|
Getting your Trinity Audio player ready...
|
[Want even more content from FPM? Sign up for FPM+ to unlock exclusive series, virtual town-halls with our authors, and more—now for just $3.99/month. Click here to sign up.]
American officials usually accuse China of trying to take over our manufacturing, but that’s old news. China took over our manufacturing long ago. And the parts it still hasn’t taken over are usually the parts that it doesn’t want or that are too uneconomical to be worth taking over.
Taking over America’s manufacturing was never China’s endgame. Taking over our economy is.
Undercutting, stealing and dumping its way to manufacturing supremacy was how China got its foot in our door. Americans came to think of China as an assembly line for cheap junk, but the cheap junk built China’s production capacity. The next step was moving up to components for bigger products and then the products themselves. Once the components were being made in China, it made more sense for the companies to simplify by moving everything to China.
China’s undercutting of American manufacturers convinced many of them that profitability and survival lay in closing down U.S. factories and moving their production eastward, lured by the promise of lower costs and access to a growing market. But China quickly demonstrated that it could copy any product, no matter how large or sophisticated, and rip off any brand or IP.
By moving their production to China, American companies gave away their intellectual property and their R&D and all of their methods allowing China to rapidly produce copycat products.
At every stage, American leaders and companies refused to take China’s ambition to be more than our 99-cent store seriously. When China stopped going after our manufacturing and came after retailers, it took them by surprise. China had been signaling its intention to move away from low-end manufacturing businesses, sticking them in Vietnam, experimenting with Africa and focusing on Xinjiang whose large Turkic Muslim population were rapidly turned into a cheap and dirty labor workforce for the western markets in what human rights activists misleadingly describe as ‘concentration camps’. China had bigger plans for its own people and economy
And for us.
Go to Amazon and sign up as a third-party seller for the United States market and you’ll find more Chinese banks than American ones. Amazon dominates American retail and Chinese third-party sellers dominate Amazon, along with eBay and other American ecommerce platforms. Disguised by its obnoxious billion dollar shows, its founder’s mega-yacht and the ubiquity of its smiley swoosh boxes, Amazon long ago became a platform for Chinese sellers. But China quickly showed the ability to create their own successful platforms like Temu and Shein.
While American social media platforms, which weren’t allowed to operate in China, believed that at least those Chinese companies would be dependent on them to harvest big data and advertise their wares to customers, the launch of TikTok and China’s takeover of gaming platforms showed that hope was also futile. Chinese retailers use Chinese social media platforms to hawk products to Americans. Even as President Trump tried to fight back with tariffs, Chinese manufacturers turned to TikTok, recruiting American influencers to urge Americans to download Chinese shopping apps and buy copycat products directly from them.
Much like COVID-19, this can be seen as a test and in economic terms, a more crucial one.
China has assembled all the building blocks for taking over our economy. It has hijacked our manufacturing from the ground up. What began with 99-cent store fare now includes high-end smartphones, ebikes and laptops. Its hackers and employees from Silicon Valley to our defense industry provide pipelines of stolen techniques, trade secrets and R&D to supplement whatever we haven’t exported already to provide China with assured manufacturing supremacy.
After swallowing our manufacturing, China began consuming our retail sector. Amazon cannibalized our brick and mortar retail by dumping Chinese products in America on a massive scale, but Chinese retailers cannibalized Amazon and turned it into a front for their products. China’s retailers have been figuring out how to rapidly move products into this country, how to set up warehouses and eventually how to master rapid last-mile delivery. And then Amazon will have nothing more to offer Americans than a billion-dollar woke version of Lord of the Rings.
But if Chinese retailers need to, they can also make a diverse show with transgender elves and black dwarves. And they’ll be able to do it at a fraction of the cost that Amazon did.
Even the dot coms that drive the stock market have not proven to be immune from China’s reach. The Chinese employees who serve as cheap labor in Silicon Valley took the secrets and techniques home with them. TikTok proved that China could launch social media platforms aimed at dumb teens. Recent games and gaming company acquisitions show that China can compete in gaming and esports. If this goes on, Chinese companies will dominate content consumption for American teens even as Amazon spends $10 billion a year on woke shows.
Chinese social media platforms will drive American teens to Chinese shopping apps and platforms to buy Chinese products using Chinese AI tech. The only role American workers will have in this economy will be to drive the delivery trucks over to your house. And even that will be supplemented by Chinese drones and autonomous delivery vehicles.
And what will happen to America’s economy? We’ll be reduced to a third world country.
After gobbling up manufacturing and retail, China will continue to nibble away at whatever parts of our service economy that it wants to outsource. Finance will also move to China as those Chinese products will be bought from Chinese platforms with Chinese loan apps. American objections to these intrusions will be steamrolled the way that objections to the destruction of our manufacturing were with lectures about the virtues of free trade, of the incredible wealth that a trade deficit blesses us with and with the American cutouts for China’s economic invasion whose businesses will depend on carving up the rest of our economy and shipping it eastward.
