Keith Bradsher
Appearances
The Daily
A Vulnerable China Comes to the Table
China has taken a lot of little actions, but the steps they've done haven't really... fundamentally changed the situation. I'll give you some examples. They've cut interest rates a little bit. They've given the banks the freedom to lend more. But that doesn't make such a big difference when many companies are so worried about where they're going to be able to sell their products.
The Daily
A Vulnerable China Comes to the Table
Not in China, where consumption is weak, and now not in the United States with the tariffs. The Chinese government is doing a little bit to strengthen the threadbare unemployment insurance scheme. But many, many factory workers don't qualify for that at all. So that doesn't really solve the problem either. What you have not seen is a broad...
The Daily
A Vulnerable China Comes to the Table
consumer stimulus program like we saw, for example, in the United States during the COVID pandemic, when the United States sent checks out to everybody. And that's because the Chinese government, to some extent, doesn't have the money. It's really facing very weak tax revenues. So all of these steps haven't been the really big measures that
The Daily
A Vulnerable China Comes to the Table
that would move the needle at a time when the key engine of China's growth, exports plus construction of factories to produce those exports, is under threat.
The Daily
A Vulnerable China Comes to the Table
China has put tariffs of 125% on American goods since mid-April. But the United States doesn't sell that much to China. That's one of the reasons there's such a big trade imbalance. Right. China has tried even harder to switch purchases of agricultural goods like soybeans to other countries like Brazil.
The Daily
A Vulnerable China Comes to the Table
But to some extent, that means American farmers just ship to the other countries that Brazil used to supply instead of shipping to China.
The Daily
A Vulnerable China Comes to the Table
The most important step by far that China has made that could really create problems for a wide range of American manufacturers from aircraft manufacturers like Boeing to defense contractors like Raytheon and Lockheed Martin to automakers like General Motors and Ford is to halt the export of rare earth magnets. And that has already become a significant problem
The Daily
A Vulnerable China Comes to the Table
for many American companies, and for that matter, even for European companies. But there are also big risks for China. The risk is that these big companies will decide that they can't trust China to be providing key components. That's the kind of disruption that complicated assembly plants in the West can't really handle. And if corporate boardrooms are
The Daily
A Vulnerable China Comes to the Table
react to this interruption in rare earth magnet supplies by saying, we're not going to buy from China anymore. That would be a disaster for China and a disaster for the Chinese families that depend on working in factories, making these components to earn their livelihoods.
The Daily
A Vulnerable China Comes to the Table
That's true. The difficulty for China is that the European Union has been increasingly worried about the tsunami of goods coming out of China and has been moving to impose its own tariffs on those goods. You've seen that most noticeably already with Europe imposing tariffs on electric cars from China.
The Daily
A Vulnerable China Comes to the Table
And there is really an international move to raise tariffs on goods from China by countries that have industrial sectors and worry about becoming entirely reliant on China. So Brazil, Turkey, India, as well as the European Union have all moved to raise their tariffs. They just haven't done it in quite such an in-your-face style as Trump has. Yeah.
The Daily
A Vulnerable China Comes to the Table
30, 40 in some cases, some cities, 50% drops in apartment prices since the high of the bubble in 2021. So this has been a huge blow to the household finances of people in China. In turn, they've stopped spending money on consumer goods. And the tax revenues of the Chinese government are also way down. So they've got a huge budget problem.
The Daily
A Vulnerable China Comes to the Table
What I've already seen on the ground, for example, in Guangzhou, the commercial hub of southeastern China, is that some factories are already closing. And the longer tariffs continue, particularly if they were to continue at high levels, the more factory closings, the more layoffs you would see. So China has a big economic incentive
The Daily
A Vulnerable China Comes to the Table
to reach some kind of resolution, longer term resolution, longer term closure on this issue. However, while China may be experiencing more pain than the United States, China also has more ability to endure pain than the United States. How do you mean? Well, China has a very stringent security apparatus that has crushed dissent already in many ways.
