Volatility markets remain calm; China invokes “whole nation system”

China confirms the direction is a bipolar world

In a speech today China’s President invoked the “whole nation system” used previously in the country’s space programme and Covid vaccine drive during the pandemic. The comments are likely a response to the recently enacted US CHIPS Act which aims to quickly establish broad-based production of semiconductors in the US, but the recent US restrictions on Nvidia to sell its most advanced AI chips to China. More and more pieces are pointing towards that the world is accelerating into a bipolar world in which global supply chains will be drastically reshaped. Globalisation only works if there is peace and mutual understanding of trade relationships, but when the two leading powers of the world are no longer in agreement globalisation no longer works. It is simply to risky for global supply chains to be to spread out and dependent on each other. Just like Europe learned that its dependence on Russian gas was a mistake geopolitical, the US has come to the conclusion that semiconductors should not be produced in Taiwan because it is a key risk to the US military and technology sector.

Germany’s Foreign Minister Baerbock said yesterday in a speech with business leaders that Germany has learned the lesson from Russia and that these learnings will guide its relationship with China. In other words, exports should not be too dependent on China. Again a confirmation that the world is changing fast these years. Germany is potentially one of the biggest casualties in the reshaping of globalisation being hugely depended on exports in its economy.