We Are in an Industrial War. China Is Starting to Win

 

"Credit goes to Donald Trump for alerting the world to the dangers posed by China, particularly its efforts to overtake the United States as the world’s most advanced economy. 

But neither his first administration nor President Biden’s has done enough to combat China’s incursions, which have cost America millions of manufacturing jobs and the closure of tens of thousands of factories, according to data compiled by the Information Technology and Innovation Foundation, the nonpartisan technology policy think tank I lead. 

That’s because policymakers on both sides of the aisle are only slowly waking up to the reality: We are already in the middle of an industrial war.

Lawmakers need to understand that for China, a desire to make money — the fundamental driver of trade and of capitalism — is secondary. Its primary goal is to damage America’s economy and pave the way for China to become the world’s pre-eminent power. Countries like China are power traders, called such because their policies and programs are designed not only to advance their power but also to degrade their adversaries’, even at a financial cost to their own economies.

China’s rate of progress in production and innovation across a wide range of industries is striking. 

If our policymakers don’t work fast and smart enough, they will put at risk America’s workers, economy and place in the world.

History has seen other campaigns like this. From the late 1800s to World War II, Germany illustrated how trade could be weaponized into “an instrument of power, of pressure and even of conquest,” wrote the development economist Albert O. Hirschman.

Like China, Germany mostly focused on importing goods needed for its war machine, redirected trade to friendly or subject nations and sought to control oceanic trade routes, all in an effort to limit development of its adversaries. Like China, the German government kept its currency undervalued (making its goods relatively cheaper for consumers in other countries), leveraged the use of tariffs and subsidized its exports to bolster its position in industry goods such as steel, chemicals and machinery.

Like China, German companies sold goods for less than the cost of manufacture to wrest market share from overseas rivals. Like China, Germans engaged in systemic industrial espionage. Engineers were sent overseas with the explicit order to return with trade secrets for German companies.

There was also the theft of intellectual property, including chemical formulas and machinery plans to give German manufacturers a leg up. “Trademarks are to be pirated,” declared a 1919 New York Tribune article on Germany — a declaration that could have been written today about China.

In short, Germany sought to gain technoeconomic power, especially over its European adversaries, then use that power to dominate the continent. As the French economist Henri Hauser wrote in 1915, “Germany made war in the midst of peace with the instruments of peace. Dumping, export subsidies, import certificates, measures with respect to emigration, etc., all of these various methods were used not as normal methods of economic activity but as means to suffocate, to crush and terrorize Germany’s adversaries.”

For a while, it was successful. Without American intervention in World War I and II, it is quite possible that Germany would have taken over much of Europe, in large part because its industries and hence military were so much stronger than those of other European nations. While America’s industrial revolution continued through the early 20th century, insulated by high tariffs initiated by Abraham Lincoln during the Civil War, the German trade shock stopped many Eastern and Southern European economies from fully industrializing and spurred the deindustrialization of nations like Britain. Many have not fully recovered.

It seems all the trade lessons from that fraught period have been forgotten. In the postwar glow of American dominance, U.S. legislators and business leaders embraced an idealistic vision of an increasingly wealthy free world. Countries would embrace capitalism and, thus incentivized by self-interest, would trade fairly and freely with the United States, enriching their citizens and naturally leading to a democratic order. Because American companies were so strong, this was seen as a path to expanded U.S. global economic leadership.

As we now know, that vision was never fully realized. Today it is China that is weaponizing its roughly $18 trillion economy, using a vast array of policy tools to distort trade and increase its relative economic power. 

Wielding such weaponry as export financing and subsidies — almost four times as much as a share of G.D.P. as the United States, according to a study by the Center for Strategic and International Studies — China has already gained global leadership in telecommunications equipment, effectively destroying North America’s industry. It has done the same in solar panels and commercial drones and is close in high-speed rail and batteries.