The Daily
A Vulnerable China Comes to the Table
If you had these kinds of layoffs in other countries in the West, you would have large-scale protests by workers and in particular by labor unions. China has no independent labor unions. China is quick to detain any workers who try to organize any independent protests. China heavily, heavily censors social media and blocks access to overseas websites so as to keep workers
The Daily
A Vulnerable China Comes to the Table
a very tight grip on the information that most people in China are able to access. And it tamps down or silences any discussion of job losses and economic pain and presents the whole dispute with the United States and with the world as in very nationalistic terms.
The Daily
A Vulnerable China Comes to the Table
So through this spring, what we've seen has been rhetoric from China about how it would not bow down to or kneel before the United States. But China nonetheless decided to go ahead with the talks this past weekend, even though previously it had said it wouldn't even talk to the United States unless the tariffs were removed first.
The Daily
A Vulnerable China Comes to the Table
It's clear that they are highly aware of what the populace is experiencing on a day-to-day level. They keep extraordinarily detailed information on, for example, how many people are going home from the factories and not coming back into the cities. And the last thing that China wants is for a repeat of the kind of public protests that
The Daily
A Vulnerable China Comes to the Table
by workers and others that you saw in late 2022 against the COVID zero policies. Now, if anything, many people in China have even more to be upset about because they've lost much or all of their life savings in the bursting of the housing bubble. And now they have faced, through this spring, job losses as exports declined to the main buyer of Chinese goods.
The Daily
A Vulnerable China Comes to the Table
So when you've got a property crisis and an emerging budget near crisis, that's a very bad time to have a trade war.
The Daily
A Vulnerable China Comes to the Table
Purchases by the United States have been what have really kept the Chinese economy going for the last several years through this housing bust. And the tariffs affected the extent to which that gravy train could continue for China. And so this has been a genuine worry for the Chinese leadership.
The Daily
A Vulnerable China Comes to the Table
There are partial compromises that would work. For example, some reduction in tariffs makes sense for both countries because the tariffs right now are so high that they're almost at trade embargo levels. Right. But the difficulty is that the two sides have fundamentally different interests that are very hard to reconcile. The United States
The Daily
A Vulnerable China Comes to the Table
is saying that it refuses to be the main market for ever-rising Chinese exports and would like to strengthen what's left of its industrial base and become a little bit more self-reliant, or at least reliant on countries other than China, countries that are not engaged in big military buildups. aimed at the United States.
The Daily
A Vulnerable China Comes to the Table
On the other hand, China has a very strong desire and interest in ever-rising exports. China didn't spend $1.9 trillion extra over the last four years on factory construction, factory robots, other automation, and so forth for nothing.
The Daily
A Vulnerable China Comes to the Table
They did that because they wanted to be able to sell all the goods coming out of these newly built factories that I see everywhere all the time as I travel around China.
The Daily
A Vulnerable China Comes to the Table
They want to dominate as many markets as possible because they say China is the most efficient mass production place in the world and therefore it should be allowed to be the world's supplier. of practically all manufactured goods.
The Daily
A Vulnerable China Comes to the Table
And so in that environment, even though we may see short-term deals that reduce the pain on both sides of having very steep tariffs, the two sides have such different interests that it will be very difficult to find truly lasting solutions.
The Daily
A Vulnerable China Comes to the Table
That's exactly right. This is an economy built for exports, built for manufacturing dominance, built for maximizing production. But it's not a good economy at consuming. It's not a good economy at having a population that is able, willing, eager, even like many Americans, to spend money and have a better life.
The Daily
A Vulnerable China Comes to the Table
So what ends up happening when you have this enormous excess of production, it has to be exported or the whole system gets in bigger trouble. Basically, China over the last four years has made an enormous bet that it can dominate world markets in practically everything for manufactured goods. That only works as a strategy if you can export.
The Daily
A Vulnerable China Comes to the Table
So that is why, even though the Chinese economy now leads the world in installations of new factory robots, leads the world in the quality of the infrastructure, It leads the world in many categories of economic strength, but it has an enormous dependence on exports.
The Daily
A Vulnerable China Comes to the Table
For starters, China has a tax system that is based heavily on taxing consumption, not so much on taxing income. The burden instead hits you when you try to buy anything. So they have a national value-added tax. It's like a kind of sales tax.
