Keith Bradsher
Appearances
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.