In Chaotics we identify “The Rise of the Rest” (BRIC nations - Brazil, Russia, India and China) as a key cause of Chaos with regards to global economic and political stability. For example, China’s low cost manufacturing has put great pressure on non-BRIC countries to compete in terms of price.
In mid-September, the US unexpectedly imposed emergency tariffs on Chinese produced tires and poultry. It should be noted that here the turbulence here is being generated by the US, relatively developed nation, in response to the relatie new comer, China. This is is often the case. It is not in China’s best interest to directly cause the turbulence but rather more tactfully to point out that the US was the one breaking the WTO rules. Beijing immediately accused Obama of “rampid protectionism” with the China’s minister of commerce Chen Deming saying that it “sends the wrong signal to the world”. These are Turbulent times indeed.
To understand market turbulence and its effect on business, it may be helpful to review concepts of turbulence in nature as well as in science and physics. Turbulence in the natural world is characterized by violent or agitated behavior. Think of hurricanes, windstorms, tornados, cyclones, and tsunamis. Their defining characteristics are violence, randomness, and unpredictability. (Chaotics Chapter 1: The World Has Entered A New Economic Stage: From Normality to Turbulence)
The increasing familiar Sino-US war of words over trade exemplifies the changing balance of global power. They mask the deeper forces at work. Beijing has show increasingly sophisticated legal strategies in dealing with trade disputes, maximizing political effect while minimizing economic downsides. The US has a weakening hand in the game that is global politics, something that is increasingly clear to all. The US is going to need to raise it’s game In order to continue to compete in this Age of Turbulence.