The Daily
A Vulnerable China Comes to the Table
that is twice as high as the typical sales tax in the United States and covers practically everything, whether you want to buy a car, whether you want to buy a washing machine, or even there's a heavy tax on paying your rent. Wow. So these high consumer taxes are discouraging people from spending money. But this is not just about taxes. Even more important,
The Daily
A Vulnerable China Comes to the Table
is that China has a very modest, threadbare social safety net. The pensions, the equivalent of Social Security in the United States, are tiny. The unemployment insurance is very modest, and a lot of people don't qualify, and they actually cut back further the number of people who qualified the moment the COVID pandemic ended to make sure that they went back to work immediately.
The Daily
A Vulnerable China Comes to the Table
Not much of a social safety net. There was actually even a discussion 25 years ago in the Communist Party of China on whether to drop the word communist, and they decided to keep it. They decided it had a lot of historical resonance for them. But this is really a very strongly capitalist system now.
The Daily
A Vulnerable China Comes to the Table
For example, when I mentioned to people in China that there is rent control in some American cities, they are stunned. The idea that any government agency would tell somebody who owns an apartment how much they can charge to rent that apartment out is startling to them. And they say, that's socialism, somewhat jokingly to me.
The Daily
A Vulnerable China Comes to the Table
And yet it's really the sentiment. That's exactly right. Xi Jinping has denounced what he calls welfarism, which he says might erode the work ethic of the Chinese people.
The Daily
A Vulnerable China Comes to the Table
What he said in a speech four years ago was, quote, even in the future, when we have reached a higher level of development and are equipped with more substantial financial resources, we still must not aim too high or go overboard with social security. and steer clear of the idleness breeding trap of welfarism. Whoa.
The Daily
A Vulnerable China Comes to the Table
And because there is very little in the way of a social safety net, people in China save a lot. In fact, they save more than anyone else in the world. The savings rate is around 40%, saving two out of every $5 of their paychecks. That's a lot. That is a tremendous amount. In the United States, it's 4% or less.
The Daily
A Vulnerable China Comes to the Table
Well, people in China really don't have as many options as savers in most of the rest of the world. The stock market is very risky and full of dodgy companies. The Chinese government puts very stringent limits on their ability to invest outside of China. And so the alternative has been real estate.
The Daily
A Vulnerable China Comes to the Table
The result was that people in China put far, far more of their savings into real estate than in most countries.
The Daily
A Vulnerable China Comes to the Table
If you went all the way back to the 1980s, people in China were living in very small apartments typically. There was a tremendous shortage of housing. Starting in 1987, China began experimenting on transferring land to private developers and having them begin to build apartment buildings and sell them to the public.
The Daily
A Vulnerable China Comes to the Table
And then in 1998, the government transferred millions of apartments from state-owned enterprises and local governments to the people who were living in them for almost nothing. That created a very large market. And so then by the early 2000s, you had a completely new housing market like nobody had seen before.
The Daily
A Vulnerable China Comes to the Table
The local governments were selling enormous amounts of land each year to developers, and the revenues from that were immense. And that was what paid for the terrific roads, bridges, highways, high-speed rail, ports. And the developers were putting up 30-story apartment buildings as far as the eye could see. Hundreds of millions of people benefited greatly.
The Daily
A Vulnerable China Comes to the Table
The number of square feet per person in apartments in Chinese cities quadrupled. All of a sudden, you didn't have to have three generations crammed into a small apartment. But after meeting a lot of those housing needs, this turned into a speculative mania that got out of control. How so? I'll give you an example.
The Daily
A Vulnerable China Comes to the Table
I know a sales manager at a small furniture factory who, even though she earns a modest salary, has ended up buying five apartments. How do you end up with five apartments, I asked her when I first met her. Right. On a small salary.
The Daily
A Vulnerable China Comes to the Table
And the answer was she'd bought one. It went up. She sold it and bought two. They went up. She sold one of them, bought two. Little by little, she ended up with five apartments, all of them with mortgages. So I said to her, what is going to happen if apartment prices go down? And what did she say? She said, I don't have to worry about that. The price will always go up. Wow. That's a bet.
The Daily
A Vulnerable China Comes to the Table
Well, it was a bet that worked. From the late 1980s, the price always went up. The final skyward jump in real estate prices began in 2016. The banks in China were told by the government, essentially, give a mortgage to practically anybody with a pulse. We're doubling down on construction. We want everybody buying apartments. And the housing market just went nuts.
