The China "Problem"
It is a nation of 1.4 billion people, one of the fastest growing economies on earth, and is the target of western anger. So what the heck is going on with China?
First it is important to remember that for centuries China was a largely isolationist nation that rarely engaged in global affairs. They were slow to industrialize and struggled with a massive population boom. They were, and are, staunchly communist as well - or at least they once were.
After WWII and the push for globalisation western nations did what they always do, they pushed undeveloped nations to... develop. Industrialisation was the name of the game as it also allowed for massive economic growth. This was especially true of the more mature, western, companies that soon set up shop in east asian nations to capitalise on cheap labour and low human right protections.
Massive western companies shifted their production to these low cost, low regulation, countries to allow them to drastically cut manufacturing costs. It was cheaper to ship the raw material to China, have it processed and ship it back, then it was to keep the manufacturing in the western nation.
That also meant many of these massive companies needing to set up shop in China, and that resulted in a political push for China to "open it's market" because they were not being "fair" to other countries. China, to varying degrees of success, did open their economy to foreigners and the results were clear. China became the fastest growing economy on earth. That also came with ever increasing pressure to drop communism adopting democracy and full capitalism.
China's response to this pressure was for them to double down on the development of their economy, natural resources, and especially technology. The economic growth came from massive employment growth as more of the world relied on cheap chinese labour to provide cheaper products and greater profitability.
In fact, there is not a single person in the western world who does not have most of their "things" come from China and other parts of the east. It was not always like this, Taiwan and other countries used to lead the production of our goods. As the wages and rights for workers grew, manufacturing started to look elsewhere for cost savings. Enter China.
Today there is not a cell phone, computer, kitchen appliance, vehicle, television, airplane, train, building, piece of hospital equipment, shoe, satellite... well you get the point... that does not contain SOMETHING that was made in China. Be it the rare earth metals in your cell phone, or the fact that the great "American" company Apple manufactures most of its products in China, using components made in China.
Without China we would still be paying upwards of $10,000 for a flat screen television. Think a Tesla, or any other car, would be as cheap without those parts made in China. Walmart, Presidents Choice, and many other major retailers in Canada source food from China. Garlic is a great example. How does it make sense that garlic grown literally on the other side of the planet is cheaper than home grown? Simple, wages.
As the west developed and relied more and more on the east for our obsession with "stuff" and accumulation of wealth, we also demanded that things be cheaper. We want more things and we want to pay less for them. Those two things do not work when you have to pay someone a union wage, plus fill the pockets of shareholders.
As a society we were OK with all those jobs moving overseas because it meant that we could have more for less. We did not see the economic fall out that would be coming because in our demand for accumulation we actively choose to ignore where our things came from in the first place. We now enjoy a lavish lifestyle where even our homeless have cell phones and internet access is considered a human right. 100% of it built on the backs of cheap overseas labour and material, the majority of which comes from China.
We, all western nations, used to even "import" chinese workers to build our railroads, roads, and more. Chinese culture and history became all the fashion and the west began the mass exportation of chinese made goods. Importers soon realised that they could pay a fraction of the wage in the east and charge the same or more for the goods. Thus the first trickle of economic globalisation begins. It was not until the 1990's and the end of the cold war that the west actively embarked on economic domination. U.S. companies like Coke and Pepsi were already global. but with the opening of Russia and especially the Chinese economy, suddenly there were vast tracts of wealth to be made.
What the west did not count on was that the east did not see capitalism and democracy as being the ultimate solution to life as a human on this planet. While the drive to accumulate wealth has caught on like a virus around the world, the Chinese have still held very careful control over their economy. We in the west decry the lack of freedoms, yet there are more chinese millionaires created each year that any other country. They have their problems, sure, but they are not quite the dark nation that so many believe. China is a richly diverse nation that is older than all but a very few in the west.
Do they have their issues? Definitely, but we also need to look at a key component, TIME. You see the west started to fully industrialise over 200 years ago and it has taken us that long to get where we are today. China did not even really start until the early 1900's and after WWII they all but stopped. They became highly isolationist, and have nearly no diplomatic relations.
It was not until the 1990's when their economy really started to open up. That is a mere 34 years at most to go from a predominantly rural nation, to one where 70% of their citizens live in cities. In the west we have a housing shortage, in China they have the exact opposite problem, too many homes.
