Great powers ebb and swell, recoloring relationships; the great spending game to keep the world turning goes on. Commercial globalization has “liberalized” trans-Pacific economies’ supply chains and international trading relationships by reinforcing systems of commercial intercourse founded on common and shared standards, like currencies, measurements and contracts. No longer is it possible for a nation to have an effective domestic economy without having an effective network of international relationships with which to acquire the resource inputs they need (via supply chains) and sell the goods and services they produce. All economies are interconnected.
The US and the PRC both have economies worth roughly USD$25 Trillion annually, and they are the major trading partners for every single trans-Pacific economy. Political evolution and upheaval from both major superpowers are widely scrutinized; policy implications produced by said administrations have far-reaching and significant international ramifications, with the power to make or break small nations in one fell swoop. Both global poles (PRC and US) are aware of the weight of their impact; both seek to expand their own sphere of influence while simultaneously diminishing that of the other. Never before has China been able to counter US maneuvers on this international scale. Never before have domestic market supply chains been so thoroughly de-localized through regional and international players.
In reality, the US, in an act of leadership for all “Western” powers, must learn to share. It must share the spotlight in the Asia-Pacific region, and atop the global economic influence boards. It must share responsibility for policing seas, shipping lanes and waterways throughout Asia. It must share in managing and taking accountability for environmental efforts around the Pacific and the world at large. It must share in determining what is most desirable for the quality of life, security, and economic prosperity of Asians, in Asia, where the US is not. Sharing between the US and the PRC right now is not easy, but it is possible. Cooperation can succeed. Acknowledging China’s legitimacy on the world stage and seeking to move forward from common ground can produce desirable results: progress. Though holding the CCP accountable for human rights concerns is imperative, China’s influence throughout the region and world cannot be ignored in the meantime, and it is not dissipating anytime soon. As China’s economy, already USD$ Trillions larger than the US’s at PPP,(IMF) continues to grow in size and influence, cooperative competition towards universally positive goals, such as the Green Energy Transition, will help stabilize progress much more than defensive posturing and economic retaliation.
In the greater global scheme, very few leadership changes are expected to take place this year (see: Charts – Leadership Timeline). Economies will largely be able to focus on economic and domestic issues without spending money, time and effort on disruptive national elections. The runway is quite clear as so many leadership positions have either just begun, or are early enough in their terms not to warrant concern from major administration turnovers on the near horizon.
Supply Chains
After having been thoroughly globalized over the past few decades, supply chains are currently reshuffling into a more regionally diverse network of nodes and suppliers in an attempt to reduce exposure to chokepoints, bottlenecks and the risk of being locked out of business due to failures or disruptions from a sole supplier of a critical operating input. As companies seek to build resilience to system shocks through supply chain diversification, the world is discovering that being “globalized” does not mean that any economy can source whatever it wants from anywhere else, and that “stuff” is broadly dispersed around the world. In fact, most of the raw materials we really care about (from a technological development standpoint) have an easily countable number of financially viable sources, with many of those in the single digits. Supply chain diversification is a great idea; it also has its limits.
Take polysilicon as an example. Polysilicon is a critical ingredient in the current generation of solar photovoltaic (PV) panels, and there is broad consensus that solar energy’s contribution to humanity’s energy needs is strongly needed and greatly appreciated. To account, more than half of the global annual supply of polysilicon comes out of Xinjiang province in northwestern China, where human rights violations against ethnic Uiyghers are ongoing and include large-scale re-education camps. The Biden administration’s imposition of sanctions on Xinjiang companies and products is certainly ethical and moral in spirit, but they are extremely difficult to enforce, and will not be effective without an alternative source of polysilicon (see: Selected Sector Analysis – Basic Materials, below).
Thousands of companies around the world participate in the solar PV economy: mining, refining, processing and distributing polysilicon; manufacturing, delivering, installing, maintaining and updating PV grid equipment in utility, commercial and residential arenas; and marketing, retailing, financing and administering each level of the industry from the chemical oxide carved out of the earth, all the way down to the end customer. Each of these companies is fighting for the expansion of this entire industry, which is also in humanity’s best interest. Unless somebody invests USD$ billions in capital and years in time to open up new polysilicon processing facilities in more geopolitically appropriate environments, and all the associated supply chain adaptations that would require, how could anything actually change? Many people’s livelihoods depend on the persistence of their PV businesses, even if that means buying products from Xinjiang; business will go on as usual.
However, growth in this case is limited by geography. You can’t mine minerals if they are not in the ground where you are mining (see: Natural Resources). Attempts to diversify critical mineral supply chains will proceed, but are severely limited by this geographical principle. Smart investors understand that, as the demand and ubiquity of certain technologies (based on certain critical minerals) grows, and the prices of particular raw inputs rise accordingly, new extraction opportunities will become newly financially viable with the higher price demand. Smaller “artisan” mines can be quickly acquired by much larger corporate players who can exploit the extraction opportunities with much greater efficiency, opening up new local nodes for regional supply chains. In such an environment, supply chain diversification for many different critical minerals can only occur once substantial price increases have opened, or re-opened, extraction opportunities, and only in geopolitically suitable conditions.
