The most disturbing news for the Communist Party in China is not growth below 8%, which is the benchmark for political disaster, the tailing off of free flowing money to finance construction jobs for ghost cities or a banking system itself, which is on the verge of collapse, but rather a small company out of Georgia, USA that just perfected the ability of software to locate single threads on any garment and have an automated sewing machine adjust for the bend of the fabric. Stand by for fully automated garment production.

Now, to most people this really doesn’t mean too much. But to a garment industry that outsourced manufacturing to Asia decades ago in search of the cheapest labor possible, and to the masses of Asian workers about to lose their low wage jobs, and governments whose only concern is to quell political unrest and maintain their political power structure, this little tidbit of technology innovation, that barely made it into the news, is world changing.

We have already seen the effects of automation on manufacturing logistics. As an example, Philips had moved its entire electric razor division back the Netherlands because they were able to totally automate the process. Why stay in China and be subject to randomly enforced laws, no protection of intellectual property and the inability to wholly own the factories producing their products? There was no reason to stay, and the same is about to happen to the entire garment industry that employs millions.

The Chinese economy is slowing not because the Chinese consumer is buying less and saving more, it is slowing because technology is automating many of the processes that used to require the cheapest labor possible to feed the Western consumer the least expensive products sold through consolidated enormous mass market retailers, regardless of where in the world that labor was located.  As technology improves and manufacturing becomes totally automated, an economy based on exports and the cheap labor is doomed.

One only needs to experience living in China and try to understand a populace that has suffered for thousands of years and whose only concern is where the next meal is coming from.  I’m not talking about the relatively small Chinese population that benefitted for years on the backs of the workers and the nouveau riche living in living in Shanghai and shopping and banking in Hong Kong and Taiwan, but the young Chinese couple that left their mandated one child with their parents to emigrate to Shenzhen to sleep on a straw mat, eat at the factory canteen and send all their earnings home to support their parents and child. They are only able to visit home once a year during the Chinese New Year break. These people, the new “middle class” in China will not stand for the inability to make a living, and it will be a direct result of total manufacturing automation and an export based economy.

China experienced two revolutions in the 20^th century. The Chinese Communist Party is in danger of losing the mandate of heaven in the 21^st.