Mark Rosenblatt

Michael Pettis’s recent Substack note, Domestic continuities between China Shock 1.0 and China Shock 2.0, builds on Adam Tooze’s distinction between the two shocks while arguing for a deeper continuity. Tooze presents China Shock 2.0 as qualitatively different: an industrial-policy shock that targets advanced manufacturing sectors, particularly in Europe, rather than the low-value manufacturing displaced during China Shock 1.0 in the United States. Pettis accepts this shift in sectors and geography but argues that the underlying driver remains unchanged. China’s persistent high-investment, low-consumption growth model generates excess production that must emerge externally as trade surpluses. Industrial policy changes the composition of those surpluses, but not their fundamental cause. In his formulation, one country’s industrial policy simply becomes everyone else’s industrial policy in reverse. The argument is coherent and consistent with Pettis’s work on global imbalances. Yet it no longer adequately explains what is unfolding. By treating China’s current expansion in electric vehicles, batteries and solar primarily as the external expression of a domestic macroeconomic imbalance, Pettis understates the extent to which productive capacity has become an instrument of state strategy rather than merely a consequence of the growth model. It’s certainly a natural perspective to take yet it camouflages what is actually happening The current wave of Chinese industrial expansion isn’t just the spillover of excess savings and investment. It reflects a sustained policy of building capacity well beyond both domestic demand and immediately accessible foreign demand, accepting prolonged low returns in exchange for technological leadership, manufacturing dominance and geopolitical leverage. Scale has become a strategic objective. Production capacity itself has become a source of national power. This is where Pettis’s framework begins to fall short. His language of “industrial policy in reverse” suggests a largely mechanical transmission of domestic imbalances into the global economy. That framing misses the increasingly deliberate use of industrial scale to reshape market structure, create technological dependence and compel foreign adjustment. The Chinese dismissal of accusations of “overcapacity” reflects this logic. Capacity is not viewed in Beijing as excess supply awaiting market correction, but as strategic capability whose value extends well beyond immediate commercial returns. It’s point of intent difference . The geopolitical shift is that surplus productive capacity has evolved from an unintended by-product of a growth model into a consciously cultivated instrument of economic statecraft/ power . My point is our historic causal hierarchy is outdated , we need a new mental framework to think about this properly : a macroeconomic imbalance narrative explains how China finances the strategy, but strategic intent explains why capacity is being built on this scale and in these sectors. What is the western counter ?

Decoding Trump on Iran electrical infrastructure threats The strategical & tactical consequences and the motivation/s ———-expressed in neutral moral terms explicitly so the facts can land . The neutralization of Iran’s electrical infrastructure focuses on twelve nodes that support the nation's political, military, and industrial operations. The Damavand Combined Cycle Power Plant near Tehran stands as the primary target for the central region. It provides the base load for the capital’s ten million residents and the administrative heart of the government. Its removal triggers a total failure of high-altitude water pumping stations and urban transit systems. The Shahid Rajaee Power Plant in Qazvin acts as the secondary anchor for the northwest industrial corridor. It supplies the heavy manufacturing zones that produce automotive parts and defense components. In the northern Caspian region, the Neka (Shahid Salimi) Power Plant maintains grid frequency for the agricultural and logistical hubs bordering Russia. Its destruction isolates the northern provinces and halts the operation of strategic port facilities. To the southwest, the Ramin Power Plant in Ahvaz and the Abadan Power Plant provide the high-voltage energy required for oil extraction and refinery operations in Khuzestan. Disabling these plants shuts down domestic fuel production. Electric pumps and cooling systems are necessary for crude processing. The southern coastal theater relies on the Bushehr Nuclear and Conventional complex and the Bandar Abbas Thermal Plant. These facilities are the sole energy providers for the desalination plants that supply potable water to the IRGC naval bases and the millions of civilians in the arid southern provinces. The neutralization of these coastal nodes creates an immediate humanitarian crisis. Water storage in these regions is limited to a 48-hour window. The Asaluyeh Power Plants, integrated into the South Pars gas complex, are already degraded. Their destruction halts the production of petrochemicals and fertilizers. These are essential for domestic food security and foreign exchange. Civilian defense capabilities collapse as the national grid fails. Modern Passive Defense (Sazman-e Padafand-e Gheyr-e Amel) protocols require active power for the subterranean bunkers and civil defense centers that coordinate emergency responses. Hospital systems face immediate failure as backup diesel generators exhaust localized fuel supplies within 72 hours. This is particularly certain given the disruption of the domestic refinery network. Telecommunications and internet connectivity vanish entirely. This prevents the state from managing the movement of the 3.2 million internally displaced persons fleeing urban centers for the rural north. Manufacturing for the defense sector experiences total paralysis. The assembly of solid-fuel missiles and drone components requires precise temperature control and high-energy industrial mixers. A grid collapse halts these production lines and prevents the testing of guidance systems. Heavy industries, including aluminum smelters and steel mills in the Persian Gulf Special Zone, suffer permanent equipment damage from sudden power loss. Molten materials solidify within the furnaces. It’s that thing I keep referring to if you’re a regular reader the idea that our infrastructure can be immediately bought back online in any country is one of our naive beliefs. This creates a multi-decade timeline for industrial reconstruction. The result is a transition from a centralized industrial state to a fragmented, localized survival economy. There is a humanitarian catastrophe lurking here that is hard to contemplate .

Agree @aeberman12 - I would back a trained human platoon over robots any day A robotic unit is tethered to energy. Batteries deplete. High-draw systems drain faster under combat load. Sustained tempo requires charging hubs, generators, fuel stores, or grid connection. Easy to spot easy to destroy . Those resupply nodes are physical. They emit heat, noise, and electromagnetic signatures. They concentrate equipment and personnel. They operate on predictable replenishment cycles. In a contested environment, fixed, emitting, essential infrastructure becomes a sitting duck . Human units disperse their logistics. Food, ammunition, and medical support scale differently and can be cached, carried, or sourced locally. Energy for machines concentrates in infrastructure. Concentration increases visibility. Visibility increases vulnerability. The central question concerns survivability of the supporting architecture under sustained pressure you’d have to drag generators all over the battlefield This is the era of unsupported nonsense claims