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China is the manufacturing superpower

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Re: China is the manufacturing superpower

#221

Earlier quoted context omitted.

> Some people don't like protectionism because in the long term it's worse for both countries. That is a good argument from a purely economic perspective, but the ability of a country to manufacture things on their own is a long-term benefit to the country from a security and sovereignty perspective. It's hard to prevail in a war if a potential enemy is making all your stuff for you. China understands this very well,…

It's hard to prevail in any war in a post-nuclear age. Profiting from a war with China is a total fantasy, it would be the end of both countries, even if we had as little trade with them as with the Soviet Union. The reason we are not manufacturing everything ourselves is that our incumbents refuse to allow anything to replace them, whether that is a more efficient company or a more able manager. They have the sway w…

>It's hard to prevail in any war in a post-nuclear age.

Another cold war is possible, and someone could prevail eventually.

>The reason we are not manufacturing everything ourselves is that our incumbents refuse to allow anything to replace them, whether that is a more efficient company or a more able manager.

That is not true in general. We have laws specifically to promote competition. I'm not aware of anything like that in China, although I haven't looked. I can tell you that it's common knowledge in China that doing certain kinds of business requires a bribe or connections.

>They have the sway within the US to get what they want, and so things like patents and approval processes (which China does not have to the same degree, because for all of their flaws the government is more powerful there than the established manufacturers), will stop anyone from improving on GM within Michigan.

First, the Chinese government owns or has a stake in many companies there. I think you're even required to have certain CCP officials inside your company if it's big enough. Second, China does have patents and IP laws. They also have pervasive state surveillance, so your ideas can be stolen by the government. I often wonder if WE have that too, but at least total privacy is legal here. Americans can stop the state from spying on them in most cases, at least as far as we know.

>The competition comes from within a country they can't determine the policy of.

I think you're mistaken about this too, because many party members are rich and involved in business. They CAN determine policies. There was a huge crash in the Chinese stock market a couple of years ago as one party faction fought with another one. That was totally anti-competitive, yet it happened, and Western investors got screwed. I heard it was the result of a fight between Hu Jintao (the previous president of China) and Xi Jinping. I think the campaign against Hu was touted as a way to fight corruption. By the way, Mr. Hu has only been seen in public like once since he was dragged out of a national party meeting in 2022.

>Germany is suffering from a similar ailment. They are stagnating because for fifty years successive administrations have equated success with success of their majors.

Germany is currently stagnating because of the toll the Ukraine war is taking on them, along with other commitments they've made such as shutting down all their nuclear power plants. They too have high labor costs and so on, like the rest of the West, but they were doing relatively well until recently.

Re: China is the manufacturing superpower

#222
post #156

Forgive my ignorance, but how does a country with a strong military turn that into GDP? I don't understand how military > manufacturing in terms of GDP. In my mind, manufacturing > military, but my knowledge of economics isn't great.

In the old days a country would use its military to conquer or subvert other countries to setup exploitative trading relationships. For example the opium wars. Nowadays the empire works via its currency that allows it to buy real goods and assets for something it can create for free with little constrain. Of course the exploitive nature of the “exorbitant” privilege is controversial; and some economists would argue t…

> For example the opium wars.

For a more recent example, the CIA operations on South and Central America in the 20th century. But well, it didn't take the entire military there, just a military-like paragovernamental entity.

Doing that today would be seen in a bad light and has a real chance of turning the entire world against the country. That doesn't seem enough to stop Russia, though.

Re: China is the manufacturing superpower

#223

Forgive my ignorance, but how does a country with a strong military turn that into GDP? I don't understand how military > manufacturing in terms of GDP. In my mind, manufacturing > military, but my knowledge of economics isn't great.

In the 20th century, the US was quite successful into turning "military spending" into very advanced R&D subsides. I think most of the believes that military spending and growth are related come from that.

Re: China is the manufacturing superpower

#224
post #178

I remember how until quite recently, the West viewed the East, particularly China, as a backward region. People would even dismissively use the term 'Chinese junk'. In a remarkably short time, that perception has completely flipped. Now it's the West that seems to be falling behind...

It's still backwards.

https://forcedistancetimes.com/asymmetric-why-china-still-ca...

> While China claimed a breakthrough in 2017, manufacturing a ballpoint pen all by itself and “ending a long-term reliance on imported [ballpoint pen tips],” as of 2021 the country was still reportedly 80% dependent on imported ballpoints.

> In fact, Chinese imports of ballpoints pens (comprising the ballpoint and ink reservoir) have more than doubled since 2017, from 12 million USD to nearly 28 million USD last year.

> Machine tools are machines that make other machines. China is a leading producer of machine tools, accounting for about 31% the world’s output in 2021 (p.10, fig. 12)—ahead of Germany (13%), Japan (12%), the US (9%), and Italy (8%). But China is heavily reliant on foreign technology for high-end machine tools: in 2021, it was 91% dependent on foreign firms for the most advanced machine tools.

China just doesn't have the ability to do high precision, high quality engineering and manufacturing.

I am not saying that everything that comes out of China is bad, but that there are limits to what can be produced at a high level of quality there. You can buy simple tools, like knives, at a good level of quality from China, but anything that requires complex tooling is likely not actually made in China.