The Information Technology and Innovation Foundation found that in 10 advanced industries — including semiconductors, robotics, artificial intelligence, quantum computing, space and chemicals — China is making progress toward the global leading edge of innovation, backed by extensive intellectual property theft, enormous government subsidies and closed domestic markets. 

And in some industries, such as electric vehicles and commercial nuclear power, Chinese companies now lead.

China installed more industrial robots last year and has more nuclear power plants under construction than the rest of the world combined. It spent almost $50 billion on subsidies to catch up on semiconductors before the U.S. Congress responded with the CHIPs Act. It is seeking to flood the world with electric vehicles, as well as gasoline-powered models. It has spent as much as three times as much on semiconductor subsidies as the United States. And it is spending billions of dollars more on the development of quantum technology than any other government, according to an analysis by the consulting firm McKinsey. Sales of the C919 by COMAC (a state-owned company) are on pace to make it the top-selling jet aircraft in the world this year, contributing even further to Airbus’s and Boeing's travails. And China accounts for 44 percent of the world’s chemical production, according to my research.

China has demonstrated time and again a willingness to lose money to gain power — decisions that would make little sense under the regular dynamics of profit and loss. Look at the LCD display and OLED display industry (high-definition electronic screens), which are critical to smartphone and television production. In 2023, China’s leading producer, BOE, received more in government subsidies ($532 million) than the company generated in profits. That could explain why, for displays like those used in smartphones, Chinese suppliers are charging just $20 to $23 while rivals charge more than twice that. This is why China accounted for 72 percent of LCD production in 2024, up from virtually nothing in 2004.

U.S. policymakers are starting to wake up. Rush Doshi, formerly the deputy senior director for China on the National Security Council under Mr. Biden, titled his 2021 book “The Long Game: China’s Grand Strategy to Displace American Order.” And Marco Rubio, the former chair of the U.S. Senate Committee on Small Business and Entrepreneurship and Mr. Trump’s choice for secretary of state, issued a report concluding that China was doing more than “breaking the rules” to dominate high-value industrial sectors. This helps explain why, despite a highly polarized political climate, Congress managed to pass the CHIPS and Science Act, which subsidized with billions of dollars new semiconductor factories in the United States. Nothing promotes unity like a common and frightening enemy.

But these measures are not enough. America must expand its competitiveness in a range of other industries — including aerospace, biopharmaceuticals and machinery — and lead in emerging ones such as A.I., quantum computing and nuclear fusion.

Instead of across-the-board tariffs, the new administration should take a page from Ronald Reagan and negotiate a major decline in the value of the U.S. dollar vis-à-vis our trading partners, and if that does not work, the Treasury Department should take unilateral steps to drive down the value of the dollar. That would make American exports less expensive and imports pricier without the risk of trade retaliation. Congress should also update U.S. trade law, such as by eliminating the requirement of harm to U.S. companies from foreign unfair trade practices before remedies can be enacted.

America needs closer collaboration among allied nations to push back on China’s predatory power trade practices, including increasing foreign aid to help developing nations avoid their dependency on Beijing. And the United States needs to take advantage of its being a magnet for the best and the brightest globally by making it much easier for scientists and engineers to work here.

America should respect free-trade ideals and hold them dear. But that should not blind us to the harsh reality that the world now is distorted by its strongest power trader. The answer is not deglobalization or protectionism. 

America depends on too many industries — like aerospace, biopharmaceuticals, software and semiconductors — that cannot thrive without access to global markets. 

And it is not holding on naïvely to the hopes that free trade could yet prevail if the United States simply ended the trade war. China will not end its power trade regime until it has gained dominance across a wide range of advanced industries. Rather, we need to understand the adversary we face and respond bravely, strategically and expeditiously.

Robert D. Atkinson is the founder and president of the Information Technology and Innovation Foundation and the author of the books “Innovation Economics: The Race for Global Advantage” and “Technology Fears and Scapegoats.”" [1]

The horse left the barn. We ourselves passed to China all world factories. The Global South is buying what China sells of good quality and cheap because of the scale effect - if you produce more you can produce cheaper. Start making good Schnizel (country-fried steak), like Austria does these days. Good luck.

