There is an alternative explanation - "the West" set its standards high. The only permissible economic activity has to be perfectly safe, do no harm and priority is given to loud groups who object to change.
China (and, indeed, the rest of Asia) set standards lower. Economic activity is permissible if it makes life better for someone. Damage is acceptable.
The economy acted exactly how a neutral observer might expect it to and is rerouting all the manufacturing activity into Asia. This is the outcome where everyone gets what they want - and although a lot of people complain loudly, nobody in the West is willing to put up with the conditions needed to change the situation. All the stuff China is doing to get ahead is illegal in the West (eg, the pollution, letting IP restrictions go without much fuss).
Reactionaries are trying to legalise the economy away with about as much success as all the other attempts of the law to overrule the economy. The only thing that can stop the Chinese economy is China - if they don't handicap themselves then 1.4 billion will have the worlds most impressive economy and it won't be close. The military implications of a competent China are scary for the Anglosphere, but avoiding their goods isn't going to change the situation.
Chinese citizens were certainly not really happy with the environment; air pollution is probably one of the few issues that have really galvanized the population and resulted in protests in China's political climate. There's certainly been efforts made on that front, not least because in a country with severe water and land shortages polluting what they have doesn't make sense. https://www.cnn.com/2021/08/23/china/china-air-pollution-mic...
Even simpler version - While the West thought the manufacturing was a petty concern and thought it was exploiting cheap Chinese labor, China had a longer term vision and exploited the West's myopic focus on quarterly profits. The West has now lost manufacturing know-how, is now subject to military supply chain issues and trojan horse hardware, has exported it's middle-class creating greater divisions, and given away huge leads in many military and economic fields.
This will go down as a strategic blunder of historic proportions. It may still be recoverable, but it is getting late...
> China (and, indeed, the rest of Asia) set standards lower.
You are claiming that the West did not have lower standards in the past which is not true, even the West went though the lower standard phase. You cannot just jump to higher standards from the start.
Except of course, the damage is very real, insidious and difficult to see. If a million people who could be born were never born, would you see it in the economic stats? Not if you don't take a conscious effort to try to model it.
Of course, China is strong in many ways, but we would be remiss not to note China's weakness.
Yep. America wants environmental laws locally, but they don’t want to import them for convenience’s sake. Nobody wants to fundamentally change their lifestyle. Take timber for instance. We rape Canada and South America for their trees, but protect trees domestically. This is completely absurd if you accept that environmental problems are global problems. It’s stupid to save a Spotted Owl and the forest locally if you’re letting Canada, China, Brazil or whoever do something 1000x worse while paying them for it.
America needs to dog food it. Don’t like it? Don’t consume so much wood and export your catastrophe.
Yes and—-we in the USA carry on taking resources from other places as if the people there need it less, and we continue to do it domestically; there were people here before my European ancestors, and their descendants continue to be shut out of ancestral lands.
Shortsighted logging practices mean less for future generations. There are better ways to harvest trees (look at the Menominee in Wisconsin, for one). Suzanne Simard is one logger-turned-researcher (they can also overlap) whose publications I find helpful for managing the forest on the land I live on.
Collectively using less seems key. To that end, some combination of regulation and culture shift?
My personal opinion is that we need to supply ourselves domestically (dog food it) and adjust prices to reflect the true cost.
As for American Indians, as far as I know, they practically can’t do anything productive on their lands without an Act of Congress, it’s a crime.
Small- and medium-time loggers are hardly paying rent though. I don’t know where the money is going. I’ve worked in supply and demand. It’s all crooked. Millers are thieves, as are others, etc.
There really isn't much logging of old growth Canadian forests any more. Most timber production is from trees specifically farmed to be cut down. Complaining about consuming too much wood is like complaining about eating too much wheat.
So, global-yet-Western corporations outsourced manufacturing to to China, some "unfair" trades that have long-term benefits for China happened, and now Chinese companies can now compete against those corporations (at least on Amazon).
I don't see how the West is lost, even after the author claims that if there's a war against China, "You’d need to walk around naked because you have no shirt, pants, socks, or underwear". Global-yet-Western Companies that outsourced manufacturing to China like Nike and Apple seem to be doing very well.
