Thomas Friedman talks about this after his most recent visit to China. Where China excels is through rapid supply chain development by fierce regional competition among several (state-supported/sponsored/seeded?) competitors.
Do we not recognize that western governments do this too? Do we not recognize that western banks and VC firms are quasi-state institutions? Do we not see western countries continually subsidize businesses by lowering corporate tax rates and giving out cheap loans?
The US government was giving out $7500 per car to buy EVs and the US carmakers still got demolished by better Chinese products.
It’s like the western zeitgeist can’t accept that China is simply out-competing them on pure merit.
It’s not possible for China to have every business be state-subsidized and running a loss. At some point the truth is that China is getting wealthy by selling the most competitive goods. It doesn’t matter that the state “subsidizes” it because the money for the subsidy comes from selling the best and most competitive products.
The US government absolutely does not do what China does in this case. But the reason for my paranthesis and question mark was that I was not sure what call it.
Even if you paid 5% more for materials for an iphone but could pay 50% less for labor than China, you could probably beat China.
How does the state sponsoring come in? The state represses the people and the wages and prevents them from leaving for greener pastures in many cases, which benefits the corporations.
I don't buy this argument.
Sure, labor protections in China are weak, but let's use our mirrors: the US has no guaranteed paid time off of any kind, it has unions on paper only, 1 in 10 Americans have no health insurance, and it's nearly the only country where medical bankruptcy exists as a concept. The largest employer in the US runs a scheme where their workers are intentionally kept part-time with low enough wages to need SNAP assistance and other social safety net programs, as well as avoiding any obligation to provide health insurance, effectively subsidizing their corporate profits with tax dollars. America's middle class has been shrinking via housing, healthcare, and education cost inflation while China's middle class has been growing as its industries have continually moved further up the value chain.
"China is just cheap labor" is a last-Millennium viewpoint. China is a manufacturing ecosystem where you can walk into a physical marketplace and find rows of vendors with skilled technicians who all know how to work on electronic or machinery or other manufacturing skills, where they offer services like chip-level NAND upgrades where they solder on storage upgrades to your iPhone while you wait.
China is now a country where you would pay a price premium to buy their products over competitors.
Literally last night the US president stated that his policy is to keep real estate expensive, and his main attempt to lower housing costs is by lowering mortgage rates, a policy which is incredibly short-sighted and squeezes American workers more. It also won’t work as housing is sold at market value: lowering rates will increase sale prices as buyers compete on available supply and the amount they can pay on a monthly basis.
I am not specifically trying to get political about it, but the Republican Party is generally opposed to public transit and is essentially anti-urbanism. They view cities as dangerous bad places with evil Democrats in them. They have done things like holding federal transit project funding hostage to MAGA demands.
Meanwhile, you don’t need to own a car to live in China and get around. They built out the world’s premier high speed rail network, and they’ve built massive metro systems in their cities rapidly.
Those “ghost cities” in China? That’s also known as “available housing.” They usually eventually get filled. Americans paying above-inflation rates for homes would envy that sort of thing.
Most other countries including China would consider the high cost of healthcare to be a pressing national emergency, but the US government has allowed the insane status quo fester.
With a 400m head start in a 1600m race. It's a whole lot easier to out-compete somebody when you know the government will backstop you even if you misstep.
Solar and battery technology were two of those areas. China absolutely dumped cheap, mostly inferior solar cells on everybody else to wipe out competing manufacturers until they caught up. And China absolutely subsidized local battery consumption until their manufacturers had critical mass and market share. Even now, the RISC-V ecosystem mostly relies on China funding students to do the grunt work of porting everything over.
This is a smart thing. We used to do stuff like this in the US. (See: VHSIC, VLSI project, Sematech, etc.)
And now, BYD appears to be, at this point, simply a superior manufacturer and it doesn't appear to be close. It absolutely grinds my gears that I have to root for BYD to come into the US and bankrupt the automotive companies to finally move their asses, but we have been here before--back in the 1970s with Japan producing better cars.
You mean like how the US government constantly bails out and props up the American car companies?
Um, yes? Did I stutter? Do you have bad reading comprehension? Are you using an AI?
Precisely what part of "we have been here before--back in the 1970s with Japan producing better cars" did you miss?
Also he talks about this on The Ezra Klein Show.