The Daily
A Vulnerable China Comes to the Table
It began to burst in 2020 and 2021 when stricter rules started to be put on these real estate developers who were taking big deposits from many families and using that money not to build the building that they promised for the deposits, but to finish the previous building they promised somebody else. It was becoming, in some ways, even a Ponzi scheme.
The Daily
A Vulnerable China Comes to the Table
The government finally got concerned about this. It began imposing tighter and tighter borrowing and spending rules on the developers. And by the second half of 2021, real estate prices were falling quickly and many of the real estate developers were starting to collapse. The real estate collapse has been devastating for families across China.
The Daily
A Vulnerable China Comes to the Table
In fact, people don't even really want to talk about it. It's so painful for them. Chinese families had twice as large a share of their household net worth in real estate as in the United States. So they were really heavily, heavily invested. They didn't have much else. It was all in apartments. And then the apartment prices have gone down faster in China
The Daily
A Vulnerable China Comes to the Table
than they did in the United States during the 2008 to 2009 real estate crash. So the total losses on apartment value in China are now twice as big as they were in the United States in 2008, 2009. Wow. And this is coming out of the savings of a country that's not as prosperous as the United States. So to lose twice as much of your savings is just devastating.
The Daily
A Vulnerable China Comes to the Table
The government's response has been to shift the priority of government lending away from real estate and towards building lots of factories. The government's goal is to create a lot more jobs, which they want to offset the loss of jobs in the construction sector. And their hope is that if people have well-paid jobs in the factories, they will begin to have the confidence to spend again.
The Daily
A Vulnerable China Comes to the Table
The very, very heavy lending by the state-controlled banking system to build more factories and other industrial sites has helped some. A minority of all workers in China are factory and other industrial workers, and they have benefited. But for the rest of the country, They're not benefiting. Demand is weak. If you go to hotels, the hotels are mostly empty. The restaurants are closing.
The Daily
A Vulnerable China Comes to the Table
So workers across the rest of the economy aren't doing very well out of all of this. And so the Chinese government strategy has been to double down on building even more factories for exports. And many of these factories have not yet been finished.
The Daily
A Vulnerable China Comes to the Table
President Trump, by early April, had raised tariffs on goods from China to 145%. That stopped all but the most essential imports coming in. Why was this terrible timing for this to happen to China right now? It was because China is already struggling with several severe economic problems. The biggest of them is the housing market crisis. Apartment prices have plummeted.
The Daily
A Vulnerable China Comes to the Table
In many ways, it looks as though they have replaced a housing bubble with a factory bubble. Wow. China is now trying to save itself, trying to save its economy by ramping up exports to the rest of the world. And that has real consequences for any other country with a manufacturing sector, whether it's Brazil or Mexico or Germany or Japan or South Korea or the United States.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Thank you. And by OG, you mean old guard?
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Trump uses tariffs in several different ways. He, more than his predecessors, likes to use them as a general purpose negotiating tool. But part of his goal also with tariffs on goods from China is to stabilize what's left of American manufacturing. So many of the tariffs that he imposed on China in 2018 and 2019 are still there today.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
These are tariffs that are meant to change the playing field of international trade between the United States and China to help America still have a viable manufacturing sector.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
That's right. But the question is, are tariffs enough by themselves to turn around the decline in American manufacturing? Yes. Or are they just part of a much broader, longer list of measures that need to be taken to stabilize this very important part of the American economy and of American society?