Furthermore, why is the fact that Chinese companies can compete after 30 years (while following the CCP rules) a bad thing? Did globalization go wrong because this wasn't supposed to happen? Was China supposed supposed to just be the world's cheap manufacturing for eternity? If so, a better title for this article would be "How China Was Not Lost".
> if there's a war against China, "You’d need to walk around naked because you have no shirt, pants, socks, or underwear".
I agree that this is hyperbole and a bad example.
I'm not sure how long the author thinks such a war would last, or the aggregate US stockpile of textiles, or the source of cotton inputs into Chinese textile manufacturing, and so on...
Both I'm going to go out on a massive limb here and assume that even a decade-long cold war with China wouldn't result in a single American walking around naked who would have otherwise been clothed.
There are geopolitically significant manufacturing sectors where the west has ceded important ground in the last couple decades. Daily-use textiles isn't one of them.
What was supposed to happen is openness to the West was supposed to move China away from dictatorial government. Approximately nobody cared whether China got rich or stayed poor; the goal was that China become free.
The original goal was to divide and conquer the communist block (taking advantage of the sino-soviet split/wedge).
After the collapse of the USSR western companies and governments saw shiny ($) ($) in their eyes and could not help themselves. They thought giving up some intellectual property rights was worth getting a leg up on their other western competition because they thought they’d be able to fend off completion local to China as they presumed it would adopt western ideas (law, intl conventions, governance, etc.) despite history indicating otherwise.
> The death spiral begins for the global brands who are forced to give up the low end of the market and focus on the high end, resulting in loss of both economies of scale and profit margins for the global companies.
Except that profit margins are much fatter at the high end of the market, and successfully positioning yourself as a luxury mass-market good is a license to print money. (Exhibit A: Apple.)
This is a real documented phenomenon. An example from the metalworking industry: the big steel companies could produce a variety of products with their process, but smaller cheaper forges appeared that could produce certain kinds of material.
These kinds of material had lower profit margins, so the big companies gave up that share of the market. The big companies profit margins got even better, the smaller mills were making money, everything looks better to the investors.
Then the cheaper mills get better and can now do medium-grade work. That's still less profitable than the biggest work, so once again the big companies withdraw from that market when they can't compete on price and their profit margins get even better.
You can see where this is going. There's nothing stopping the upstart that you're ceding some of your markets to from entering into your market and taking it over, and at that point you have no moat and no differentiation, while those companies have a full range of other products to fall back on and earn revenue.
But as smartphones continue commoditization, the non-luxury brands will become “good enough.” The differences compress. Suddenly the luxury maker is cut off at the knees.
We’re already seeing this play out with really compelling non-Apple devices.
However, it’s worth noting that Apple isn’t a great/perfect example for the phenomenon because it has the confluence of both software and hardware plus ecosystem lockin.
Plus if Apple actually needed to, there’s probably very little stopping them just getting into the lower margin markets. They have an infinite bank, ridiculous brand strength, etc.
This is the situation from a few years ago. It's past that point now. There are now many products the US can no longer make. Such as smartphones. Not make at a competitive price. Make at all. The manufacturing has been lost, as has the know-how. Motorola was the last US phone maker. They were bought by Google, then, two years later, sold to Lenovo in China.
Someday, not too far away, Foxconn will no longer need Apple.
Anyone remember RCA? The Radio Corporation of America? "The most trusted name in television?". Owned the NBC network. Made Spectra computers. Today it's just a front company that licenses out the brand.
Anyone remember Western Electric? Made most of the telephone switching equipment in the US.
They eventually became Nortel, which went bankrupt around 2011.
Meh. You're arguing, correctly, that something was lost. But you're failing to recognize that the value of what was lost has changed. Continuing your RCA example: making CRT televisions in the 1960's was a high tech growth industry with huge margins that created billionaires and made life better for uncounted millions. By the 1980's they were commodity products differentiated only on price, and saw their manufacturing driven into low wage regions as part of the resulting competition. And by 2005 no one wanted them any more at all.
Do you want CRT manufacturing back in the USA? No? Me neither.
That's what's happened with PCBs and phone displays and enclosures. Sure, they're important. But they don't make much money. In fact most of the price of an iPhone ends up going not to the component manufacturers and assembly houses in Guangdong but to this weird looking building in Cupertino California that doesn't make anything at all.
