2018-06-13

Trade War: China Punishes Australia With Trade Halt

In The Logic of Strategy: Yuan Devaluation and the Road to Trade War, I wrote:
An anti-China coalition is building up due to each nation following the logic of China's inevitable rise in power along with the perception of an increasingly aggressive China. China has "tipped its hand" so to speak and these nations are moving preemptively. Due to the nuclear arsenal of the United States and China (to say nothing of Russia's interest in the region), there isn't going to be a major war for survival. This reduces the options for confrontation, with one of the most powerful being economic. If there is a minor military confrontation that is too large to be ignored, the most politically acceptable response will be economic.
Now both sides in the Pacific Cold War are using trade in response to political disagreements.

Reuters: Pernod Ricard wines delayed at Chinese ports amid strained ties with Australia - sources
Wine shipments from Pernod Ricard’s (PERP.PA) Australian business have been held up at Chinese ports, two sources told Reuters, the first foreign company to be harmed by a deterioration in relations between Australia and China.

...Six Australian wine companies have faced delays at Chinese customs since Prime Minister Turnbull complained of Chinese political interference late last year, straining ties, a senior government official said this month.

The listed French company Pernod Ricard owns the big-selling Australian wine brand Jacob’s Creek.

“Pernod Ricard through its ownership of Jacob’s Creek has been impacted by China’s restrictions,” said a government source briefed on the issue, who declined to be identified as he is not authorized to talk to the media.
This is the Logic of Strategy unfolding. A nation does not have sovereignty if it is dominated by a foreign power (friendly or hostile) or independent international institutions such as the International Monetary Fund or World Trade Organization. In the run-up to peak social mood, nearly all nations traded sovereignty for faster economic growth. The benefits weren't balanced internally and with global growth slowing, the case for surrendering sovereignty to global institutions is collapsing. Additionally, the rise of China, India and other nations means that Western nations that operated under a "global" system run by the United States from 1945 to 1990 now must accept foreign laws and influence or breaking with the system.

Globalism will fall apart. Samuel P. Huntington's The Clash of Civilizations and the Remaking of World Order was prophetic and will be proven more correct with each passing year, particularly as social mood deteriorates. Internationalism won't die, but the future will start with the Anglosphere. The U.S. is breaking up its own globalist system under Trump. The British have exited the European Union. Australia is chafing under China's rise. Isn't it strange how all these nations are moving in similar directions? It's almost like they're related.

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