The issue is in getting the technology into the marketplace: between advertising, product positioning, dealerships, and consumer demand, that's where things fall apart.
I think that is actually a fair question, but it all comes down to what you optimize for. I think that the most efficient economic model could be some form of slave command economy.
That said, I think the bigger argument against central economic planning is that it further centralizes social and political power as well. This is prone to more drastic and oppressive failure modes.
Last, you talk about the speed of information, but that cuts both ways. Distributed systems can take advantage of this as well. Capitalist economies have booms and busts, but I would take them any day over great famines.
China’s support is an order of magnitude more and essentially allows their companies to be unprofitable and not worry about.
Similar to how American VCs enabled Uber to unprofitably wipe out many countries taxi industries in a way that those taxi companies couldn’t compete with.
Also doesn't this kind of thinking leads to an argument that says US govt does not want it's own companies to compete with Chinese ones with these grants by use of limitations?
And another question would be as USA is more of a private enterprise type of a country why wouldn't these VC's and car companies cooperate for this competition?
This is not at all the case in China's EV sector. The EV sector is China is extremely cut-throat. BYD is not living off of government subsidies. It's an extremely competitive company that has invested heavily in R&D and which has reduced costs through vertical integration.
Anyone who deals with manufacturing knows that China is dirt cheap and (nowadays) often better quality than domestic. Without the government propping up manufacturing, China could rug pull the US without even firing a shot.
They won't go down with the US on that.
https://www.bydeurope.com/article/303
https://insideevs.com/news/696789/toyota-byd-ev-partnership-...
Also, if Japan truly was a US puppet, would they be "allowed" to have a auto industry at all?
I certainly think it's better than having an morals-based view of geopolitics, and either
- believing in the moralistic post-hoc justifications for geopolitical actions like invading Iraq
- wanting to unilaterally cede resources or control to geopolitical adversaries or the global south
Btw I predict Japan will nuke up in the next decade.
I know a few people who lost their collective minds when a Japanese guy bought Pebble Beach. Turned out to be a terrible move on his part.
Japan was very much a threat to the US back then. Maybe more perceived than reality but a lot of the same rhetoric/narrative you see today about China, was Japan vs the US back then.
If the US closes it's borders to imports it'll retain a market only fit for domestic consumption. It's cars will not be competitive internationally.
The only real way out is for the US to find a way to remain competitive full stop. Isolationism or just allowing foreign imports to dominate should not be options either way.
I’m surprised that the trade wars didn’t happen sooner.
China was also the one who started decoupling first
Tech is actually one of the few sectors that is really blocked in China, and that's because of censorship, not protectionism.
> Let’s also not forget that the CCP also requires a domestic partner and a tech transfer.
Not any more. They used to, but that's been rolled back in sector after sector over the last 30 years or so. It was a transitional measure meant to protect Chinese domestic manufacturers as China began to open up to the world market.
> China was also the one who started decoupling first
This is just not at all in line with reality. China has been more tightly integrating itself into the global economy over time. The so-called "decoupling" began with Trump's trade war against China, though it's been remarkably ineffective at actually separating the US and Chinese economies.
https://foreignpolicy.com/2024/02/01/china-decoupling-derisk...
Besides automobiles, most companies are still blocked from entering China’s domestic market.
Companies still need domestic partners.
Even when there aren’t any formal tech transfer agreements, they’ll just steal the technology instead.
That's exactly the opposite of what China has been doing over the last 40 years. The history of China over the last few decades is one of massive economic opening to the outside world.
> Besides automobiles, most companies are still blocked from entering China’s domestic market.
You should just travel to China to see how wrong you are about this. Foreign companies are everywhere in China. Walk into any Chinese mall and then tell me, with a straight face, that foreign companies are banned.
> Companies still need domestic partners.
Not in most sectors.
Tesla really nailed EVs the first time around, but they never had much of a technological moat besides fantastic promises.
Imports of goods and services into China [0]:
* in 1990: 38.46 billion USD
* in 2022: 3.14 trillion USD
That comes to nearly 15% annual growth in imports every year for 32 years. That is not what an "isolated" market looks like.
0. https://data.worldbank.org/indicator/NE.IMP.GNFS.CD?location...