And yeah, it's true: that could happen to Apple! But it will happen to Apple when Apple's products have become valueless commodities, and we'll all be talking about something else (Tesla Home Robots, I dunno) that has captured the global attention as the new growth fad.
> And yeah, it's true: that could happen to Apple! But it will happen to Apple when Apple's products have become valueless commodities, and we'll all be talking about something else (Tesla Home Robots, I dunno) that has captured the global attention as the new growth fad.
Why should it take that long? AFAICS it'll happen the instant enough people realise what they're paying a premium for is fifty percent empty image and fifty percent lock-in and limitations. Just admit it: Having your online identity owned by Apple or by Google is a difference without a distinction. And paying twice as much for a device made by exploited suicidal workers in a Chinese factory as for another functionally pretty much identical device made by exploited suicidal workers in a Chinese factory is just stupid.
That is correct but the fear (and conceit) is still that Chine would not be able to compete with the West in the high tech sector.
In the classic example for Ricardo's theory of comparative advantage, England is better at producing wool and Portugal is better at producing Wine, therefore each should focus on what it does best and gain efficiencies through trade.
But then the industrial revolution happened and England had a far easier time automating weaving than Portugal could grow grape vines. Path dependence is important for technological innovation and this can not be protected with IP law alone.
To be clear, I don't disagree, but that's an orthogonal point. China may very well beat the west and drive the next few generations of innovation and growth, but their dominance of PCB stuffing and volume tantalum capacitor manufacturing will have nothing to do with that. Those things are valueless commodities, by definition the next Big Product will be something else.
The obsession with the Next Big Product may be misplaced. There's considerable profit to be made in producing routine items in volume. The US used to lead in that.
It's not about the product as much as it is about the production engineering.
> There's considerable profit to be made in producing routine items in volume. The US used to lead in that.
The US used to be a comparatively[1] low wage labor environment, though. We used to lead in making cheap goods because making goods in the US was cheap. It's not anymore.
That's not a value judgement. Maybe it should be. Maybe we should relax minimum wage legislation, increase immigration quotas to expand the labor pool and make up the human condition shortfall with sturdier safety net programs from the government (call it "progressive libertarianism"). That would be interesting to discuss.
But it's not the country we live in. If you want PCB stuffing to be economical in the US as it exists today, you need to figure out how to stuff PCBs economically with people paid $10-15 an hour. (And in such a way that people paid $2/hour couldn't just use the same trick.) That's a technology problem, not a social science one.
[1] It's complicated by the development of cheap global trade. The reason the third world didn't get involved into global trade like this until the 90's wasn't that it didn't have lower wages, but that the cost of transporting the goods was so high that it would eat up the advantage. And this is why heavy industry like auto manufacturing still exists in the high-wage west, because cheap labor doesn't make a car cheaper to ship.
Good points. But I wonder about losing the “know-how”. Aren’t these international corporations with some of their biggest offices in the US anyway? Is there really any secret sauce at any of these companies? And what problem would or do US companies have hiring back any lost talent? Seems many want to work in the Bay Area anyway, and nobody can pay like Apple, Google, etc.
This really hit home for me when I learned that Clubhouse uses a Chinees company for its audio processing and distribution. The rise of China as such doesn't really scare me but the fact that with billions of dollars in investments they don't even bother writing their own audio software and instead just focus on the product and marketing really shocked me.
I don't know, but I do know that the archive.today & mirrors have been really unstable lately with redirects and downtimes, and now they are using recaptcha. I can only speculate, but this looks like a dos attempt
Surely we've all been burned by counterfeit/terrible Chinese Amazon products by now.. makes it harder to trust Chinese brands generally. At a certain point one is willing to pay a premium for the merely western/capitalist kind of incompetence, rather than risking full immersion in the chabuduo lifestyle.
My experience has been that there are plenty of both good and bad ‘no name’ products to be found on Amazon. The bad ones I return and get a 100% refund through Amazon.
None of the stuff I buy is counterfeit, although plenty probably have designs copied from other products. Sometimes I’ve wondered whether I should buy that tool or pack of LED light bulbs from the local hardware store instead, but either way I’m buying products made in China and sold by a big American corporation.
I don’t know where this wormhole goes, although there has been some good discussion here covering multiple aspects and viewpoints.
