This article appears below as a preview of the week’s Worldwide Danger- Reward Monitor.
Donald Trump, the Republican nominee for president, invited Chinese automakers to set up factories in the country on March 18 and offered China the same offer that Ronald Reagan did with Japan in the 1980s.
The former leader vowed to impose a 100 % tariff on imports of Taiwanese vehicles either directly from the United States or through middlemen like Mexico. But he added,” If they want to build a plant in Michigan, in Ohio, in South Carolina, they can, using American workers, they can. They occasionally send Chinese workers over here, which they ca n’t do. But if they want to do that, we’re pleasant, proper”?
Addressing Chinese leader Xi Jinping, Trump said,” You and I are associates”.
Trump’s provide to China went undetected in nearly all media. The former president was heavily criticized in major US press for using the word “bloodbath” to describe the impact of potential Chinese imports on the American automobile market, suggesting that he had threatened real crime if he was not elected. But the , transcript , of his notes at a Dayton, Ohio, protest makes , evident that he was referring to market conditions.
Trump told the Dayton market:
Let me tell you anything to China, if you’re listening, President Xi, and you and I are friends, but he understands the way I deal, those huge monster car manufacturing plants that you’re building in Mexico right now, and you think you’re going to get that, you’re going to not use Americans and you’re going to buy the trucks to us. Now, we’re going to put a 100 % tariff on every single car that comes across the line, and you’re not going to be able to sell those cars, if I get elected…. And I’ll tell them if they want to build a plant in Michigan, in Ohio, in South Carolina, they can, using American workers, they can. They occasionally send Chinese workers over here, which they ca n’t do. But if they want to do that, we’re welcome, right? However, they wo n’t construct them in Mexico and wo n’t do that.
Industrial automation is growing in China and lags behind in the United States. According to Zhang Weiwei, a professor at Fudan University, China already has 10, 000 applications of 5G to the industrial Internet. By my informal count, that number is lower than ten in the United States.
China installs more industrial robots and graduates more engineers than the rest of the world combined. In 2023 it became the world’s largest auto exporter. Electric vehicles starting at$ 9,700 for the well-reviewed BYD Seagull subcompact, which is comparable to the 1908 Ford Model T in terms of features and appeal, are opening up new markets for automobiles in the Global South.
China meanwhile has extended its lead in 5G broadband. According to Zhang, China currently has 3.37 million 5G base stations out of a 4 million installed capacity worldwide, accounting for 85 % of that number.
The United States may never be able to match China’s combination of skilled personnel, infrastructure , and giant economies of scale. It’s simpler for Chinese businesses to adopt industrial automation into the United States than to try to catch up after the fact. That’s the path of least resistance, and one that Trump has opened up.
Donald Trump’s approach to China , has never been ideological.  , In an interview on October 6,  , 2023,  , Trump hinted at the possibility of striking a deal with the world’s second- largest economy, leaving the door ajar for future negotiations. When John Solomon, an interviewer, asked Trump about a method for distancing himself from China, his response showed a pragmatic outlook:
At least partial decoupling – we’ll see. They might turn out to be just fine. It’s very popular politically –” We’re going to decouple”! – but I believe my relationship with China was excellent.
However, the notion of decoupling remains elusive. Any attempt at decoupling would require importing even more capital goods to facilitate increased domestic production because the US currently imports more capital goods than it manufactures domestically. Trump himself acknowledged decoupling’s political appeal while highlighting its implausibility in practice.
Trump’s approach to China exhibited nuances. Trump intervened to save ZTE, China’s second-largest producer of telecom equipment, from collapse by allowing the company to pay a sizable fine and keep access to US chips. Yet, Trump’s stance toward Huawei, particularly regarding restrictions on chip purchases, fluctuated, eventually leading to severe consequences for Huawei’s smartphone business but minimal impact on China’s broader technological trajectory.
Despite Trump’s tariffs on Chinese imports, motivated partly by his desire to reduce the US trade deficit, the deficit continued to widen. The Biden administration continued to impose these tariffs, strengthening technology controls, including a ban on selling premium semiconductors to Chinese customers and a call on allies to stop providing China with semiconductor production equipment.
It will be more difficult for Washington to impede China’s chip industry if Chinese automakers start operating EV plants in the US. EV’s require up to 4, 000 chips of increasing degrees of sophistication. In effect, an EV is a computer on wheels. A potential auto deal could lead to a wider thaw in US-China economic relations.