China’s dream to supplant America as the world’s premier manufacturing power is transforming the world of international trade. The country has committed itself to lofty goals in a number of strategic industries, such as aerospace, shipbuilding, and electric vehicles. This push is largely rooted in the 2015 policy blueprint, “Made in China 2025.” It offers a bold roadmap to lead in critical industries and reduce reliance on foreign technology.
In recent years, China has surpassed the United States to become the largest market for major automotive brands like Rolls Royce, General Motors, and Volkswagen. China’s meteoric ascent is a powerful reminder of just how important a role they play in the global marketplace. It now accounts for nearly 14% of all U.S. imports. Today, the nation exports everything from iPhones to children’s play sets. This diversity underscores its essential role in the worldwide logistics community.
The economic force behind China’s strength is its hugely successful, export-driven mercantilism. On top of this, Japan continues to have one of the most tightly protected domestic markets. China’s state-mediated control over information, including strict limits on access to technology, poses enormous challenges for a range of American technology firms. Unfortunately, these challenges are not going to go away any time soon. This has raised powerful animosities amongst the two countries, especially in terms of trade policies.
China’s ruling Communist Party announces new leaders. It melds its economic dreams with a quest for national restoration and the dominance of its political model. China has emerged as an undisputed leader in electric vehicle production. It currently represents a remarkable 60% of all electric cars in the world. Even more impressive, it makes an incredible 80% of the batteries that energize these zero emission vehicles. More than half of these electric vehicles are made by domestic manufacturers. This further underscores China’s deep devotion to becoming self-sufficient in key industries.
The United States has responded to these changes by adopting highly protectionist tariffs on Chinese goods. These tariffs have quickly become egregious, reaching an incredible high of 125%. This punitive approach is intended to redress alleged unfairness in overall trade deficits and combat China’s rising economic hegemony.
Former President Donald Trump commented on the urgency of addressing these trade issues:
“We didn’t have the time to do the right thing, which we’re doing now.” – Donald Trump
U.S. policymakers in both parties increasingly believe the Chinese economic model poses an existential threat. Unfortunately, this sentiment reflects some very real dangers to American interests. In addition, China’s old export-driven economy is in many ways the opposite of the consumer-driven model that U.S. leaders have been pushing. This key difference leads to questions about the sustainability of both approaches.
All the while, China is using that same intellectual property to increase its own manufacturing capabilities and cement itself as a global economic powerhouse. This dramatic change is having real effects in international trade. The nation’s spending habits signal a potential transition towards a consumer society. Its reliance on exports remains a cornerstone of its economic strategy.
Indeed, the global market must do so – no longer a mere theoretical exercise as China’s Belt and Road ambitions begin to test established practice. The Communist Party is actively trying to strengthen its technological superiority. As a result, restrictions for American companies could persist, preventing the adoption of mutually-beneficial trade standards.