Ha, I’m an American born Chinese and I didn’t get the Americanized reference until I clicked on your link.
In my experience the phrase more or less means functionally sufficient, which is not exactly the same as say ‘not as good.’
Sometimes you want the best thing you can buy, other times you just want one that does the job. Of course, that is a different distinction than being pragmatic vs. cutting corners.
I guess ‘chabuduo’ sometimes sits in the gray area between the two.
> They know full well that once a country monopolizes manufacturing, they could quickly pivot into dominating a market, especially if they justify the wholesale theft of intellectual property through nationalism (“the West exploited us in the 19th century, so our companies stealing their intellectual property is just fair play).
Well, much of that so called intellectual property progressed out of tax funded research. The so called west use to mass produce RND which made a rather epic combo. It was the neoliberal agenda that didn't care about slow long term progress that killed it just like local manufacturing.
> the West exploited us in the 19th century
"the west" should probably not be the title of the entity but damn, China was completely and utterly obliterated. This of course much like Asian leaders from the region did to other countries and among their own long long before.
One cant make an omelet that size without breaking many many eggs.
Walking alone in a forest behavior is very different than having a companion, replace the companion and it is again very different. Now if you add more and more people it increasingly matters less who they are but as the numbers go up the weirdness grows until you get things no single human would ever do. Groups of people are not a person. Free form self organization will quickly look very sensible but without people at the top entitled to say NO to stuff it may also turn into utter chaos over night. All ever so slightly refined qualities people might have are lost in the chaos theory and you get uniform instinctive behavior.
I want pepper, the next guy wants rice in the giant omelet. Some are lactose intolerant so the end result wont even have cheese in it.
Why should those of us who live elsewhere (Australian citizen here with zero connection to China ) prioritise the welfare of US American corporations ?
The US is around 4% of the world's population.
If I had to choose, I would prioritise the welfare of Chinese people, who are 18% of the world or the welfare of Africans, who are 17% of the world or the welfare of Indians, who are 20% of the world.
Our loyalty should be to humans, not to the delusional political configuration of the moment.
Otherwise we might as well go back to loyalty to traditional ancient Greek city-states.
So they're making lots of dollars off of crap on Amazon. Most cheap labor has been outsourced from China by now and they didn't turn the trick: building a self sufficient growth engine while they had the fuel.
China peaked about two years ago. Today sharp left policy shifts are signaling a quick erosion of their economic integrity, which will turn out to have been very brief between the prosperity brought on by what's mentioned in the article and the coming collapse due to a lack of fundamentals built into the society.
I presume you haven't been to China in the last decade or so, since they most certainly did "turn the trick". Consumption as a percentage of GDP exceeded 50% back in 2009 and has been slowly by steadily growing ever since, and an increasingly large portion of the Chinese economy has nothing to do with exports.
I do agree that the decades of steady 10+% growth are over, largely thanks to demographics/aging, but a Japan-style stagnation seems more likely than an outright collapse, unless Xi does some really catastrophic miscalculation that triggers WW3.
While the Peary was built in 4 days as a publicity stunt, by 1943, the US was building Liberty ships in about a month (depending on the exact shipyard) from keel to launch.
It should be noted that one of the surviving Liberty ships today, the SS John W Brown, was the third Liberty ship launch of its day... at Baltimore alone, not counting the other shipyards also producing Liberty ships. Which should give you an idea of the sheer scale of Liberty ship production (it's the largest ship class ever built).
China (and, indeed, the rest of Asia) set standards lower. Economic activity is permissible if it makes life better for someone. Damage is acceptable.
The economy acted exactly how a neutral observer might expect it to and is rerouting all the manufacturing activity into Asia. This is the outcome where everyone gets what they want - and although a lot of people complain loudly, nobody in the West is willing to put up with the conditions needed to change the situation. All the stuff China is doing to get ahead is illegal in the West (eg, the pollution, letting IP restrictions go without much fuss).
Reactionaries are trying to legalise the economy away with about as much success as all the other attempts of the law to overrule the economy. The only thing that can stop the Chinese economy is China - if they don't handicap themselves then 1.4 billion will have the worlds most impressive economy and it won't be close. The military implications of a competent China are scary for the Anglosphere, but avoiding their goods isn't going to change the situation.