As the United States continues to mount pressure on all of the world’s developing economies through a combination of sanctions, tariffs, negative speculation against emerging markets, rising interest rates and the consequently largely unstoppably bullish Dollar, it has become clear that much of the burden to correct the pangs caused by Washington’s protectionist policies will fall to China. This is the case not only because China seeks to and is largely on the cusp of replacing the US as the economic superpower championing free trade, but it is also due to the fact that China seeks a balanced and symbiotic economic relationship with developing economics throughout the world.
As China like the rest of the world discovers that the vast US market is no longer a reliable export destination, China will if anything accelerate its long term strategy of helping developing economies throughout Asia, Africa and even Latin America to advance sustainable growth strategies. As a result, living standards will rise throughout the developing world and China will in turn attain new markets for its goods while simultaneously offering developing markets an export destination in the form of the Chinese domestic market which in terms of purchasing power parity is already larger than that of the United States.
In this sense, America’s self-evidently calculated antagonism of the free trading consensus is sending very real schokwaves throughout the developing world which according to the WTO includes China, but this is off set by the fact that China’s preexisting long term global trading and development strategy is well placed to absorb much of these shockwaves over the medium term.
One of China’s rapidly growing industries revolves around the research, development and deployment of robots and artificial intelligence (AI) in modern factories. The Made in China 2025 programme which looks to fully automate modern factories along with President Xi Jinping’s push to transform Made in China to Created in China is symptomatic of a maturing Chinese economy that is looking to transform itself from the world’s key facilitator of production to the world’s key hub of innovation.
China’s existing market socialist model places the economy in a unique place vis-a-vis neo-liberal economies when it comes to taking advantage of AI and robotics on a domestically inclined win-win basis. Under the Chinese economic model, while innovation and enterprise is encouraged, controls on capital outflow and a system which necessarily re-invests the profits of industry back into the national infrastructure means that the profits generated by the artificial hand will cycle back into the domestic economy in the same way that profits generated by the human hand have done for decades. Because of this, the automation revolution in China will allow the Chinese workforce to gradually re-position itself to become a major factor in a country whose economy is focused primarily on innovation.
Beyond this, a medium term strategy for helping poorer nations that have already partnered with China in the One Belt–One Road initiative can involve the sale (most liking through credit) of robots and other instruments of AI to other developing nations in order for them to kick-start their own development without having to repeat already outdated industrial models. Here, the DPRK could prove to be a pioneer of such a model as Chairman Kim Jong-un recently stated,
“It is important to completely eliminate manual labour and modernise production processes”.
The clear implication behind this statement is that Kim looks to emulate China’s forward looking automated drive and duplicated it in his own nation. Seeing as the DPRK has a much smaller population than China, it is now conceivable that over the next decade, the DPRK’s industrial economy could become among the most highly automated in the world.
Without having to gradually modernise the country’s industrial infrastructure, the leadership in Pyongyang can instead set an agenda for a wholesale change in the country’s industrial development, one which aims at fully automating all existing and future factories based on the latest, most sustainable technologies. As a revitalised partnership with China looks set to expand as the current peace process continues, there is every possibility that the use of Chinese technology combined with home-grown research could help to make the DPRK a future economic pioneer – thus representing a radical departure from the current state of affairs where North Korean industry tends to lack the technological innovations present in South Korea, China and Japan.
The same strategy presently being promoted by Kim Jong-un could be repeated across the world even among economies that are less industrially developed than the DPRK. From south Asia to Africa, Chinese partners could take out lines of credit from Shanghai’s financial institutions in order to purchase Chinese built robots and AI technologies whose profits could then be used to pay back the initial loans and pave the way for the establishment of wider trading partnerships throughout the One Belt–One Road network.
In this sense, China can help its partners to trade their way out of the US created crisis in emerging markets not only through traditional means but through helping countries to rapidly modernise existing industrial infrastructures and build new industrial infrastructures using the most up to date technologies available.
Transcontinental cooperation in the field of robotics and AI is in fact already occurring and indeed progressing at a rapid pace against the backdrop of America’s protectionist posture. According to China’s Global Times, the trade war is already hastening cooperative partnerships in the field of robotics between Chinese and European companies.
Taken in totality, America’s protectionist polices are helping to accelerate existing trends in China’s domestic economy while simultaneously aiding the development of partnerships between China and developing economies as well as expanding China’s research partnerships with leading European economies including Germany. This helps to paint a broader picture wherein the trade war will be fought and overcome as much with human ingenuity as with artificial intelligence.