If this sounds too fantastic, much of this is already here. Gen X bought ‘Made in China’ products in American stores, Millennials bought them on Amazon, Gen Z buys them in Chinese apps. Gen X watched ads on network television from American companies for products made in China. Millennials clicked on Amazon affiliate links to Chinese products on American websites. Gen Z watches TikTok videos of American influencers pitch them on installing Temu. Once generative AI is fully up to speed, the influencers, as the last to be eaten, will also be replaced.
American retail is turning into a wasteland just like the Rust Belt did. Today’s department store is yesterday’s defunct manufacturing plant. Coastal cities are promising to bring back retail the way that midwestern towns once promised to bring back factories. The Amazon warehouses dotting the landscape seemed to offer some relief allowing American workers to pick up a few dollars packing up Chinese junk before putting it on trucks. But those warehouses are only an intermediate step in destroying American retail by pandering to American consumers. Once there’s no competition, free one-day shipping won’t be needed to dump products in America.
That is why President Trump launched another bid to stop China before it’s too late. There have been plenty of warnings about China’s economic warfare over the years, but too few of them understood what was at stake or the scale of their plans to destroy our economy. Like a virus, China parasitically infiltrated our economy while at every stage always moving upward.
If we don’t decouple our economy from China soon, we’ll have no economy left to decouple.
Good analysis, thanks !!!!!
Oh good lord, we went through this protectionist fear mongering nonsense with Japan and the Japanese back in the 1980s. Forty years later, are America and Americans now owned and controlled by the Japanese? Not at all.
The reason we should NOT be trading with China is because China is a communist/fascist totalitarian dictatorship that treats its people like serfs and slaves, and steals technology from the US and other countries, and does not respect copyrights, it’s an outlaw country, but not because communist China can produce inexpensive products with serf and slave labor.
“Let’s say that Americans in 2024 import from China $300 billion more than Americans export to China. Cass and other protectionists will point in panic to this ‘US trade deficit with China.’ But to anyone who understands economics, this panic is laughable. To see why, suppose that the Chinese spend all $300 billion on goods imported from countries in Europe, and then Europeans in turn spend this $300 billion buying exports from the U.S. In this hypothetical example — which isn’t remotely far-fetched — America can indeed be said to have a $300 billion trade deficit with China, but every cent of this $300 billion nevertheless returns to America as demand for American exports. This $300 billion of demand for American exports just happens to come from Europeans by way of the Chinese, rather than directly from the Chinese.
Nothing of significance in the American economy changes in consequence of this $300 billion of export sales being made to Europeans rather than to the Chinese. But to listen to people such as Oren Cass and other protectionists who write about America’s trade deficit with China, you’d think that something momentous — and ominous — is afoot.” – America’s “Trade Deficit” With China
by Donald J. Boudreaux
There’s a fundamental flaw with this academic theory, China cannot buy $300m worth of goods from Europe because, like America, it has given up manufacturing anything other than regulations and academic reports that nobody reads.
Thanks Mo. I just got one of those reports yesterday. I thought “My Gawd, do they expect me to read this?”
Well then, China will just stop trading with Europe and America because they have no goods to trade. You can’t trade if you have nothing of value to trade.
“Money cannot function as money, i.e., as a medium of exchange, unless it is backed by actual, UNCONSUMED goods.” – Ayn Rand
The lameness of the response reinforces the soundness of your logic. It is entertaining to read “you are wrong about everything” with zero commentary explaining why you’re wrong.
I’m still waiting for just one person to explain how foreigners can get the dollars they need to make the investments in the U.S. if they don’t get those dollars via a trade surplus. Maybe someone will be “intrepid” enough to provide that.
Here’s the actual refutation of what Boudreaux has written–> <–
Looks just like the evidence that markets want Trump to fire the very Fed chair he chose.
Because when I want to find out the state of our economy vis-a-vis China, I always refer to and read the musings of Donald J. Boudreaux. (Who?)
As usual you are wrong about everything. So glad you are actually too lazy to run for office and you pontificate from your living room on a low traffic website that few people read. So typical of the know-nothing do-nothing NYC intellectual doofus.
BY the way, you better call your little friends and tell them to get busy clicking those “thumbs up” links. Is it always the same five people?
I’m going to enjoy this not so intrepid.
You’ve never heard of Don Boudreaux? Wait, so which is it, I’m stating things people already know. or alluding to someone whose writings are irrelevant just because your are demonstrably ignorant of them?
