The Biden Administration’s style of international diplomacy has been reduced to simply making loud demands and carrying a wiffleball bat. In the case with China, it’s “if you do not do this or that we will punish you in ways to be specified later.” Prior to Treasury Secretary Janet Yellen landing in China, she declared to the world that China is guilty of making too many products that the world wants to buy and selling them way too cheaply. The new creative terminology she used was “overcapacity,” and she threatened more tariffs if China does not cease and desist.
Yellen did not propose that China make crappy products or raise their export prices. And, she could not publicly admit that the US cannot compete and it’s costing American jobs, though that admission was tacitly obvious to most third-party observers, such as Bloomberg.
Yellen seemed to imply China’s unfair advantage comes from large government subsidies, though she did not actually accuse China of selling below cost. She couldn’t, because she could not present any evidence to support such accusation.
A clear example is China’s sudden rise to world leadership in new energy vehicles or electric vehicles. From nowhere, China became the dominant maker of EVs by 2023 and leader in export of EVs.
China Made the Strategic Decision To Go Electric
Is there government subsidy behind the rise of China’s EV industry? Yes, there is. The most important subsidy came in the form of government policy as Beijing decided to stop following the West in the internal combustion engine and leapfrog to the electric vehicle. Thus, China got a jump on the rest of the world by about a decade.
Hundreds of Chinese companies entered the market to design and make EVs. Not all succeeded in the cutthroat competition that ensued. By far the most successful is BYD in EVs and CATL (Contemporary Amperex Technology Ltd.) in batteries for the EV. Both achieved world leading position. BYD is making plans to locate a car making plant in Mexico and CATL is forming a JV in Hungary with Mercedes to make EV batteries for the EU market that will create 9000 jobs.
China has also accomplished global engineering leadership in constructing bridges, boring tunnels and building highways under extreme conditions, and now owns the leading-edge practices for laying high speed rail and the manufacturing of high speed railcars.
Huawei has so long dominated advanced telecommunications technology that the West seemed resigned to settling for second rate telecom networks and has spent $billions tearing out Huawei’s already installed advanced equipment to satisfy the innate paranoia and follow the US lead in the name of protecting its national security.
The U.S. Hobbled by Paranoia and Short-Term Thinking
in fact, in every industrial sector where China has advanced beyond the best the US can do, such advances are automatically rejected on the premise that everything made in China can be used to spy on Americans. Crop dusting drones, surveillance cameras, even container handling port cranes can be dastardly tools for violating American privacy.
While Washington has been busy castigating and belittling China’s accomplishments, they seem oblivious to the most important difference in the American mindset and that of the Chinese.
The US kicks challenging problems down the road and measures results by quarterly reports.
China tackles challenges head on, especially when such challenges were made obvious by sanctions imposed by Washington that denied access to certain critical technology. China’s government planners took the long view, and dug deep to develop home grown solutions, if necessary, over a time span of years if not decades.
President Donald Trump thought he could cut Huawei at the knees by denying the company access to advanced chip design and fabrication. For three years, Huawei was knocked out of the smartphone business. But then Huawei came back in 2023 with its own chip design, made in China, and its own operating system, became a formidable force in the smartphone sector.
Back in 2015, China’s leadership drafted a ten-year plan called “Made in China, 2025.” They made a mistake in making the document public and drove the Trump Whitehouse bananas and triggered a host of hostile actions attempting to suppress China from making their planned Advances.
China Is Already Number 1
Recently, South China Morning Post made a comprehensive review of China’s progress against their plan and by their measurement and projection, China has already achieved 86% of their targets and will exceed 90% by the end of 2025.
The Chinese people are natural born entrepreneurs and China graduates eight times more science and engineering majors than in the US. It shouldn’t surprise anyone, least of all the US that China can produce a continuous stream of innovations powered by technical and engineering breakthroughs.
Xiaomi is another of China’s smartphone makers. The company just introduced SU7, an electrical vehicle, that they designed and made on a production line powered by robots. From inception to completion, the entire project took the company three years. Apple could not do it after trying for ten years.
Yellen went to Beijing accusing China of overproduction and threatened an intensified tariff war on imports from China. At the same time, she was hoping for China’s willingness to buy more American debt. China gave Yellen a cool reception and did not show any support for the dollar.
Instead, China bought more gold in the open market and continue to shed their holding of US treasury bills. In back of Beijing’s mind must allow for the possibility that Washington can abruptly cancel their debt to China and/or confiscate China’s holdings in the US as they have with Afghanistan and Russia.
Then America’s chief diplomat, Antony Blinken, ahead of his China arrival, demanded that China stop supporting Russia’s war or face sanctions against Chinese enterprises that included delisting from SWIFT, the international telecom payment system.
China gave Blinken an even frostier reception and basically told him that China’s normal trade relations with Russia is none of his business. China has steadfastly maintained that they do not supply weapons to either side of the Ukraine war.