For that matter, smartphones aren't "made in china". They are /assembled/ there. China doesn't make the CPU in an iPhone, TSMC did. China doesn't make the /machines/ that engrave silicon in TSMC's factories, ASML does. And so on, and on, and on.

If something is truly mainly made in China, with Chinese tools, and it's complex to manufacture, you should avoid like the plague.

China hasn't really become the manufacturing capital of the world. It's just the place where a lot of people are paid to use screwdrivers, glue, and package things.

Re: China is the manufacturing superpower

#225

Earlier quoted context omitted.

The irony is in a world war China would likely take over the manufacturing plants the west built in places like Thailand and Vietnam to assist China in the war effort. Further bolstering their war time production.

Can we even talk about a world war like this in the nuclear era? Wouldn't we all just annihilate each other with nuclear weapons if we had a full fledged war?

The more time Russia spends in Ukraine, the more evidence we get that no, we won't just annihilate each other. We will probably do something more complex.

Re: China is the manufacturing superpower

#228
It's not about what China did well, but about Europe/US ignorance. How many times you've heard during last decade that software eats the world? That we should do highly profitable software things only anyway? That everyone and his dog should be a software engineer in future? Well, turned out that it was really about free money and it didn't last. Serious question – how many of you who say that they can't find the job any more, have considered manufacturing? https://x.com/zanehengsperger/status/1862134411657117773?mx=...

Re: China is the manufacturing superpower

#229

Earlier quoted context omitted.

I don’t think it’s necessarily so clear that Chinese foreign policy has really paid off yet. Chinese loanmaking to foreign countries has mostly gone bust, with many loans basically in default. While it’s true that Western development agencies were not lending to these projects, they mostly weren’t doing so because they were doubtful of the business cases of said projects and the likelihood that the government could a…

It's been argued that if you observe actions and not words, default has always been the point of IMF loans. Have you read Confessions of an Economic Hitman?

The IMF is by definition the lender of last resort, when banks and investors find a country so fiscally irresponsible that they cannot access reasonable funding. It is not exactly surprising that those kinds of basket case economies also fail when given IMF loans given that people predicted they were going to do that and stopped lending.

Re: China is the manufacturing superpower

#230

Earlier quoted context omitted.

The only way to protect wages in the face of competition that works for 1/10 to 1/3 the rate is to institute protectionist policies. That has also been unpopular because there's money to be made in offshoring as well. Americans are getting the worst at both ends, and only experiencing short-term benefits of having cheaper goods.

What the heck? When did this sort of economically irresponsible thinking become so mainstream? The benefits of protectionism are what are short-term, but they leave both us and China materially poorer in the long term. Life today is better than it was in the 1950s — and a large part of that is knowing our comparative advantage and leaning into it, not trying to restore long-dead industries by political fiat and throw…

>What the heck? When did this sort of economically irresponsible thinking become so mainstream?

It's not "irresponsible" to deny the existence of some utopia where everyone's interests align. It's not worth competing with virtual slave labor. A perpetual race to the bottom is not what we should be striving for. With our current standard of living, or even half of it, we don't make anything that is going to be economical to export in the long run.

>The benefits of protectionism are what are short-term, but they leave both us and China materially poorer in the long term.

You're not entirely wrong. There is a cost to duplicating effort. What is the cost of not being independent? Your country's sovereignty and maybe your life. Let us take care of ourselves as best we can and import only a small amount of stuff.

>Life today is better than it was in the 1950s — and a large part of that is knowing our comparative advantage and leaning into it, not trying to restore long-dead industries by political fiat and throwing trillions in good resources after bad initiatives.

I think many would argue that life is worse today than it was in the 50s. Sure we have more consumer goods, but housing is unaffordable and many people are working well beneath their capacity at meaningless make-work jobs in the service industry. The "long-dead industries" you speak of are alive and well, just not HERE. Not because others are necessarily doing those things better either. It is all about labor costs and regulations in conjunction with international competition.

>If we want to help workers who are struggling - then tax more and redistribute more.

First of all, many aren't working at all because there are no good jobs for them. Second of all, what exactly are we going to tax if everything is offshored consistent with the current trend? What are we going to buy our imports with, the land under our feet (which is finite and also our home)? Increasingly worthless paper, promises to drop bombs or not drop bombs somewhere, etc.?

>If we want to help workers who are struggling - then tax more and redistribute more. Don’t throw a wrench into mutually beneficial trade (and completely sabotage our critical climate goals while we are at it, it makes no sense that we treat BYD the way we do).

Oh yes, nothing more critical to cutting pollution than shipping giant logs to China to be turned into toothpicks. Give me a break. It makes total sense that we treat BYD the way we do. It is unfair competition that would destroy one of the few industries we have left, and China isn't exactly eager to buy cars from us (nevermind that they cost too much for the Chinese anyway). We might all be better off if every country produced what it could. It may lead to new discoveries in design and production methods. And if international trade was not an issue, countries could freely copy each other's IP for domestic use. That last part might be too optimistic but monopolies create stagnation.

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