Geopolitical cooperation is vital for mineral extraction and effective supply chain management, and also equally as vital for restricting access to supply chains, such as in the multilateral arrangement currently hindering the PRC’s access to certain elements of the semiconductor market. At the most advanced end of the industry, at the “bleeding edge” of supercomputers and AI and defense technology, ultra-high-end semiconductors are required to enable the fundamental processing. For everything “behind” that bleeding edge, including most vehicles and consumer electronics, broadly available semiconductor components, technology and manufacturing equipment proliferate the market. Even if the PRC is effectively shut out from the very front of the industry, more than ample opportunities exist for Chinese companies to gobble up market share and dominate an enormous swath of the “trailing edge” economy which accesses everyday consumers around the world.
Furthermore, because of persistently competitive forces with the US, continued innovation within the trailing edge environment will abound with even greater fervor and manpower than being applied in the same space from the Western economies. While busy trying to control the most advanced focal points of high technology, Western companies and innovators will pass up many novel technologies that will surely be discovered and found useful in the Chinese domestic economy, localizing PRC supply chains in the process.
Functionally, re-shoring and localizing of supply chains usually entails modification, implementation or expansion of infrastructural capacities in new locations, which itself is a process entirely tied up with the pouring of cement. Siam Cement PCL is in prime position to continue to capitalize on supply chain reorganization throughout the SEA region.
Modern Information Liquidity
The modern era is comprehensively marked by digital technology and the myriad ways in which they are reshaping traditional industry conventions. Remote access to services, remote request of goods, remote control over equipment and operators, remote monitoring of sensors and mechanics, remote access to a global marketplace, all of these dynamics and more are changing the ways in which customers make purchases and companies rise to meet and provide for those demands. The digitization of information makes that information more liquid by making it remotely accessible, more freely sharable than ever before, enabling new entrants into virtually all fields both new and evolving.
At an industrial-revolutionary scale, liquid digital information has reshaped urban Asia, now making a non-digital participation in those urban economies essentially impossible (or, only reserved for the lowest, discarded economic classes). Furthermore, liquid digital info empowers ruralites to an even greater extent, allowing them to leapfrog many of the time-consuming conventional steps of economic development that require massive outlays of government capital and years of infrastructural upgrading. The Southeast Asian economies of Thailand, Vietnam and Indonesia are particularly taking advantage of the digital revolution and modern liquid info, function which is propelling some companies to new heights of commercial influence and success. FPT Corporation in Vietnam is capitalizing on the nation’s increasing digitization by offering many different technology and communication based services all up and down the consumer and business demand chains. When a particular one of its subsidiaries or services strikes a vein of popularity, it already operates many other tech-related businesses from which it can leverage industry support to boost access and supply as quickly as possible. This gives it a particular competitive advantage in the rapidly evolving tech space.
Liquid digital information makes the commercial economy run faster and opens up the playing field, but it also makes political and authoritarian control more challenging. Since every economy operates by its own rules, the advantages of liquid info play out differently in every country, but digitization cannot be avoided in the long run. Widespread adopters of new technologies, like South Korea, Japan, and the urban sections of Greater China all make headlines with jaw-dropping advancements implemented into urban life, while the less-wealthy Asian economies of Thailand and Vietnam are incorporating digital services into their much-less-developed infrastructure with astounding efficiency and early results. Being able to access new technologies from other international commercial economies that can actually be applied to their own domestic uses has never before been realized in countries so far in the wake of the most developed nations. Smart cars haven’t done much good where there aren’t paved roads, but cell phones, digital information and the internet certainly have.
Rapid digitization of economies in the trans-Pacific has provided its citizens with mobile and relatively unprecedented access to largely liquid social and political information, a shift in the knowledge distribution spectrum within nations that is profoundly reshaping the way federal governments must engage with their citizenry. As autocracies grapple with how to control political dissent by controlling digital information, their citizens are all the while gaining more and more access to increasingly-liquid historical information, and international similarities and dissimilarities, all of which are re-shaping political perspectives on the fly. Exposure to democratic ideals (suffrage, representation, individual agency, political participation, etc.) can provide citizenries with new knowledge tools to topple or reshape harmful autocracies, as well as hold elected officials accountable.
Some nations, like South Korea, routinely hold their heads of state responsible for breaches of trust and duty, a dynamic which reinforces the efficacy and importance of participation in the body politic by its citizens, who themselves are increasingly informed by liquid digital information.
In Malaysia, former PM Muhyiddin has recently been charged with multiple counts related to graft, corruption, fraud and money laundering, all supported by digital information. And this development is just months after another former Malaysian PM, Najib Razak, began his 12-year prison sentence for graft and corruption related to the looting of the 1MDB Malaysian state development fund during his term in office. Malaysians are holding their leaders accountable, and liquid digital information is fueling the machine.
