The United States vs. China: the State of Play

I am fully confident that this story will make many of you seriously unhappy. That is, it will make you unhappy after you get over the spasm of outrage you will direct against author David Goldman. 

Those who rage against this information do not do so because they dispute the facts. It would be wonderful if they did, but they do not. No, they are outraged because the facts hurt their feelings. And we cannot have any hurt feelings around, can we?

Goldman reports that we have lost the trade war with China. In truth, many conservatives warned against engaging a trade war, but few of them predicted that we would lose one.

By the data, here goes. Just in case you were wondering how the Trump tariffs were doing, Goldman offers some facts:

The sad fact is that the Trump tariffs did nothing to stem the flood-tide of Chinese imports to the US. We now import $550 billion a year of Chinese goods, and the volume jumped above trend during 2021.

Now, that’s $550 billion vs. manufacturing output of $2.4 trillion. Nearly a quarter of the industrial products we consume come from China. And we’re not investing in manufacturing capacity in the U.S. CapEx for the industrial sub-index of the S&P 500 will be down 30% this year vs. pre-pandemic levels in 2019. We have shortages of industrial goods (try to buy a used car) across the supply chain, and we’re doing nothing about it.

Yes, I know. We are onshoring manufacturing and industrial production. The problem is, first, that we aren’t doing so, and, second, that we do not have a workforce that is sufficiently skilled to do the job. 

Think about it, our schoolchildren are being trained in anti-racism? Is there a better way to make them fundamentally dysfunctional? 

As you may know, Goldman was a staunch Trump supporter. That does not mean that he is obliged to say that the Trump tariffs, and the trade war we just lost, worked out well for us:

I supported Donald Trump in two elections and denounced the Deep State attack on his presidency. But for all his talk about reviving American manufacturing, U.S. industrial output actually fell in 2019, before the pandemic. The 2018 tax cuts funded a lower base rate of corporate taxes by removing incentives to invest in the form of depreciation allowances. So in 2019, U.S. corporations spent more buying back their own stock than on new plants and equipment.

Buying your own stock makes for scarcity. And scarcity increases the value of each share. Thus, you get a great stock market rally, accompanied by lower industrial output.

Anyway, we did not just impose tariffs on Chinese goods. We imposed sanctions on Chinese tech giants. So, how is that one working out? Not so well, as it happens:

The tech sanctions against China haven’t worked, either. China has found ways to work around the chip boycott imposed by the Trump Administration. It will build more than 900,000 5G base stations this year, doubling its coverage. It already has 70% of all the 5G infrastructure in the world, and it’s gaining on us. That means factories where industrial robots program themselves, smart cities where autonomous vehicles communicate in real-time, automated ports (already up and running), telemedicine, and other Fourth Industrial Revolution wonders.

For example, we know and we have reported that Chinese ports are five times more efficient than American ports. You see, they are almost all automated, run by robots, while ours are run by the longshoreman’s unions.

As for our lead in advanced technology, it is dwindling:

Harvard Professor Graham Allison and former Google CEO Eric Schmidt warned Aug. 4:

Most Americans assume that their country’s lead in advanced technologies is unassailable. And many in the US national security community insist that China can never be more than a “near-peer competitor” in AI. In fact, China is already a full-spectrum peer competitor in terms of both commercial and national-security AI applications. China is not just trying to master AI; it is mastering AI.

The pandemic has offered a revealing early test of each country’s ability to mobilize AI at scale in response to a national-security threat. In the US, President Donald Trump’s administration claims that it deployed cutting-edge technology as part of its declared “war” on the coronavirus. But, for the most part, AI-related technologies have been used mainly as buzzwords.’

Not very encouraging, so it seems. Of course, the Biden administration does not have a clue about how to solve the problem. It is advancing the stupidification of American children, indoctrinating them all in critical race theory and is going all-in on its support for labor unions. 

Goldman concludes:

Don’t ask me if we’re beaten. We’re not even fighting.