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Many experts now argue that tariffs are necessary— but not sufficient for an American industrial revival. A lot more is going to be needed because China has a much broader approach to trade than just tariffs. China also used industrial policy and education policy, and China used zoning and housing and regulatory policy.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
And the United States can learn a lot from how China reached the point where it is today, where it is by such a wide margin the world's sole manufacturing superpower.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
There is going to be a price in all of this. President Trump has acknowledged that there will be slightly higher prices for some products. However, he and his advisors seem to feel that that price is worth paying to make sure that the United States remains a country that can not just consume a lot, but also manufacture and produce a lot.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
There were several factors. First of all, many Americans loved the availability of very cheap manufactured goods from China. Second was that there were powerful interest groups in favor of continuing open trade with China, particularly Wall Street, with financial interests seeing benefits from trade and also investments in China.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
you also had a perhaps naive expectation of what trade and economic advances in China would mean for China itself. There was in many places an expectation that a more affluent China would mean a more democratic China that would be an increasingly positive contributor to the global community of nations.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
What practically nobody expected was for China to take a very sharp shift towards a much more authoritarian structure at home and also a very sharp shift in Chinese foreign policy towards close cooperation with Russia and Iran. which has alarmed a lot of the geopolitical experts.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Yes, it's a big number, and the number is nearly $1 trillion. And that's how big China's trade surplus was last year with the rest of the world.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
And so China's return in some ways to its geopolitical stance in the 1950s has made many experts reconsider whether the United States should be almost totally dependent on China for practically every category of manufactured goods.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Trump has really changed the American dialogue. The Clinton administration, the George W. Bush administration, and the Obama administration were just not very interested in tariffs. They saw them as a throwback to economic policies that the world had moved beyond.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
But Trump has now put tariffs once more at center stage as, at least for him, the key component of trying to stop the decline of American manufacturing.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Leaders here in Beijing are certainly concerned about higher American tariffs, but I would not go so far as to say they are afraid. Trump imposed some tariffs in 2018 and 2019 of 25%, and those are still in place. And yet China's exports overall are still growing. A lot of them are just going through other countries to reach the United States.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
So it's possible that almost nothing can really slow down this very fast-moving freight train of China's rising exports, although it seems as though Trump is determined to try.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
A trade surplus means that you are sending far more containers of goods, far more cars, far more solar panels and drones and all the other things that China makes in such abundance. You're sending far more of those to other countries than you're buying. And it's important because
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
China right now is swamping the world with manufactured goods, and that's beginning to cause factories all over the rest of the world to close. So if you look, for example, at December, China's exports were up 17% from one year earlier. Is that a big deal? Well, that's a big deal because global trade is only growing 3%.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
So if the world's biggest exporter is growing 17%, then you know that everybody else is losing market share in a hurry to China's exports. Right. And so that's beginning to cause a lot of concern, as we've seen not just with Trump, but in many developing countries and many other industrialized countries. A lot of concern now in Europe, Brazil, India, Indonesia, Turkey, and so forth.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
about what is going to become of their industrial sector now that China is ramping up its exports of factory goods so quickly.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
He isn't wrong to highlight the US trade deficit. The US is importing huge quantities of goods and not exporting nearly as much. This is not a new issue for the United States and it's not a new issue for Trump.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
In 1988, he warned strongly on Oprah Winfrey's show about...
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
He made it a centerpiece of his platform then.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Yes, most Americans... have benefited from lower prices for a lot of imported goods. Whether it's an electric fan, or an air conditioner, or toys, or clothing or furniture, a lot of these goods are less expensive now because China now plays such a big role in their global manufacture. But the danger for the United States is what happens during international crises?
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
What happens if there's a confrontation or even military standoff between the United States and China? Can the United States keep relying on China for everything? For example, in the early days of the pandemic, the United States really needed N95 masks. Right. But the United States had very little capacity to produce N95 masks.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
And China even briefly halted any export of N95 masks to make sure that it had enough to use for its own use. medical personnel, rescue personnel, and so forth. So the United States found itself really stuck. China then even put restrictions on the export of N95 manufacturing equipment because China's now the world's leading maker of factory equipment.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
And the United States found itself turning to domestic industries. Even the underwear industry ended up making masks, for example, for a while.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
