China’s comparative advantage, for a time, was cheap labor. But upon this, and a heavy-handed industrial policy, they captured industries that have up-skilled their workers and attracted foreign investment. China doesn’t have the natural resources that give it an advantage in semiconductors. And so its mercantilist policy is leading it toward a desperate scramble to gather these resources, especially in Africa.
The lopsidedness of our trade relationship is not just a function of comparative advantage. It’s a function of a Chinese policy that excludes many categories of American goods from being traded into China at all so it can build its own industries instead. That is partly why, even though China buys up so many dollars, it buys so few American goods.
Firey denounces Anton for wanting “an interventionist government that tightly guards who can participate in society and the economy, and how they do so.” But America’s trade relationship with China has strengthened such a government and has put it into a position to sell strategic technology to our allies and quiet our humanitarian objections to their persecution of Muslims and to crackdowns on Hongkongers.
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