U.S. and Chinese Industrial Policy, A Brief Comparison

An incomplete list of companies banned in China (source)

by Thomas Neuburger

This is your periodic reminder that the goal of U.S. industrial policy is to enrich the rich at the expense of the nation, while the goal of Chinese industrial policy is to enrich China at the expense of the world.

Consider the image at the top. Why are so many American and Western companies banned in China while only one Chinese company is banned in the U.S.? Is it because China has us by the manufacturing gonads?

Of course it is. But why is this the case?

The fact that China leads the world in manufacturing is not an accident, nor was inevitability of population or China's re-emergence on the world stage the cause. China's dominance is not some act of God. Handing the manufacturing world to Asian nations was (and still is) a decision made in the U.S. as a way to hand more wealth to U.S. billionaires. It was an act of policy.

As I put it here ("Two Ways of Looking at U.S. Industrial Policy"): 

Current U.S. industrial policy is to move our consumer manufacturing capability out of the country at the fastest possible rate and to hand the (untaxed) savings to billionaires, using corporations as a pass-through.

That is, the people who control U.S. government policy vis-à-vis the manufacture of consumer products make sure that the nation's manufacturing worker class is made poorer so that the savings in labor cost can go into the pockets of the corporate ownership and financier classes. They do this to the greatest extent possible, and at the fastest rate allowable under current conditions.

They do this by action — through treaties like NAFTA, for example, as well as numerous bilateral agreements — and by inaction, through tax policies that don't interrupt, or in many cases accelerate, the wealth drain out of the worker class (including white collar workers) into the pockets of the international wealthy.

In other words, the U.S. billionaire class, and each U.S. administration since Reagan, have decided to transfer U.S. manufacturing to China as a way to enrich said billionaire class — at the deliberate expense of the rest of the country.

Bottom line: The Chinese government serves China; the U.S. government serves the wealthy who own it. In doing so, the U.S. government serves the interests of China as well.

Thus we now face a situation in which China has almost all the power it needs to exercise coercive control of the world economy — almost, but not quite — while U.S. billionaires like Phil Knight (Nike co-founder; $38 billion at last count) and the rest, having made and pocketed their own money already, now have to turn to the Pentagon to keep the U.S. on top of a potential and looming upheaval:

As the Pentagon tries to prepare the U.S. military for the future, military planners are looking to China as the next potential large-scale threat to the United States. The Defense Department’s most recent assessment of China’s power raises concerns about China’s military modernization and contends Beijing could one day try to dominate Asia or challenge U.S. hegemony.

This is a classic example of reward first, consequences afterward. The reward in this case was the money pocketed by Phil Knight and the rest of his class.

The consequences — well, we're just getting round to those. Until the climate crisis makes the current century nobody's to own (see "There Will Be No Chinese Century"), it's going to be a bumpy ride.