Elected officials in governments all across the trans-Pacific can learn from these examples that they must accept that they cannot prevent the utilization of digital information. Democratic economies are heavily influenced by what is referred to as the Median Voter Theorem (MVT) which stipulates that the political will of the populace (once empowered democratically) can be measured by the political will of the median voter, who resides between the two political spectrums. As an example, if the total population of right-wing voters decreases, the median voter has shifted to the left. Politicians and leaders who recognize and apply the raw logic of MVT are more clearly able to discern the will of their constituents, and thereby become a more effective leader.
In the current age, liquid digital information has the power to abruptly persuade voters “in the middle”, which can rapidly shift the median voter and subsequent MVT dynamics. Readers can look to present-day Mexico (see: Countries/Regions, below), to see how liquid digital information is feeding and informing the hotly-contested on-the-docket electoral reforms. In the end, the only way to stay in office is to gain approval from the largest body of constituents there is, indicated by the median voter/MVT.
In democratic economies, such as South Korea, Japan, the Philippines and Australia, those elected officials (and commercial enterprises!) who are engaging in the cooperative process of helping to guide the evolution of the digital industry and the healthy adoption of digital technologies through applied policy and clear direction of resources will find the greatest benefits and the least popular resistance from their constituencies as their economies further digitize in the modern era. In single-party systems, like the PRC, and Vietnam, no MVT dynamics play out as democratic voting systems either do not exist or do not exist independently enough from central influence to function like actual democracies. National governments in single-party systems have a unilateral capacity to influence political and commercial markets as they see fit; if they so desire, they can easily reshape the visible narrative through coercion of dominant tech companies, undercutting the advantages otherwise bestowed by liquid digital information.
In all cases it can be clearly seen that modern information liquidity is present, ubiquitous, and relevant. Control over digital information gives the competitive advantage in the information age.
Competition
In the trans-Pacific space, the two primary planets of the US and the PRC have very different approaches to competition, each of which is uniquely empowered by the existential constitution of each nation. In the US, what are colloquially referred to as “states’ rights” effectively empower each individual state to manage its own jurisdiction’s market environments, including its commercial participants. The federal government of the United States does not directly manage or oversee private business ventures, but has only a limited regulatory capacity.
In the PRC, by contrast, the state has immense access to commercial markets and its participants, including state-owned enterprises (SOE), co-ownership or co/management of business operations, and unchallenged political authority. The PRC is governed by a one-party system; no opposition to the CCP’s political domestic agenda exists or is tolerated. People who don’t feel like this is the case, or who don’t understand how inflexible this truth is, can ask residents of Hong Kong, or Xinjiang, or Tibet how they feel about their current state of democratic free speech.
The CCP’s authoritarian ability to directly implement policy into many market behaviors is effective in its speed, but fails to effectively plan for risks because it suffers from a lack of scrutiny due to the absence of competitive domestic political forces. Economically, investors can expect this policy direction authority to be direct and generally forcefully implemented. The ability to back rhetoric with capital outlay makes the CCP capable of actually steering sectors. In some cases, this makes them more competitive, particularly in international markets where other economies can’t respond with the same degree of legislative policy latitude as in the CCP’s single-party domestic environment.
As geopolitical strategies play out, the US is pursuing greater numbers of overlapping multilateral agreements with other Asia-Pacific and Indo-Pacific economies (ie: AUKUS, the Quad) to enmesh basically the entire Eastern Hemisphere of planet Earth in agreements that contain PRC growth from every conceivable angle, while still holding it as central and integrated into the global market economy. This is an impossible tightwire act and it will definitely not go according to plan, at least some of the time.
Nonetheless, the competitive ramifications of geopolitical developments are real. For example, most of the world’s internet traffic runs through underseas cables. A new super-fast fibre cable connecting Southeast Asia to the Middle East (Western Asia) to Western Europe, called the SeaMeWe-6. Long desired, the cable is finally being pushed through by the major countries who all stand to benefit.(CNA) But who is to build it? Who is the fastest-growing manufacturer and layer of underseas cables? A firm called HMN Tech, according to data from TeleGeography. Who is HMN Tech? Cutting its teeth doing undersea cable work in smaller Caribbean and Pacific island markets, HMN Tech is officially called Huawei Marine Networks Co. Ltd., a subsidiary of Huawei. In 2019, sanctions coming out of the US administration were slapped on Huawei and others, making doing business with them difficult or impossible for many outside of China.
Long story short, HMN Tech lost the bid to build the fibre cable of tomorrow due to pressures from other involved nations unwilling to risk being subject to US sanctions via Chinese intermediaries; an American company called SubCom LLC got the job. In the modern geopolitical environment, strategic circumstances must always be considered in order to determine competitive advantages.
tkscm, limited 