But the United States just didn't have the ability to ramp up quickly or even slowly its own domestic production of masks. And so the concern is that the United States is relying on a country like China that is increasingly a geopolitical adversary for crucial supplies like, for example, the main ingredients of antibiotics and drones.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Warfare has been transformed in the last few years, as we've seen in the conflict between Russia and Ukraine. And China makes almost all of the world's drones and drone components. So there is a nervousness about having the United States rely on them for that.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
That's right. A decade or two ago, China was exporting toys, clothes, furniture, and so forth. But you had a very concerted national policy of moving towards higher value products that would create a lot of better paid jobs.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
And particularly in the last five years, that policy has taken off. And now you see them making huge quantities of solar panels, wind turbines. All but the fastest semiconductors are now made in vast quantities in China. But where you see China's most impressive progress is in the car industry.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Well, five years ago, China only exported a few cars, and they were very cheap, junky cars that went to markets like Syria's market. They weren't competitive on an international market. Today, China has very quickly, just in five years, passed Japan, South Korea, Germany to become, by a wide margin, the world's largest car exporter.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
And the cars that China is selling overseas are no longer junkie. They are good quality cars at very affordable prices. And a quarter of these cars being exported by China are electric cars, which may be the future.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
The car industry is very important to economies all over the world. In China and the United States, it's around 6% or so of the entire economy. It creates millions of well-paid jobs, whether it's in making and designing the auto parts, whether it's in assembling the cars, whether it's marketing. and distributing the cars, whether it's maintaining the cars.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
So there's just a tremendous amount of value in this industry, a tremendous number of high-paid jobs. On top of that, the industry is also important to national security because making cars makes you better at making other kinds of vehicles like tanks and armored personnel carriers.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
It really took four ingredients. It took a plan that was developed more than 15 years ago. It took money. It took people and it took a carefully designed regulatory environment. Let's start with the plan. Every five years, China has been setting a plan. And that plan includes where they want to go in particularly categories like electric cars.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
So in 2007, the premier of China chose a former Audi engineer who was not even a member of the Communist Party. but was a Chinese professor at a university and made him the minister of science and technology and gave him essentially a blank check to spend whatever it took to turn China into a powerhouse in electric cars.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Part of becoming a powerhouse then meant that the banking system backed these car companies pretty much regardless of how much money they lost. They kept shoveling enormous loans into the car industry. And with one or two exceptions, the automakers in China have made almost no money.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Well, the Chinese government, in close coordination with the Communist Party, sets quotas for where the banks are going to lend their money. And so because the banks also in China control almost all of the financing in the country, when the government gives them a target by sector for how much they're going to lend, They go ahead and lend it.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
The people and the regulations are crucial. China now each year graduates more people. engineers, and people in related fields, scientific fields, than the entire number of graduates in the United States. Wow. It's remarkable. It's extraordinary. Only one in five American graduates is in these STEM areas, science, technology, engineering, and math.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
In China, it's more than two in five, plus they have a lot more graduates. So China has ended up with vast numbers of engineers, which means that they're not too expensive for the companies to hire. And they can put them to work on designing ultra-modern factories, ultra-modern cars. The final piece of the puzzle here, where China's been very successful, is the regulatory environment.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
And what I mean is that China has a very streamlined permitting process. It's very easy to get things started. It's easy, for example, to get industrial parks set up It puts in the roads, the electricity, the water lines, even the water purification is done at one great big complex for all the water coming out of all the factories in the complex.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
And the factories can be built in a year instead of four years or more in the West. And then there's housing. China largely prohibits single-family housing. And when factories build a new complex, they also put in rows of 30-story apartment buildings, beautifully landscaped with extensive parks around them so that people have nice views. And the zoning rules allow so much housing construction...
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
that people will pay as little as a couple hundred dollars a month to rent an apartment. And that means that even if they're earning $20,000 a year, their standard of living is quite good.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
China's authoritarian regime has been linked to many human rights violations over the last several decades. But it has also produced an extraordinarily efficient export machine and an industrial policy to encourage those exports on a scale the world has never seen before. And on top of industrial policy, China has also engaged in considerable protectionism over the past several decades.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
Direct, like what President Trump has been doing lately. and also in much more indirect or less visible ways that have proved equally effective in discouraging imports to China.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
In 2008, China raised its taxes on large imported Cadillacs, Mercedes, Lexus, and so forth, cars and sport utility vehicles, to over 100%. So you had to pay twice as much. Incredibly high. You had to pay, well, even now, A Cadillac Escalade in the United States costs $85,000. Because of these taxes, General Motors doesn't even try to sell it in China, but you can buy it through an importer.
The Daily
China Seems Unstoppable. Trump Thinks Otherwise.
But with the taxes, you pay $185,000 for it in China. Wow. So more than twice as much. So not surprisingly, almost nobody buys big American cars, big German cars, big Japanese gasoline-powered cars here in China.