1. We Are in an Industrial War. China Is Starting to Win.: Guest Essay. Atkinson, Robert D.  New York Times (Online) New York Times Company. Jan 9, 2025.

Rytų Europoje daugiau problemų nėra: Trumpo vizija NATO kelia problemų NATO --- Karinių išlaidų reikalavimai ir teritorijos perleidimas JAV gali pakenkti aljansui

  „Naujausi išrinktojo prezidento Donaldo Trumpo reikalavimai Amerikos NATO partneriams – kad jos perleistų teritoriją JAV ir daugiau išleistų gynybai, nei pats Vašingtonas – gali pakenkti sąjungininkų pasitikėjimui ir potencialiai paskatinti priešininkus.

 

 Antradienį spaudos konferencijoje išrinktasis prezidentas iškėlė galimybę per prievartą perimti Kanadą ir Danijai priklausančią Grenlandiją. Kanada ir Danija yra Šiaurės Atlanto sutarties organizacijos narės steigėjos, o JAV įsipareigojo jas apsaugoti pagal sutartį.

 

 Trumpas taip pat pareiškė, kad NATO sąjungininkės turėtų padidinti savo karinių išlaidų tikslą iki maždaug 5% bendrojo vidaus produkto nuo dabartinio mažiausiai 2%. NATO pranešė, kad praėjusiais metais JAV karinėms reikmėms išleido maždaug 3,4% BVP, kaip ir kitais pastaraisiais metais.

 

 Kai kurie analitikai ir D. Trumpo patarėjai teigė, kad Trumpo komentarai gali būti vertinami, kaip atviri pasiūlymai griežtose derybose, o ne politiniai pareiškimai.

 

 Vis dėlto jie yra precedento neturintys. Niekada anksčiau kas nors, išrinktas JAV prezidentu, nebuvo viešai diskutavęs apie karinės jėgos ar kitų prievartos priemonių naudojimą, kad galėtų užvaldyti dalį ar visas glaudžiai bendradarbiaujančias šalis ar reikalautų tokių didelių karinių išlaidų.

 

 Mažos Kanados ir Europos NATO narių karinės išlaidos jau seniai pykdė Trumpą, kuris per pirmąją kadenciją grasino pasitraukti iš Aljanso, jei išlaidos nepadidės. Jis teigė, kad Europos šalys turėtų kompensuoti JAV už dešimtmečius trukusią apsaugą, ir pavadino jas laisvai besinaudojančiomis šalimis, nes nepakankamai finansuoja savo saugumą.

 

 Naujas Trumpo spaudimas kyla dėl netikrumo dėl jo požiūrio į konfliktą Ukrainoje. Valdant prezidentui Bidenui, NATO narės iš esmės buvo vieningos dėl būtinybės remti Kijevą.

 

 Trumpas išliko su nekantriu požiūriu į konfliktą. Jis pažadėjo užbaigti didžiausią konfliktą Europoje nuo Antrojo pasaulinio karo, bet detalių nepateikė. Daugelis Europos lyderių baiminasi, kad Trumpas sumažins arba nutrauks JAV paramą Ukrainai.

 

 Per pirmąją savo kadenciją D. Trumpas iškėlė ir NATO išlaidų didinimą, ir Grenlandijos įsigijimą. Danija tada ir neseniai pasakė, kad Grenlandija neparduodama.

 

 Kritikai teigė, kad D. Trumpo komentarai prieštarauja esminiams šiuolaikinės pasaulio tvarkos principams ir rizikuoja pritarti kitų jėgos naudojimui.

