Ministry of Commerce last week announced far-reaching export controls on lithium batteries, products that use Chinese rare-earth materials, and related technologies — the latest reminder that the US is funding its own destruction through economic dependence on a communist adversary.
Many American business elites persist in denying this reality. Nvidia CEO Jensen Huang said in a recent interview that while some Americans wear the label “China hawk” as a badge of honor, it is really “a badge of shame.” The future, Huang says, “doesn’t have to be all us or them. It could be us and them.”
A nice sentiment, but CCP leaders don’t believe it. They often speak soothingly of their country’s “peaceful rise.” But the party’s history and actions tell a different story. It believes that stability comes from control. This belief explains its ruthless efforts to consolidate power. The CCP believes China and the US are locked in a “great struggle” for mastery. In this worldview, it isn’t enough for China to rise — the US must fall.
The first step to ending our dependence on China is admitting we have a problem. We can continue as useful idiots, decrying “China hawks” who point out that we’re funding our own demise. Or we can wake up to the reality that we’re already in an economic war in which every purchase and investment will help determine which system survives.
China is already waging war against us in many ways. These include withholding rare-earth minerals, attempting to smuggle crop diseases into the US to harm our food supply, pre-positioning electronic devices to cripple American telecommunications and emergency-response systems, and subsidizing the production and export of chemicals used to manufacture fentanyl. Beijing’s goal is to weaken us while mobilizing for a future showdown we would lose. China’s military aims aren’t secret: The PLA does target practice on mock-ups of US aircraft carriers.
Beijing’s economic strategy complements this goal. China spends roughly 5% of GDP on industrial subsidies. This is conquest economics, meant to drive competitors out of business and make them dependent on China. Beijing’s standard playbook is to accept Western businesses until it has developed a credible challenger, then to exclude Western companies from the Chinese market and flood overseas markets with Chinese goods. Business leaders who play along with Beijing call to mind author Upton Sinclair’s observation that “it is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
The US is partially to blame for turning China into a juggernaut. American companies have invested vast sums over decades to build China’s industrial base. Apple alone invested $275B over 5 years in China — an amount, in real terms, twice that of the Marshall Plan.
Even more galling: Chinese military contractors securitize weapons contracts in global capital markets, meaning that American pension funds and 401(k) investors have financed missiles aimed at US ships.
The result of all this is that Beijing has grown into a champion of heavy industry and a formidable opponent in technology. China accounts for ~30% of global manufacturing by value, while America’s share has slid to around half of that. The Chinese shipbuilding industry is by far the world’s largest, while America’s has shrunk to irrelevancy.
This dramatic reversal of fortunes could have serious consequences. Mass manufacturing backstopped American primacy in the 20th century; the US outbuilt and outinnovated its totalitarian foes. Now our enemy has the upper hand.
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wsj.com/opinion/jensen
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Byron Wan
@Byron_Wan
Jensen Huang shows his true colors during this Bg2 Pod interview… disappointing…
Cook, Musk, and now Huang…
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