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China has declared economic war against us — and we’re helping them win

3 9 96
20.04.2018

China is systematically hollowing out the West’s industries, not just toys and T-shirts, as was the case decades ago, but increasingly strategic industries vital to national security. China isn’t succeeding simply because of its comparative advantage in cheap labour. It’s succeeding because of its comparative advantage elsewhere — in its ability to overwhelm target industries using the power of the state.

Its ultimate prize isn’t profit but power

Take steel, where China now controls 50 per cent of the world’s production, and where — until U.S. President Donald Trump imposed tariffs on steel imports — it was one to two years away from collapsing what was left of America’s steelmaking capacity. China became the world’s largest steel exporter more than a decade ago on the strength of energy subsidies, which allowed it to undercut competitors by 25 per cent. Or take aluminum, another target of Trump’s tariffs, where similar energy subsidies propelled China into control of 56 per cent of the world’s production.

Or take rare earths, elements indispensable in military uses such as laser-guided missiles and the F-35 fighter jet as well as cell phones and other consumer products. Here China controls some 90 to 95 per cent of world production, having either bought out competitors or bankrupted them by flooding the market with cut-rate rare earths. China may be prepared to do more, too, to enforce its monopoly. Chinese vessels have been entering Japanese waters,........

© Financial Post