 

 Vokietijos kancleris Olafas Scholzas sakė, kad Europos lyderiai, su kuriais jis kalbėjo trečiadienį, į D. Trumpo pasisakymus reagavo „nesupratingai“. „Sienų neliečiamumo principas galioja kiekvienai šaliai, nesvarbu, ar ji yra mūsų rytuose, ar vakaruose, ir kiekviena valstybė privalo jo laikytis“, – sakė jis, nepaisant jos dydžio ir galios.

 

 Trumpo grasinimai vienašališkai ištraukti JAV iš NATO paskatino Kongresą 2023 metais priimti įstatymą, neleidžiantį prezidentui pasitraukti iš Aljanso be Senato patvirtinimo ar Kongreso akto. NATO buvo sukurta 1949 m. pasirašyta sutartimi, kurią ratifikavo Senatas.

 

 Jo požiūris į sąjungininkus gali sužlugdyti NATO ir jos gebėjimą atgrasyti, JAV oficialiai nepasitraukus.

 

 Dramatiškai padidinti karines išlaidas sunku, nes Europos šalys patiria didžiulį išlaidų spaudimą dėl apskritai silpnos ekonomikos ir dėl to, kad ginklų gamintojai jau sunkiai pristato įrangą, kuri jau buvo užsakyta. NATO kariuomenės pareigūnai skundėsi, kad dėl lėto pasiūlos augimo ir sparčiai augančios paklausos ginklų kainos brangsta labiau, nei plečiamas arsenalas.

 

 Dauguma Europos šalių gerokai padidino karines išlaidas nuo įvykių Ukrainoje prieš beveik trejus metus, nors daugelis jų nesiekia 2% tikslo. Atrodo, kad kai kurios, pasiekusios tikslą, ateinančiais metais sumažins dėl silpnų vyriausybės finansų. Beveik visi susiduria su skausmingais kompromisais su socialinėmis ar aplinkosaugos išlaidomis, kad įvykdytų NATO įsipareigojimus.

 

 Išlaidos didėjo po 2014 m. įvykių Ukrainoje ir paspartėjo per pirmąją D. Trumpo kadenciją, prasidėjusią 2017 m. Neseniai pas Trumpą apsilankęs NATO generalinis sekretorius Markas Rutte ir jo pirmtakas Jensas Stoltenbergas įvardijo Trumpo padėjimą paskatinti europiečius padidinti savo išlaidas.

 

 NATO sąjungininkės „neapmokėjo savo sąskaitų“, antradienį sakė D. Trumpas. – "Sakiau, kad neapsaugosime jūsų, jei neapmokėsite sąskaitų."

 

 Daugumos Europos NATO narių lyderiai teigia, kad jiems reikia didinti išlaidas saugumui ir leisti pinigus efektyviau. Nuo liepos mėn. Vašingtone įvykusio kasmetinio NATO viršūnių susitikimo karštai diskutuojama dėl naujo, už 2%, didesnio išlaidų tikslo.

 

 Rutte gruodį sakė, kad naujas tikslas turėtų būti „gerokai didesnis, nei 2 proc.“, tačiau konkretus skaičius tebėra svarstomas.

 

 Tik NATO narė Lenkija priartėja prie 5 proc. Ši šalis pernai gynybai išleido maždaug 4,1% BVP. Nė vienas kitas narys nebuvo didesnis, nei 4%.

 

 Paskutinį kartą JAV išleido 5 proc. Gynybos departamento teigimu, gynybos srityje devintajame dešimtmetyje, Šaltojo karo įkarštyje.

 

 Naujasis Trumpo 5% tikslas „yra išgalvotas skaičius, neturintis tikrovės pagrindo“, sakė buvęs JAV ambasadorius prie NATO Ivo Daalderis. Jis sakė, kad Europos NATO narės dabar gynybai išleidžia tris kartus daugiau, nei Rusija, o 5% Europa kasmet išleis Rusiją 750 milijardų dolerių, išleisdama maždaug 10 kartų daugiau, nei Rusija.

