Chinese Lockdowns

A few weeks ago I wrote Pandemic Retrospective. Events since then pretty much confirmed everything I wrote.

The West got over covid. It's still there, but old people are overwhelmingly vaccinated, so nobody cares.

Meanwhile, China is doing its best to implement Zero Covid policy. OK, so here's what I wrote back then:

There's also an interesting idea for stage 1, to totally close not just countries but each city and region, and wait for covid to disappear there, before reopening only borders between covid-free areas. But this would only work if external country borders were closed as well, and it would be extremely disruptive. China sort of did that initially, but nobody else really tried that at all.

And what China did 5 days after I wrote that post? Literally what I said, on a much larger scale than in 2020.

Chinese lockdown is based on setting up borders. Not just external borders, and just borders outside cities, but borders between districts inside cities. It's extreme borders more than extreme lockdowns.

Instead of closing factories, China converts them to a closed system, where workers live in their workplace, so they don't need to cross internal borders. That's something Europe never considered, travel was open for "essential workers" which were a huge chunk of the population, far too great for covid to be possible to contain.

It's unclear if this will be enough to achieve Zero Covid - so far the signs aren't too great, but let's imagine they do. Whichever way it goes, one thing it proves beyond any doubt is that European approach - late severe lockdowns without corresponding external or internal hard borders - didn't have the slightest chance of ever working. European style lockdowns were completely 100% counterproductive.

And since I'm in a prophetic mood, Ukraine will destroy Crimea Bridge.

Russia is Doomed

I drafted this post last year, with this exact title, but I ended up writing the 100 Programming Languages Speedrun instead, and didn't have time to finish it. I'm feeling a bit silly now. Anyway, nothing here is in any way related to the Russian invasion of Ukraine, so just imagine that this was posted before all that.

Russia is a regional power like Italy, Turkey, Brazil, or Saudi Arabia, LARPing as a superpower. It's baffling that people actually buy that, and think that Russia is some kind of a global superpower like US or China.

If you look at GDP or population, Russia is really unimportant. Projected population growth for Russia looks even more miserable than for the West, and their economic growth potential is very poor if you exclude two sectors.

Now Russia has two important things going for it, but here's why both will end soon.

Fossil fuel exports

Russia's biggest strength is its fossil fuel exports. If you look at export statistics, they constitute about 50% of all of Russia's exports. Exact number varies year to year based on their prices. Russia has been called "gas station masquerading as a country" for a good reason.

This is not sustainable. I despise virtue signaling over climate, but regardless of that, renewables technology is ceaselessly advancing. We already reached the point where renewables, with reasonable subsidies, are almost competitive with fossil fuels for electricity generation during good parts of the day. The main problems are intermittency of renewables, use of fossil fuels for transportation, and cost of switching all the existing infrastructure.

The first two can be solved by cheap batteries, and battery cost fell about 90% over the last decade, with little reason that this will stop. And given enough time and money, existing infrastructure will get replaced.

Full replacement of fossil fuels will take many decades, but this is not a growth sector. And Russia has nothing to replace it with. Other raw natural resources bring a small fraction of that money.

Green useful idiot

One thing Russia succeeded in doing, is funding "environmentalist" group that oppose European energy independence. Europe could have been far closer to energy independence already if it proceeded with fracking, nuclear, clean coal, and other technologies, just as US have done. It took US twenty years from being in just as deep shit as Europe to being a net energy exporter. All it took was political will.

However "environmentalist" groups, some receiving substantial Russian funding, others being Putin's useful idiots, managed to prevent European energy independence, and made Europe more dependent on imports from Russia for the time being.

Also did I mention recently that this guy should hang from a lamp post for treason, and it's a disgrace to his whole country that nobody hanged him from a lamp post or other suitable object yet?

Anyway, while this has been extremely successful Russian subversion of democratic countries, in the long term it won't matter, as it will be possible for just about any country to just buy enough batteries, solar panels, and EVs to gain energy independence.

Weapon exports

The second thing Russia has going for them are their exports of military equipment.

Russia is targetting mid-tier market. Their equipment is much worse than top-tier exports from the US, but it's a lot cheaper, and still a lot better than low-tier weaponry poorer countries can manufacture locally.

This is going to unravel really quickly, much faster than energy exports. The reason is China. China has been trying to build weapon export industry, and there's nothing that could possibly stop them from succeeding.

Chinese industry outproduces Russian industry 20:1 and the gap is growing every year, China has amazing track record at going from low-tier to mid-tier in any key industry it wants. That's what happened to far more competitive low-tier and mid-tier smarphone market over just a few years. The high end is safe - be that Apple and Samsung or US and other NATO military equipment. And countries can do their own low-tier basic stuff like rifles if they really want to. But China is amazing at going after the whole global mid-tier market.

I don't know why nobody talks about this, but it's pretty much guaranteed that the same will happen with Russian weapons exports. China will dominate this. And other mid-tier competitors like Turkey are also trying to break into this market, all at Russia's expense.

Why military exports matter?

Weapons exports are not a huge money maker for Russia. Overall global weapons trade is about $100bln a year, just 0.5% of $20,000bln a year global trade.

This is important to Russia for two reasons. First is that modern weapon development is horrendously expensive. Spending all that R&D money and your own military being the only buyer, translates to enormous unit cost. Even US can just barely get away with it, and non-exportable F-22 was in retrospect a huge mistake, compared with exportable F-35.

Russia is just far too small a country to even attempt creating any modern non-exportable weapon systems.

The second reason is that weapon exports give Russia a lot of political influence among world's poorer countries. It's hard to criticize what Russia is doing, after your minister of defense took Russian bribes to get them to win the contracts, and now your air force is now made of Russian planes, and Russia is the only source of spare parts.

This is not going to last. Oven the next few years Chinese offers will be better, cheaper, and for most countries less politically toxic, than Russia's.

There will be some markets left, like India might be unwilling to buy from China, and too corrupt to buy from the West (which is far less willing to engage in outright corruption necessary to win military contracts), and too poor for high-end gear anyway, so they might still buy worse Russian jets over better Chinese ones. But overall, this part of Russian economy will collapse even faster than their energy exports.

Postscript

As it turns out, I was late with this post. Europe is now scrambling to reduce their exposure to Russian fossil fuels, and Russian weaponry turned out to be a lot worse than advertised, so both sectors might collapse a lot sooner than I thought.

By my original guesstimated times for these, Russian energy sector would go into serious decline in 2030-2040 kind of range, but their weapon exports likely as soon as 2025-2030, while Chinese weapon exports would skyrocket just like their smartphone exports did.

People are now willing to talk about Russian fossil fuels, so that take isn't all that hot anymore. However, I haven't heard a single other person even entertaining the second point of the inevitably coming Chinese (and surprisingly Turkish) competition crushing Russian weapons exports.