The Economist is a strong supporter of liberal democracy around the world, and it is fully aware of the military threat posed by China in its backyard. On the other hand, it was created over a century ago for the purpose of promoting free trade, so American efforts to limit our exposure to, and dependence on, Chinese exports are naturally viewed with suspicion. As a result, we have seen a series of articles and special sections over the last few months to the effect that de-risking is impossible, or unnecessary, or is already failing. Do these positions have merit?
Here are my reactions to some of these articles:
- On the one hand, we have been told that the American effort to diversify supply chains away from China are a miserable failure, because the Chinese are manufacturing and selling critical components to companies in countries like Vietnam. On the other hand, the numbers indicate that China’s overall trade surplus has dropped significantly. How can this be, if the diversification process has been such a disaster?
- The series on the weaknesses of the Chinese military was based on a faulty premise–that the biggest threat was an invasion of Taiwan. For reasons I have laid out on several occasions, an amphibious assault on Taiwan would be far too risky; the Chinese will rely on missiles and an air and sea blockade instead. Any holes in China’s ability to pull off an invasion are consequently of little importance.
- One cannot logically argue concurrently that de-risking is impossible and that it is unnecessary due to the ability of the American private sector to adapt quickly to supply chain problems.
Like The Economist, I would like to see an end to Trump’s stupid Chinese tariffs, but the Biden approach to tech exports with national security applications makes perfect sense.