China has achieved, in less than 40 years, what it took the west 200 years too. How did they do it? They didn't - we did. When China opened their economy western multinationals were the first to line up and gladly accepted incentives from the Chinese government to do so. Before you knew it, outside of the language differences on signage, most chinese cities are just mimics of what the west has. Ever architectural styling has been taken over by western influence and thought on design, etc.
China in the meantime was paying attention, close attention. They saw that there was a benefit to not just providing the manufacturing, but also the raw materials. Their government invested heavily in developing these resources and now China is the major global player in resource extraction. Cheap chinese steel, concrete, and more are what has built much of the cities we live in as western citizens.
It also made sense that China would start to develop a keen interest in technology. Why shouldn't they also be able to build cars, phones, and such in companies that are chinese owned? So, they did just that.
Right or wrongly they (most likely) reversed engineered the wests technology and they started to do their own development. As a result, China is now the leader in green technology, including battery technology. In fact, if it were not for China, TESLA - the electric car darling of the west, may not well exist today - at least not as the 2nd most valuable company on earth. (Sales of Tesla's in China is the reason it got it there). They also pay less than we do for the exact same car, even if it is made in Europe or America/Canada - figure that one out. We are subsidizing Chinese consumers by paying more for our vehicles than they do.
In fact, there is not a western car company that does NOT want to sell in China and very few do not. Ford, GM, Stellantis, BMW, Mercedes, Volkswagen... well you get point... they all cite China as their largest growth market on earth. They also pay less than we do for the exact same car, even if it is made in Europe or America/Canada - figure that one out. We are subsidizing Chinese consumers by paying more for our vehicles than they do.
Until now.
China has been doing what they always have done. They are learning and then building their own. Enter BYD and the world of automotives is about to change... or not. BYD builds what are arguably the best electric cars on earth, and they are affordable. They offer an entry level model with 250 miles of range... for $10,000 USD - that is less than 1/3 the cost of the least expensive Tesla and 1/2 of what any other new car can be bought for.
In Canada that same car would be available for around $15,000 CDN - making it by far the most affordable vehicle on the road. One that has all of the modern safety features, and even comes with "self driving" technology. It is beautifully designed, efficient, has the world's best battery exchange program, and we will probably never be able to buy it. At least not for $15,000 - no, try double to at least $30,000 - and it is all because of what is being called unfair government subsidies.
Every major auto maker in the west has successfully lobbied their governments to table tarifs of upwards of 120% on auto's built in China - but only by Chinese manufacturers. The claim is national security, the truth? Profits.
You see, every single major automaker in Canada has received billions of dollars in direct and indirect subsidies from various levels of government. In the past 3 years alone Canada has given over 50 Billion in tax benefits and grants to "build" an electric car supply chain. That does not include the billions each company received to bail them out in 2008/09, nor the billions in previous years. All funds that, if closely examined, were never fully recovered and never will be.
I find it very suspect when I hear that we are OK when we get to buy cheaply made things from China, as long as it is sold to us by a Western country, but not bigger ticket items. Hyundai, based in a friendly nation, was lambasted in the 1980's for selling cars for less than 10K, but there was NEVER any talk of sanctions.
The reality is that the west has created the China of today by exploiting cheap labour and our demand for cheap goods. We want more and more of their cheap goods, but... not in all things. This may be pitched about saving Canadian and American jobs, but the reality is very different. There are fewer people working in auto manufacturing every year as automation continues to advance, and there is little reason to think that will change.
This is not about saving jobs, this is about saving the profits of these massive multi national companies that already dominate the global marketplace. If our governments truly cared about jobs, and safe supply lines, they would have not allowed all those jobs to leave in the first place.
I am not saying that letting China or any country have free reign is a good thing. I do however question the legitimacy of the argument about "unfair" government subsidies when we do the exact same thing.
The difference?
In China it results in lower consumer costs, in the west it results in more profits for the corporation. There is nothing really inherently wrong with that, except that we should not be paying more for a Ford, BMW, or any other car here than they do in China. Should we?
Our subsidies are lowering costs for manufacturers who in turn are increasing prices for us, and reducing prices for Chinese consumers. Chinese subsidies of their auto manufacturers is a national security risk for us, but what is not a risk, is the millions of tons of technology we buy from them every year - tariff free (reading this on an iPhone?).
If China is good enough to supply us with kitchen appliances, toys, televisions, and more - and we love how cheap they all are so we can have a TV in every room - we are sending mixed messages by refusing their cars. This is all politics and consumers are being caught in the cross hairs.
We've been here before, in the 1970's with Japan. Who won that war? Consumers did.
We did it by demanding more options, better qualify, and more affordability.