 

 NATO atstovė Rutte gruodį pareiškė, kad bet koks išlaidų padidėjimas turi būti derinamas su didesniu efektyvumu, daugiausia dėmesio skiriant naujovėms ir bendriems pirkimams. Jis sakė, kad NATO turi „atsikratyti tos idiotiškos sistemos“, kai kiekviena narė nustato nacionalinius reikalavimus, todėl „beveik neįmanoma pirkti kartu, vykdyti bendrus pirkimus“. Pasak jo, jei NATO nepadidins efektyvumo, „net ir turėdami 4 proc., jūs negalite apsiginti“.

 

 Daalderis, dirbęs, vadovaujant buvusiam prezidentui Barackui Obamai, teigė, kad baiminasi, kad „tikrasis tikslas nustatant šią aukštą kartelę yra suteikti Trumpui dingstį arba pasitraukti iš NATO, arba nevykdyti Amerikos sutartyje numatyto įsipareigojimo ginti NATO, kai maža šalis yra užpulta“.

 

 Praėjusių metų pradžioje Trumpas per rinkimų kampaniją sakė, kad jei Rusija užpultų, mažai išleidžiantį, NATO sąjungininką: „Ne, aš jūsų neapsaugočiau. Tiesą sakant, skatinčiau juos daryti, ką tik nori... jei nenorite apmokėti sąskaitas“.

 

 Remiantis naujausia Vokietijos IFO instituto analize, Vokietija taip ilgai nesilaikė NATO 2% tikslo, kad dabar nuo 1990 m. jai trūksta daugiau, nei 230 mlrd.dolerių. Italijos atotrūkis yra daugiau, nei 130 milijardų dolerių, o Ispanijos – daugiau nei 80 milijardų dolerių.“ [1]

 

NATO jau yra pokštas. Mažos valstybės narės, tokios, kaip Lietuva ar Suomija, naudojasi NATO, kad žadėtų pradėti branduolinį III pasaulinį karą, kad jų „heroizmu“ nustebintų jų kvailą elektoratą.

 

1. U.S. News: Trump's Vision Spells Trouble for NATO --- Demands on military spending and ceding territory to U.S. risk undermining alliance. Michaels, Daniel.  Wall Street Journal, Eastern edition; New York, N.Y.. 09 Jan 2025: A3. 

No More Problems in Eastern Europe: Trump's Vision Spells Trouble for NATO --- Demands on military spending and ceding territory to U.S. risk undermining alliance

 

"President-elect Donald Trump's latest demands of America's NATO partners -- that they cede territory to the U.S. and spend more on defense than Washington itself does -- risk undermining allies' confidence and potentially emboldening adversaries.

In a news conference on Tuesday, the president-elect raised the prospect of forcibly taking over Canada and Greenland, which is part of Denmark. Canada and Denmark are founding members of the North Atlantic Treaty Organization, and the U.S. is treaty-bound to protect them.

Trump also said NATO allies should raise their military-spending target to around 5% of gross domestic product from the current target of at least 2%. The U.S. last year spent roughly 3.4% of GDP on its military, in line with recent years, NATO said.

Trump's comments can be seen as opening bids in hard-nosed negotiations more than policy statements, some analysts and Trump advisers said.

Still, they are unprecedented. Never before has someone elected as U.S. president publicly discussed using military force or other coercive measures to take over part or all of closely allied countries or demanded such high levels of military spending.

Low military spending by Canada and European members of NATO has long angered Trump, who during his first term threatened to withdraw from the alliance if outlays didn't increase. He has said European countries should reimburse the U.S. for decades of protection and has called them freeloaders for not adequately funding their own security.

The new pressure from Trump comes amid uncertainty over his approach to the conflict in Ukraine. Under President Biden, NATO members have largely been unified on the need to support Kyiv.

Trump has remained cagey on his approach to the conflict. He has pledged to end Europe's biggest conflict since World War II but has given no details. Many European leaders fear Trump will reduce or end U.S. support for Ukraine.

Boosting NATO spending and acquiring Greenland are both objectives Trump raised during his first term. Denmark said then, and again recently, that Greenland isn't for sale.

