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Notes -
US and Chinese national strategy
Here’s an article about DEI’s negative impact on the US CHIPS Act for reshoring semiconductors:
I note that this is an opinion piece. There are many other issues with the CHIPS Act, this rather dry article lays the blame on aggressive industry lobbying eating the original ‘boost US production’ idea and wearing it like a skinsuit:
Recently the Centre for Strategic Translations recently put out their take on a Chinese book “General Laws of the Rise of Great Powers”, a work designed to communicate to Chinese officials what the grand plan is, what China’s national strategy shall be and why.
Essentially, the book argues that while population size, land, resources and such are important for national strength, the most important thing is technology. Population and land get you into the game, (Iceland will never be a world power) tech lets you win it. With technology you get the military and economic power needed to rule the world.
All facets of statecraft are considered through the lens of how they can develop technology. The chapter goes through how some countries did well and did poorly: the Soviet bloc pursued imbalanced industrialization favouring heavy over light industry. The Great Leap Forward inhibited Chinese industrial development, damaging the agricultural base. Diplomacy affects how you industrialize and develop: Argentina foolishly moved towards the UK rather than the US in 1944 (I’ve never heard anyone else say this before), while West Germany and Japan had good relations with America and were able to quickly reindustrialize with their market access.
The authors regret that just when Song China was at the peak of science and industry, the Mongols showed up and wrecked their chance at early industrialization and world hegemony. Clearly technology used to be less of a key factor back in the day. But China’s time is coming! They conclude that the New China has stable foundations and has made prudent long-term investments in infrastructure and institutions. Unlike the silly Indian democrats, China has no need to pursue popular but foolish policies. Shortly they’ll achieve comprehensive scientific superiority to the US, as the huge Chinese population becomes highly educated. Replace ‘demographic dividend’ with ‘talent dividend’. That’s the plan anyway.
In another poll (scroll down to the graphs), