The US Plan for China — Shoe-Horning US Allies into “De-Risking”

Sanctions!

Officially, it is ”acknowledged” by the US and the EU that it is “not possible” to decouple China.

Neocons don’t think so.

It may be costly to decouple China, but definitely not impossible. And Neocons don’t care about heavy costs, not even for their own Western societies. That is the Blinken concept of “Trade Denial” from Blinken’s 1987 book “Ally vs. Ally”. The cost paid by trade denial for the West’s own societies will be worth it to bring down the enemy.

The US enemy back in 1987 was the Soviet Union, today it is China. Neocons don’t care that Germany with Mercedes, BMW, and Audi will lose billions on sanctions. Weakening Germany will only be a side-benefit for US Neocons.

Neocons also don’t care that Qualcomm will lose sales in China and that Apple will have to get their phones produced in India or elsewhere.

As for Chinese rare minerals and solar cells, the equivalence to Russian oil is obvious – make exceptions to embargo and put a price cap on Chinese exports. Sanction China completely and make a few exemptions only where strictly necessary.

TSMC, the chip manufacturer on Taiwan, will not be entirely lost when the Mainland takes Taiwan – TSMC is right now being relocated to the US !

The Taiwanese people have of course not been informed, that the US plan is to accept that they are lost and the US takes their biggest industry away to the US. Before China takes full control of Taiwan, the vital chip machines and key people will be evacuated, and TSMC’s factory demolished not to be used by China later.

US will not start a nuclear war against China for taking Taiwan.

The US will impose “nuclear sanctions” instead.

Shoe-Horning US Allies

Germany and France are not yet fully prepared to lose their business in China and take a big hit on their economies & societies just for the sake of Taiwan. But the US will squeeze them into it.

Right now, Germany and France are being shoehorned into ”de-risking” China – pushed by Ursula von der Leyen, Poland, Lithuania, and immense US pressure.

The ”de-risking” of EU-China trade will then be expanded upon continued US pressure. Not yet a full decoupling, but gradually preparing and implementing decoupling and sanctions.

When finally the ”action” starts on Taiwan, Germany and France will be given no alternative but to follow US orders for full decoupling and total sanctions. Sanctions don’t work with Russia because Russia has industrial supplies from China, and China in turn benefits from trade with the West. That will be stopped. This time, the West will seal off a whole group of sanctioned countries consisting of Russia, Iran, and China.

China will come to possess Taiwan and that will punch a major hole in the US control of the First Island Chain and give China free Blue-Water access to the Pacific. The US Neocons may have accepted that as a bitter apple and decided to counter the effects of it long-term.

Taiwan Damage Control

• The loss of Taiwan will be compensated by the US.
• Australia will stop export of iron ore to build more Chinese warships.
• The US production of warships to patrol China on Taiwan will increase.
• The US will build up Japan, incl. with nuclear weapons.
• The US will also militarize the Philippines as a forward island-fortress against China (if needed, make a coup) and
• The US will strengthen South Korea militarily.

After the loss of Taiwan, S.Korea will come into a precarious situation. To de-risk US dependency on S.Korean microchips, the US will further do like with Taiwan and relocate S.Korea’s chip capacity to the US.

Just like the Taiwanese people, the S.Korean public will of course not be informed about such US plans.

S.Korea currently plans immense multi-billion dollar expansions of their chip industry, but that money may already be wasted for the S.Korean society.

The US will do like with Taiwan: Let S.Korean firms build chip factories in the US, then pick the top brains from S.Korea and take them to the US. S.Korean chip factories will not be physically demolished, but will instead start to wind down, become obsolete, and atrophy as they lose their orders to the US. If the US will not have capacity to replace S.Korean chip production, the rest will be relocated to the EU, which plans to double its share of global chip production from 10% to 20%. In this way, even a possible loss of US control on S.Korea after the loss of Taiwan will not become a strategic risk to the US in the chip sector.

The overcapacity which I have written about earlier which is being built in Western chip industry will then only hit S.Korea, because the chip capacity of Taiwan will be demolished and the chip output of S.Korea will be forcibly reduced to far below planned capacity. S.Korea can then export seafood, but not chips.

US Tech Overtakes China Over Time

Recreating the success of the First Cold War against the Communist Block, the US will create a new containment of China, Russia, and Iran. The First Cold War proved that such a strategy can win for the US over time.

The transition from a peace-time economy with China to a war-time economic confrontation will be painful even for the West. But the calculation is that the pain for the West itself will be temporary, and the subsequent victory over China will be permanent.

A transitional depression in the West will be mildened by printing extra trillions of Dollars and Euros for government investments to re-build Western industries (ref. Jake Sullivan’s speech of April, 2023), to keep up consumer demand to fill up Western factory orders.

