360° Financial Trend Detection
360° Financial Trend Detection
The so-called experts are at it again, predicting doom and gloom for US-China relations. This time, the forecast comes courtesy of Scott Kennedy at the Centre for Strategic and International Studies (CSIS), who, at a recent forum in Beijing (November 13, 2025, to be precise), stated that the cyclical amplitude of US-China relations has been increasing since 2018. In layman’s terms, the ups and downs are getting more extreme.
Is he right? Well, the numbers paint a picture that’s less about outright collapse and more about… heightened instability. And instability, as any hedge fund manager knows, is where both fortunes and failures are forged.
Kennedy’s observation about increasing amplitude is crucial. It's not just about whether relations are “good” or “bad” at any given moment. It's about the rate of change and the magnitude of those changes. Think of it like a stock market: a steady upward trend is predictable and manageable. Wild swings, even if they average out to the same overall growth, are far more dangerous. They create uncertainty, discourage long-term investment, and reward short-term speculation.
The data suggests this volatility is driven by two primary factors: competition for influence over third countries and the reshaping of global supply chains. Let's break that down.
The competition for influence is nothing new, of course. The US and China have been vying for allies and partners for decades. What's changed, however, is the intensity and scope of that competition. Both countries are now actively trying to win over nations in Africa, South America, and Southeast Asia with infrastructure projects, trade deals, and military assistance. This isn't just about building goodwill; it's about securing access to resources, establishing strategic footholds, and ultimately, shaping the global order.
And this is the part of the report that I find genuinely puzzling. The traditional methods of influence (aid, diplomacy) seem to be yielding diminishing returns. You can throw billions of dollars at a country, but if the underlying economic or political conditions aren't right, it's money down the drain. What's more effective, and far more insidious, is the use of economic leverage. China, with its vast manufacturing capacity and control over key supply chains, has a distinct advantage in this area. Calm before storm? China-US trade war seen growing more volatile despite truce - South China Morning Post
The reshaping of global supply chains is the other major driver of volatility. The trend of companies diversifying their production bases away from China has been underway for years (accelerated by the US-China trade war), but it's now reaching a critical mass. Companies are moving production to Vietnam, India, Mexico, and other countries to reduce their reliance on China and mitigate the risk of disruptions.
The problem, of course, is that this process is inherently disruptive. It requires significant investment, logistical coordination, and political maneuvering. It also creates winners and losers, both within and between countries. Some countries will benefit from the influx of new investment and jobs, while others will struggle to adapt to the changing landscape. This creates friction and instability, which can easily spill over into the political realm.
The question is, can these new supply chains truly replicate the efficiency and scale of the Chinese model? My analysis suggests that it’s unlikely, at least in the short term. China has spent decades building its manufacturing ecosystem, and it's not something that can be easily replicated. We're talking about specialized infrastructure, a skilled workforce, and a deeply ingrained culture of efficiency.
And let's not forget the human element. Building a new factory in Vietnam is one thing. Getting the local workforce up to speed, dealing with cultural differences, and navigating the local bureaucracy is another thing entirely. These are the kinds of challenges that don't show up in the economic models, but they can have a significant impact on the bottom line.
So, what does all this mean for investors and businesses? It means that we need to brace ourselves for a period of heightened uncertainty and volatility. The US-China relationship is likely to remain tense and unpredictable. The competition for influence over third countries will intensify, and the reshaping of global supply chains will continue to create disruptions.
The key, as always, is to be prepared. Diversify your investments, hedge your risks, and stay informed about the latest developments. And don't be afraid to challenge the conventional wisdom. Just because the "experts" are predicting doom and gloom doesn't mean it's inevitable. The future is never predetermined. It's shaped by the choices we make today.