I struggle to see how this contradicts with my statements?

I have always said that China is a major player and knows exactly how to play its cards. In fact, China’s dominance in trade (which is what my comment above refers to) is caused precisely its inability to build up a strong domestic consumer market, hence the increasing reliance on global trade to offset the low growth in domestic consumption.

Here’s what I said most recently:

Some Chinese commentators already suspected that the Trump-Xi meeting a while ago was China ceding the Middle East and Latin America to the US (see my post here) in exchange for Taiwan and Japan.

Look at what happened to China’s petroleum import from Venezuela immediately after the Trump-Xi meeting:

China divested its import from Venezuela and shifted to importing from Canada. The US gave China at least 2 months to readjust its oil import routes. While we do not have direct evidence, it is not hard to see that this helped reduce China’s energy reliance on Venezuela, and allowed them to cede Latin America to Trump (which is exactly part of the US imperial strategy).

You can also follow the link above and see how China is also giving up Iran and the Middle East on both its investment and the UN front.

Meanwhile, following the reasoning that China gets Taiwan and Japan in return, do you think it’s a coincidence that South Korea’s president is now bringing the entire business entourage to warm relations with China this week?

It’s very clear that the US has no objection to that, and Trump wouldn’t mind it either, because Trump’s main objective is to reduce US trade deficit first and foremost.

Now, back to Southeast Asia, which is the main story here - clearly under the tariffs and the ongoing US-China dispute has positioned Southeast Asian exporter countries such as Vietnam to benefit from the current development, as foreign companies attempt to relocate their production sites from China to Vietnam.

And what is Vietnam’s advantage here? The world-class entrepot of Singapore that is conveniently situated in the East-West sea-based trade route. Vessels have to pass through the Malacca Straits to load and unload their cargoes in Singapore, and Vietnam being part of the ASEAN community takes advantage of Singapore as part of their supply chain network to integrate into the global market.

Now, the Hainan Island being converted into a Free Trade Port is about to upset this balance completely, if China’s strategy succeeds.

Read the link of China’s readout in my comment above - the key clause is that goods entering Hainan and achieving 30% added value will be able to enter Mainland China duty-free. In other words, Hainan Island will simultaneously function as a key logistics hub that threatens to replace the role of Singapore, and more importantly, foreign companies that add 30% value to their products within Hainan Island will now enjoy tariff-free entry into China.

Look at Hainan Island’s geographical location in relation to Southeast Asia (Vietnam and Singapore) - pay attention to its proximity to Vietnam:

If Hainan Island can be developed into an industrialized region, do you think foreign investments, especially high tech sector, will still find Vietnam attractive?

First of all, Singapore has 17% corporate income tax. Hainan Island’s going to be 15%. So Singapore is going to lose its comparative advantage there.

Second, Hainan Island will effectively function as a portal for foreign corporations into China that will enjoy virtually very low tariff and tax for their goods (complementing Hong Kong’s role as China’s offshore financial powerhouse).

Third, just behind Hainan is the backing of the world’s most powerful industrial economy complete with world-class logistics and supply chain.

If China’s Hainan strategy succeeds, Vietnam will be locked into low end manufacturing for it cannot offer cost advantage for the high tech sectors with Hainan just next to them.

Now, there’s a caveat: which is that Hainan is still comparatively underdeveloped compared to Vietnam and other Southeast Asian countries, but the potential for growth is strong if China invests heavily into the region.

And most importantly, by supplanting Singapore and Southeast Asia as a chokehold against itself, China gains geostrategic advantage against the US blockade strategy and ensures its dominance in global trade on the supply side of the equation (i.e. Chinese export industries get to remain competitive).

Finally, just to reiterate: there is no contradiction at all with what I’ve been saying. China’s problem is internal and ideological - that its neoliberal policy cannot sustain a healthy growth of domestic consumption due to growing wealth inequality, hence its prioritization on global trade-based strategy, which in turn, serves as a positive feedback loop that makes China become even more reliant on global trade than ever. And when you have over-capacity, you have no choice but to kill your competitors’ trade through mercantilism because there isn’t enough demand in the world to keep all of the workers employed.

The opposite strategy, which is what I propose, will take advantage of China’s huge consumer market to absorb the global export surplus goods (including those from Vietnam) and alleviate much of the regional tension, allowing those countries to successfully transition into higher end manufacturing eventually. This will require wealth redistribution and abandoning of neoliberal policies to raise the income of the Chinese working class. Otherwise, China will have to choose protecting its own export industries and destroy that of its neighbors.