Critics said Trump's comments run counter to fundamental tenets of the modern world order and risk endorsing others' use of force.

German Chancellor Olaf Scholz said European leaders he spoke to on Wednesday reacted with "incomprehension" to Trump's remarks. "The principle of inviolability of borders applies to every country, whether it is to our east or west, and every state must keep to it," regardless of its size and power, he said.

Trump's threats to pull the U.S. from NATO unilaterally prompted Congress in 2023 to pass legislation preventing a president from withdrawing from the alliance without approval of the Senate or an act of Congress. NATO was created by a treaty signed in 1949 and ratified by the Senate.

His approach with allies holds the prospect of gutting NATO and its capacity for deterrence without the U.S. formally withdrawing.

Dramatically increasing military spending is difficult because European countries are under extreme spending pressure because of generally weak economies and because arms producers are already struggling to deliver equipment that has already been ordered. NATO military officials have complained that the combination of slow increases in supply and quickly rising demand are bidding up the cost of arms more than expanding arsenals.

Most European countries have significantly increased military spending since events in Ukraine almost three years ago, though many remain below the 2% target. Some that have reached the target appear likely to fall back in coming years because of weak government finances. Almost all face painful trade-offs with social or environmental spending to meet NATO obligations.

Spending increases began following events in Ukraine in 2014 and accelerated during Trump's first term, which began in 2017. NATO Secretary-General Mark Rutte, who recently visited Trump, and his predecessor, Jens Stoltenberg, both credited Trump with helping prompt Europeans to increase their spending.

NATO allies "weren't paying their bills," Trump said on Tuesday. "I said we're not going to protect you if you're not paying the bills."

Leaders of most European NATO members say they need to increase security spending, and to spend more efficiently. A new spending target above 2% has been hotly debated since NATO's annual summit in Washington in July.

Rutte said in December that the new target should be "considerably more than 2%," but a specific figure remains under discussion.

Only NATO member Poland comes close to 5%. That country last year spent roughly 4.1% of GDP on defense. No other member was above 4%.

The last time the U.S. spent 5% of GDP on defense was in the 1980s, at the height of the Cold War, according to the Defense Department.

Trump's new 5% target "is a made-up number with no basis in reality," said former U.S. Ambassador to NATO Ivo Daalder. He said European NATO members now spend three times as much as Russia does on defense, and at 5% Europe would outspend Russia by $750 billion annually, spending roughly 10 times what Russia spends.

NATO's Rutte said in December that any increase in spending must be paired with greater efficiency, focusing on innovation and joint purchasing. He said NATO must "get rid of that idiotic system" where each member sets national requirements, which "makes it almost impossible to buy together, to have joint procurement." If NATO doesn't boost efficiency, he said, "even with 4% you can't defend yourselves."

Daalder, who served under former President Barack Obama, said he fears "the real purpose of setting this high a bar is to give Trump an excuse either to withdraw from NATO or not to have to fulfill America's treaty obligation to come to NATO's defense in case it is attacked."

Early last year, Trump said while campaigning that if a low-spending NATO ally were attacked by Russia, "No, I would not protect you. In fact, I would encourage them to do whatever the hell they want. . . .You got to pay your bills."

Germany has missed NATO's 2% target for so long that it now faces a shortfall of more than $230 billion since 1990, according to recent analysis by Germany's IFO Institute. Italy's gap is more than $130 billion, and Spain's is more than $80 billion." [1]

NATO is already a joke. Tiny member countries, like Lithuania or Finland, use NATO to play with the idea of starting a nuclear WWIII, just to impress their bunny-brained electorate with their "heroism".

1. U.S. News: Trump's Vision Spells Trouble for NATO --- Demands on military spending and ceding territory to U.S. risk undermining alliance. Michaels, Daniel.  Wall Street Journal, Eastern edition; New York, N.Y.. 09 Jan 2025: A3.