The Chinese supply chain problem

Why the Biden administration needs to take it seriously

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An excerpt from my latest Washington Post article:

How to deal with the risks to homeland and national security posed by trade with China (and Russia) is the focus of a report by the Department of Homeland Security Advisory Council that is scheduled to be released Thursday. I took part in the study, which reinforces and adds to recent bipartisan supply-chain recommendations of the Cyberspace Solarium Commission.

The danger from U.S. dependence on trade with China has been growing across more than three decades. Administrations before Trump's clung to an increasingly forlorn hope that opening U.S. markets to Chinese goods would mean cheaper materials for U.S. industries and a growing Chinese commitment to democracy and open markets.

By 2016, though, China's aims were clear: Create a domestic alternative to practically every technology it bought from the United States, then allow these Chinese tech companies to squeeze out their Western competitors. Safe from competition at home, the flourishing Chinese companies could target foreign markets, too. Meanwhile, the doctrine of "civil-military fusion" would ensure that the People's Liberation Army benefited from its domestic commercial technology development.

The report of the Homeland Security Advisory Council will be posted here under Recommendations. The Cyberspace Solarium paper is here.

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  1. You can’t keep a high regulation country running without a escape hatch that lets businesses dodge the costs. Right now the escape hatch is China.

    1. outsourcing our pollution, etc?

      1. In 2000 the American business elite believed America was running out of natural gas and that Americans wouldn’t accept more coal pollution…so that was the context of all of the manufacturing jobs we hemorrhaged from 2001-2009. And once fracking was proven economical we have added a few since 2010. Trump demagogued on the issue but he has had little positive impact and ironically his trade war probably cost him 3% GDP growth.

  2. It seems that trade with Communist China has been highly profitable for the Bidens.

    1. Obama added manufacturing jobs…we hemorrhaged manufacturing jobs to China under W Bush. Bush’s brother received $2 million from a Chinese semiconductor company while knowing nothing about semiconductors…but he knew a lot about Asian prostitutes! Btw, Senator Perdue spent his career developing supply chains in China and shipping jobs to China. Then Dollar General made him CEO due to his Chinese supply chain expertise so they could sell off brand beef stew in a can to the poor saps whose jobs he shipped to China.

      1. Oh, punish the Bush family too. They sold us out pretty badly.

  3. Good luck! Biden isn’t doing a thing.

    1. He’s kicking Donald Trump out of the White House, after earning a landslide victory in the presidential election.

  4. Because subsidizing domestic markets (or currency) to the detriment of foreign industry is only bad when China does it?

  5. And the fox ought to take seriously that the henhouse was left unlocked.

  6. For once, I feel like Baker has a point. It’s still a pretty weird one on a “mostly libertarian” blog, though.

    1. The slugline says “often libertarian”. Some Conspirators more often so than others. Baker has always been (much) more of a paleocon.

      1. Prof. Somin is a libertarian. That’s about it. He’s the beard.

  7. By 2016, though, China’s aims were clear: Create a domestic alternative to practically every technology it bought from the United States, then allow these Chinese tech companies to squeeze out their Western competitors. Safe from competition at home, the flourishing Chinese companies could target foreign markets, too. Meanwhile, the doctrine of “civil-military fusion” would ensure that the People’s Liberation Army benefited from its domestic commercial technology development.

    Soooo, free trade is good in general, but WHEN IT IS FUCKING CLEAR THE OTHER SIDE USING IT AS A MEANS OF WARFARE maybe backing off libertarian purity tests?

    1. It is actually simpler than that. Even without China’s hostility, free trade means free on both sides. Not one side is free, the other runs a closed market.

      1. From a purely economic sense, the distortion of their market is their problem.

        If, however, the goal is to make our economy dependent upon their supply chain, and then leverage that against us in an overtly hostile way…

        It speaks to the benefits of diversification. But in this case, it’s a national security issue that suffers from a tragedy of the commons. Why should I personally pay an extra 30 cents to buy from Mexico instead of China?

        1. Please don’t give us cheap steel!! I don’t want cheap gold or cheap oil either!! Waaaaaaah!

  8. So what happened? The idea was that economic liberalization would lead to political liberalization. A growing middle class would demand – much like the landed gentry under the British monarchies – more political freedom. But that hasn’t happened.
    Instead, China has used its economic leverage over the West. Trump was a horrible, horrible president but on some issues I think Biden – who I voted for – will be worse. Challenging China may be among the top of that list.

    1. It is clear China has imported virtually none of our good points but we sure as hell have imported a lot of their bad ones.

  9. Those central-planning Communists sure are beating us capitalists, aren’t they!

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