European perspective on Trump’s China policy

This Northwest Passage cruise contains a lot of retired European multinational executives. They talked about being forced by China to set up factories in China in order to have access to the Chinese consumer market. “Trump is fighting the right battle,” one said, “though you can argue about whether he is using the right tactics. But he is the first American to try to deal with these unfair Chinese policies.”

4 thoughts on “European perspective on Trump’s China policy

  1. China has a clear national industrial policy: we will dominate advanced manufacturing. The plan is detailed down to individual cities: which cities will be the hub of photonics, which will focus on AI chips and advanced memories etc. The cities then set GDP goals (including the % of the GDP from the assigned industry focus) according to that plan, and the city bureaucrats’ careers are linked to their performance against such goals. China is doing what Japan, South Korea and Taiwan did decades ago, except at a far grander scale and with even more patience because the government does not worry about losing votes.
    You can sneer at the potential waste, or corruption, or futility of it all. But the result is exactly as Steve Bannon said, gradual de-industrialization of the US and Europe.
    Or to put it in another way, “smart” people in US find it better to invest in software that are far less capital-intensive, require far shorter R&D period, and can check product-market fit within 6 months. So basically the private sector is responding to the reality of Chinese competition by de-industrializing the US, and by voluntarily off-shoring production.
    Now Trump admin clearly treats China’s policy as a threat, and even acted to cut-off Chinese investment into US hardware startups. But I don’t see any follow on steps to foster hardware investment, because private sectors clearly will not (only 8-10% SV venture funds have hardware interests). Even if Trump moves to completely cut off trade between US and China, I still don’t see private sector investing into manufacturing – who knows what the next admin will do in just a few years? Elon Musk is still merrily setting up his larger car facility in Shanghai on land basically given to him for free, and Tim Cook will still move Mac Pro to China, because, as NYT reported, they can’t find screw makers in US any more.

  2. It’s surprising how the knowledge of China’s trade restrictions comes & goes. Elon Musk specifically had to build a factory in China to sell cars in China. People complain about Trump restricting trade, but 30 years ago, the news was nothing but the trade deficit & how China unfairly restricted imports. Every day, CNN would announce the latest trade deficit figure & complain about how China was expanding it.

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