China as the World’s Peacemaker
While Blinken was in Beijing, the leaders of Hamas and Fatah, heretofore hostile Palestinian factions, met in Beijing upon China’s invitation. This is a major first step in reconciliation toward forming a united Palestinian front in order to deal with Israel and find a place as a member of United Nations.
Since China brokered peace agreement between Saudi Arabia and Iran, the international community is beginning to recognize China’s rise in stature as a peacemaker. China does not guarantee security to any nation with empty promises that can be easily broken. It merely facilitates mutual discussion and promotes understanding for peace if both parties desire such an outcome.
Having dealt with the Biden Whitehouse for the last three years, China is quite accustomed to the Biden spokesperson expressing lavish statements of goodwill and lofty intentions while sending shivs of sanctions, embargoes, export restrictions and import tariffs.
If the US expresses desire to collaborate on issues of common interest such as battling climate change, China would welcome the opportunity. But China would not entertain complaints that made in China solar panels and wind turbines are too cheap for the West to compete. Lower cost is beneficial to a green earth.
China has reached a level of development that gave them the confidence that their policies are on the right track for themselves and for the world. They do not have to allow the US to pick and choose issues to work on and others to exclude. Furthermore, they do not accept whatever Washington has to say or do.
China the Manufacturing Superpower
In terms of relative strength of their respective economy, China already holds virtually all the cards except one. China is already acknowledged as the world’s “sole manufacturing superpower,” responsible for 35% of global output, almost three times the second place US, and more than the total of the next 9 countries.
More than half of world’s robots are installed in China, an important component contributing to China’s manufacturing prowess. Organized labor in America resists the adoption of robots and is the reason relatively few are installed.
In shipbuilding the gap between China and the US is even larger. According to the Wall Street Journal, China owns more than 50% of world’s shipbuilding capacity while the US has less than 0.5%. That’s a ratio of more than 100 to 1.
China has the goods and has the ships. Small wonder that China has overtaken the US as the leading trading nation in the world. China has established itself as the leading trading partner for most of the countries in the world. At this point, the US needs China’s products more than China needs the US market.
The one card that the US still holds is the chokehold on semiconductor technology. But as we have seen with Huawei, the US action is just a delaying tactic and a matter of time before China will work around the restrictions imposed by the US.
What about the relative strength of their military capability? In the name of protecting world order and national security, the US maintains over 800 military bases around the world. In order to justify continued presence in those bases, the US needs a threatening adversary.
Increasingly that designated adversary is China.
Since the end of WWII, the US has participated in conflicts all over the world. After Vietnam, there was Iraq, Afghanistan, Syria and Libya to name a recent example. In case of Iraq and Libya, the local national leader was decapitated.
In the case of Afghanistan, the US hastily withdrew in the dark of night after a 20-year occupation, and the control of the country reverted to the religious government the US tried but never could dislodge.
World Order Needs China’s Help
The farce of the American idea of “rule based international order” was evident for the world to see when the Biden Whitehouse had to beg Israel to stop the genocide in Gaza (because it’s ruining America’s image), only to be met with a deaf ear from the Netanyahu government.
The US navy had fits trying to stop the Houthis’ missiles from disrupting passage for shipping from the Suez through the Red Sea. Washington even asked Beijing if China could help and ask Iran to ask the Houthis to desist.
In Europe, the EU community is increasingly disenchanted with the US insistence of supporting the Ukraine war. The war may be down to the last Ukrainian standing but it’s killing the EU economy with runaway energy prices and severe depletion of material and resources. Some of EU countries, notably France among them, are reconsidering closer relationship with China as compared to a handcuff to the war mongering US.
China favors an international order for peace within the framework of the United Nations. It does not have military bases around the world and does have troops outside of China except as part of UN peacekeeping forces.
Even the New York Times acknowledges that China is promoting a universal commitment of no first use of nuclear weapons, an idea the US would never accept but insist on the right to fire first and ask questions later.
Indeed a recent poll by an organization in Singapore showed that for the first time, over half of the people of ASEAN countries view China more favorably than the US.
China has a second-strike answer.
Of course, in order for China to maintain a credible second strike, it must have the capability to retaliate. Its most deadly response is their proven hypersonic missile that can fly with blinding speed in a low trajectory that’s hard to detect in sufficient time to shoot it down.
With its more than 100 to 1 shipbuilding capacity, China’s navy is already bigger than the US.
The US still have far more aircraft carriers than China but China has already proven their advanced electromagnetic catapult on their third carrier and will be installing in others being built. The US version on USS Ford may or may not be working.
China’s military ability to react to US aggression merely feeds the US paranoia and justifies piling on the annual Pentagon budget. By the end of 2024, the national debt is expected to top $34 trillion. Just to service the US debt will cost the Federal government more than $1 trillion per year.
The can that Washington used to kick down the road has grown to the size of a 55-gallon drum and there is no solution in sight. The world is watching with bated breath as to when Washington will finally break a leg.
The better alternative is the obvious: peace and cooperation with China, working together for win-win mutual benefit as the Chinese have repeatedly suggested.
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