If you are implying that the Chinese can make cars that can satisfy the upmarket needs of US consumers, and do it significantly cheaper, then that implies the US automakers are gouging their customers or are simply incompetent. In both cases, protecting them amounts to putting shareholder interest before the interest of the common people.
To kill off American industries.
A lot of what China does makes sense when you consider that their goal is not to make a financial profit, at least not in the near-term. No, their real goal is to go in and replace the local industries with their own; choking them out with Chinese goods so cheap yet still good enough that competition is impossible. The end result is the locals end up relying on China for industrial production, research and development, at which point China just won a war without firing a single shot.
Look at what happened with solar panels, lithium batteries, and indeed EVs. Most if not all industrial bases outside China were destroyed and replaced thanks to a flooding of Chinese goods. The red ink is no doubt immense, but the payout in sheer geopolitical power far exceeds it.
The Rust Belt and the collapse of American steel manufacturing is another example. Cheap steel from China and elsewhere led to the collapse of American steel, and we're now looking at it getting bought out by foreign interests (fortunately Japan rather than China, but the damage to American ego is beyond critical mass) as the final nail in the coffin.
The battle is not between US and China, it's between US companies, who want large profit margins and US consumers who want cheap, well made stuff.
Just look at BYD's palette - their $10k EV, is a tiny car, and would probably not sell well in the US despite the price because US consumers don't buy cars this small, except maybe as a novelty. (Besides, tiny, cheap cars always face a stiff competition from barely used models available at the same price)
Moving up, you have the Dolphin, a mid 20k compact car, it's affordable and good. There was a mid 20k compact car made by an US company - the Bolt. It was also affordable and good. Guess what - GM discontinued it, citing low profit margins. And they won't make another one. It's next-gen EV platform is decidedly aimed at a higher segment with a bigger profit margin.
Higher still, you have the Seal, BYD's Model 3 competitor. First, it's no longer cheap, and that segment of EVs is the most crowded. Second, it's nice, but I don't think it comes together quite as well as a Tesla. What it does have on Tesla is build quality (which is Tesla's weak point), with most people expressing interest in it being the ones who are fed up with Tesla's shitty manufacturing and service.
Based on all this, I don't think China could take the US market to itself, even if free competition would be allowed. This whole thing is about political posturing and enabling continued shitty behavior from US manufacturers.
And if you'd accuse me of being some China shill, personally, I wouldn't buy a Chinese EV, not until they have a proven track record, and service network.
The brutal fact of the matter is if the US needs to blockade Chinese cars lest the US automotive industry completely collapses on itself, the US has already lost. There is nothing worth protecting at that point; an industry that can't make first rate products can't create instruments of war that can win.
If we wanted Pax Americana to last, shit needed to change at least a few decades ago. Anyone who was paying attention to EV development would have foreseen China dominating the field.
Retool what?
Just because GM was able to switch from cars to tanks for WW2 doesn't mean they could do it now if they had to.
You mean if China produces vehicles that offer tremendous value and consumers love them? Lots of happy consumers who can spend money on other things they want.
> and the US players go out of business
US automakers have been bailed out several times now and have been insulated from competitive pressures. It is inevitable that several of them will go out of business. This is not a bad thing. The valuable bits will be snapped up by other firms. (pension obligations will be another story). [^1][^2]
> What happens if there’s a major war...
Healthy trade between the US and China dramatically reduces the chances of a major war. China is not run by an irrational child, its policy is influenced by wealthy business owners and its large capitalist class. Those people do not want to go to war with their best customers. [^3][^4]
(Warmongering over China is coming strictly from US hawks who are attracted to the narrative to distract attention from tough times at home.)
> You think a new crop of auto companies come up and then are able to compete against lower wage workers combined with gov financing?
The US auto industry has been significantly bailed out several times. US auto industry workers are heavily subsidized by US government policies. [^5][^6][^7]
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[^1]: https://www.history.com/topics/21st-century/auto-bailout
[^2]: https://www.thebalance.com/auto-industry-bailout-gm-ford-chr...
[^3]: https://www.piie.com/blogs/realtime-economic-issues-watch/tr...
[^4]: https://www.cfr.org/blog/how-trade-can-reduce-conflict
[^5]: https://hbr.org/2019/06/how-china-wins
[^6]: https://thediplomat.com/2020/12/chinas-capitalist-classes-th...
As China emerges as a superpower, of course it will have its own.