Social programs for the poor will sweeten existence and dampen anger a little for the lower classes. Subsidies, tax-exemptions and other “social” programs for the rich will be pearls for the Capitalists who lost business with China.

The West will recover, be more self-reliant, and after that it will be a grinding down of China over time in unlimited economic warfare. Those countries in the Global South which are not with the West against China will be targeted, put into depression, and their governments overthrown.

US Technological War

Technological supremacy in AI, chips, Quantum Computing, and Industrial control of low-earth orbit in Space will soon create such enormous economic and military advantages for the West, that it will ensure a complete US dominance over China.

AI is about to increase Western productivity with 40% and more in all sectors political, economic, and military.

IBM is already building a 100,000 cubit Quantum computer – the 2 million cubit Quantum computer is within reach for the US. That is the threshold, where the US can crack all Chinese and Russian codes and communication, and with AI the US will be able to analyze these two countries better than they themselves can understand their own countries. With Quantum Computing and AI, the US will probably also be able to jam and control all Russian and Chinese drones, missiles, anti-air defenses etc.

Quantum Computing will also create new materials, incl. super-batteries better than Chinese batteries, high-explosives better than the Russian ones, and other tech-wonders. Quantum Internet will come next, impossible to hack, and with unimaginable advantages.

In 2025, SpaceX will two times a week send 100 tons of cargo to space for only $ 1 million per launch. China is 10 years behind and falling further back. From 2025, the US will quickly dominate Earth from Space.

A Western loss of Ukraine and Taiwan will matter less than US technological control of the World.

Devastating China

China will be devastated in a number of years by economic sanctions, lack of growth, increasing technological backwardness in business and military, and isolation.

China may take control of Taiwan, and even gain suzerainty (high influence) on S.Korea. But China will be sanctioned and prevented from ever being able to grow its GDP larger than the US.

China will also be cut-off from taking big advantage of the chip capabilities of Taiwan or S.Korea. Countries working friendly with China or Russia will one-by-one be cut-off – or cut down. The axis Russia-China-Iran will be contained (mind the word), isolated, and run down by sanctions in a Second Cold War over a decade.

Already in 5 years, the US will have the upper hand over China militarily and economically due to its sovereignty of AI, Quantum Computing, and Industrial control of Space (with SpaceX). China will sink behind in all technologies and all the production capabilities that China delivers to the World will be dispersed among the rest of the World.

Will this work?

The above is a scenario, and the question is if it will work in practice.

Significant uncertainties pertain to the social and economic impact of the US and the West itself from decoupling with China.

It is important for the West to limit the social and economic disruptions.

The disruption of supply chains from China together with new trillion-dollar economic stimulus packages will undoubtedly create inflation. Neocons will see that as a temporary problem, they can live with that.

Will US capital markets burst from such an injection of paper money? Perhaps. Neocons will bet it doesn’t. New surveillance technologies enabled by AI will dominate public “information” with fake government narratives and censorship on disturbances, create a hidden police-state, and keep each individual in place, most of them even without knowing it.

Far more certain is the technological impact against China of global US dominance in AI, chips, Quantum Computing, and Industrialization of Space.

China has been complacent. China sees itself as magnificent and has failed to develop the key technologies of fast chips, AI, Quantum Computing, and Industrial lift-to-Space in time and with sufficient vigour.

China has also failed in its self-containing attitude. China believed that its own level of efforts were sufficient, and China has not drawn upon the enormous pool of skills and capabilities of Russian science to speed up China’s own technological development.

China is a trading super-power, but in technology, China somehow believes it is an island which can just copy, attract a few talents from Russia and Taiwan, and develop everything alone. China has badly failed to team up in a vast society-to-society win-win with Russia in technology.

India has an enormous tech-potential and India is these years achieving growth-rates higher than China’s. China has failed to team up with India. Instead, China has played its own bad part to keep the China-India enmity alive.

It is unbelievable, that China makes claims on India’s state Arunachal Pradesh. China calls the area “South Tibet” and has recently provoked India by giving Chinese names to locations in Arunachal Pradesh. India did perhaps make a mistake in Doklam in 2017, but China has failed to do sufficiently from its side to meet Indian efforts to normalize the situation. China needs a final peace agreement for China-India-Pakistan and to partner up with India in technology and economics.

As China progresses its enmity with India and with lack of deep institutional technological cooperation with especially Russia and India, the conclusion is: Yes – the US definitely has great chances to demolish China in technology, economics, and advanced military means with the plan described above.

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Karsten Riise is a Master of Science (Econ) from Copenhagen Business School and has a university degree in Spanish Culture and Languages from Copenhagen University. He is the former Senior Vice President Chief Financial Officer (CFO) of Mercedes-Benz in Denmark and Sweden.