I’ve read many Boudreaux columns–try reading the Wall Street Journal once in a while– recommend his books, and brought Professor Boudreaux to speak at the college you so lamely denigrated. His speech on how things have improved over time was excellent. I get his columns sent to me every morning.
Be intrepid enough to tell us what Adam Smith wrote about the trade deficit. Ever hear of Adam Smith? After some predictably lame attempts at insulting me, please explain how foreigners can invest U.S. dollars in the U.S.–i.e. the U.S. will have a capital account surplus–if they can’t get those dollars via a trade surplus. We’ll wait.
Just when I thought you couldn’t be lamer you go ahead and criticize someone for not running for office. You’re a hoot! What did you get elected to? Director of the Office of Pathetic Retorts?
As for “a low traffic website,” YOU are commenting on it. Better hope Trump doesn’t tax hypocrisy. Smoot and Hawley say “hello.”
I stopped reading WSJ when it was actually a conservative paper. I haven’t read it in many years. As for Don Boudreaux I could care less. I am not an assistant professor economist like you. Just because you read his columns doesn’t make you special. It makes you a pinhead. I know fraud with an insecurity complex when I see one. You actually believe that asking questions is somehow intimidating.
re: Adam Smith You and you alone will have a long wait. You aren’t funny or sarcastic. But I’m not surprised you took the other faux intellectual narcissist’s side. He has all of these Objectivists that he quotes as if people are actually going to do his little homework assignments. If I actually read all of the atheist crap he posts, or all of idiotic economic crap he posts I would be spending all of my time on his garbage instead of my stuff.
And yes, this is a low traffic website. If you don’t like being on it you are free to leave and go to a more erudite web site where the people are so much more “sophisticated” than me and jeff.
What did you ever get elected to? My guess is nothing but you probably got some teaching dink award from that dink college you teach at.
You used that last line about Trump for your last attempt at insult. Lame then. Lame now. You are a puffed up fool.
The only way you seem think you can get over is to pose silly gotcha questions on topics no one would know the answers to, except you, and then sit back and tell yourself how “intelligent” you are. “Boy I sure got him with that Adam Smith question.” You also seem to to be stuck on Smoot and Hawley. Again, no one cares.
Generally the hallmark of a person with a massive insecurity complex who has an unimportant position at, say, an assistant professorship at a dink college in Bumf*ck Ill.
I could do the same to you regarding what I got my Masters in at a real University in Washington D.C., but I have no need to dick (head) measure, Ritchie.
One doesn’t have to go heeled to get the bulge on a tub like you.
Thank you Daniel.
Amazon is full of Chinese companies posing as UK companies. They have UK in their names but their address is in China.
I’m certain that the same thing happens in every other country.
Bezos and his like have facilitated the destruction of the western world economically while the UN destroyed it politically and the Islamists destroyed it environmentally.
surprise ! surprise ! surprise ! gomer pyle .
You didn’t mention that China is also buying up food production here as well. Can utilities and military dominance be far behind?
What makes Temu possible is the special subsidized postal rate it is afforded as an “emerging market” aka: a poor country. That makes it next to free to ship to the US using the USPS. Look at Temu’s offerings, most make no sense at all if the actual cost of postage was factored in, I have not tried this but it would be interesting to try but buy a low cost item on Temu and then take the unopened box back to the post office and see how much it would cost to ship it back to China. I would guess it would be more than what you paid for the item.
I’m tired of saving money by paying low prices for goods.
That’s it! I’m no longer shopping at Aldi’s and Save-a-Lot and switching to Whole Foods.
I’m going to stop using coupons for Subway.
I’m moving to Monroe, Louisiana so I can pay the highest sales tax.
Sarcasm off. You know who has the ultimate control over which businesses succeed and which fail? It’s the consumer.
Thanks for proving my point dick….head.
Interesting read, however, “Amazon dominates American retail and …”
Amazon 2024 income: $68.6B. Walmart 2024 income: $680,985B
One solution – require every Chinese import to be labeled MADE IN CHINA where no one can miss it.
There’s a store in the uk called The Range which labels everything as made in the PRC.
Where’s that? The People’s Republic of China.
Liars one and all communists.
it was clearly visible more than 10 years ago for those who were not sporting horse glasses. china bought the silk industry of france, lace of belgium, textiles of italy, selling by dumping. nothing new in commerce. stealing of technology started 30 years ago.
but globalist enjoyed.
further building or buying ports around the world, building railways fro the mines they bought to their ports. using stupidity, greediness, the poor clients of 1$ shops. the leading class busy in political wars, chinese bought universities , finance students of pro hamas, BLM, woke activists, all in order to destroy countries that stopped to produce thinking heads.
trump makes a patriotic attempt to save the world. he has a heavy burden wit democrats, europe eec, muslim countries, etc