Yes lot of the supply chain stuff talk right now is posturing, but in the end, if the Chinese continue the zero COVID nonsense business might friendshore to other Asian locations simply because its hurting the bottom line. If the west was smart it would shut the fuck up criticizing China for covid zero (the hypocrisy on this is mindbogling) and let the Chinese wreck their own business model in the end Business is following the bottom line more than political policies.

Chinese manufacturing at this stage is not profitable because of low wages  but simply because productivity is extremely high. One of the things that is most impressive is their turn around times even for small batches, no one in Europe would bother, and in China, they make stuff sometimes in 24h the other thing is the supply of subcomponents due to the industry clusters in same cities, you know  you design a PCB for a drone specify use xyz components,and likelihood of them being able to make the part in the short term is extremely high, even when chips for servos are often German, and processors US made  , in any case same order in EU or US might take weeks before all the specific parts are on stock.

80-20holds true but its the final 10% or even less that costs an insane amount of money. 

On the topic of drones vs air defences , my recent work on a target drone made me think we will see in the future a considerable rise in use of decoy drones. For example, a target drone that follows a preprogrammed flight path using off the shelf parts without any optics or command controls and in size(not in weight) and flight speed similar to a smaller shahed 131 , cost me (target drone specs) less than 2k $ while same exact same surveilance equiped drone is closer to 10k $  while much heavier attack drone might cost 50-500k$ depending on sophistication so in the contested environment it would make sense to deploy both sensored or attack drones and decoy drones to deplete AD  . Kind similar to how in the past target drones were used to lure SAM sites into the firing of their missiles and then attack while they are being reloaded .

There's an argument that the main thing China has going for it now is its industrial clusters. Final Production of a lot of goods is easy enough; getting all the sub components made is the hard part.

But does anyone seriously believe business is mowing it all back west , all these plans liek CHIPS act are basicaly talking about reclaiming some of tinyest subcomponent production that is now in Taiwan?

Moving it all back West? No. Some to other Asian countries, some to the US, some to Middle East and Latin America. China will manufacture a lot, but the era of rapid growth for it is over.

I'll give you an example of what we're seeing here in the U.S.. Where I work, we export a lot of casting molds and cores to Mexico. The Mexican foundries have American contracts/owners. The castings are produced in Mexico, but often used in the U.S..

More of the 'Ukraine Effect' - the US now doing multi year, high volume contracts for munitions. Previously it was done on an unpredictable year to year boom and bust cycle that prevented contractors from fully investing and optimizing production lines. 

Some of these purchases are massive. While most will go to the US,  and some are no doubt slated for Ukraine, I imagine more then a few are going to become 'stocking stuffers' for Taiwan. Especially the Harpoons.

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These are still amateur numbers, especially if we're talking about deterring China.

Still, it's a good start.

Well in terms of more China focused munitions, this is also happening:

I think in the next few years, the kinetic aspect of deterrence will be pretty solid.

The big issue is economic, and there the US has a long way to go. Right now huge swathes of the US economy is dependent on Chinese imports of retail consumer products. Millions, possibly over 10 million, jobs are tied up in selling these Chinese widgets. Theres also chemical precursors for medicine etc that were foolishly of shored that would be bad to do without... 

When the first missile is fired in defense of Taiwan, thats all over. And that sort of economic dependency and destruction greatly curtails the deterrent effect.

The US needs to further increase industrial policy to create a ABC - "Anywhere But China" - Supply chain. The US should impose +1% tariffs per month on Chinese imports, with the goal of ending all imports of Chinese goods over the next decade. And the money raised from those tariffs, plus loans, should be offered to any company relocating their manufacturing to another country. 

It should also develop policies to create a sort of "Freedom Trade" to encourage manufacturing and better economic links with allies in the Pacific and Europe. (IE encourage US Steel manufacturers to buy Australian iron ore instead of ore from Brazil, etc.) 

Fortunately, we're starting to do what you mentioned. Like I told Mr. T4, my employer sends a lot of product to Mexico, to make components that are used by American companies. (After 30 years, North American free trade is working like it was supposed to!)

As for precursor chemicals, possibly India as a China substitute, if they can get their QC up. Frankly, we need a Chemicals Initiative for our industrial policy.  Support R&D, and crush the NIMBY/BANANA legal-industrial complex so plants can be built, and actually make products. (Energetics for artillery are a good first step.)

Farmplinker said:

As for precursor chemicals, possibly India as a China substitute, if they can get their QC up

Relocating chemical production to Germany would have been ideal, as they are the world leaders in chemical production.

But one of the many tragedies of the war in Ukraine is its effect on German industry, which really relied on plentiful cheep natural gas from Russia.

Most of their chemical precursors are derived from breaking down natural gas into various chemical sub compounds. Without tons of cheap gas, thats all in peril. 

https://www.ft.com/content/50a462b3-0e8b-49e1-873c-9505760d4a66

Now BASF is looking to build a new chemical complex - in China. 

...

Mexico might be a good choice. It would negate the NIMBY factor, and its partially tied into the US natural gas supply. Plus more jobs in mexico serves as its own sort of 'wall' to reduce illegal immigration. 

I'd love us to get more petrochemical plant here in the Ohio Valley. Lots of natural gas, and due to pipeline constraints, limited out of area exports. So cheap. Close to most US (and probably Canadian) polymer production. Good cost of living.

But a lot of NIMBY/BANANA, alas.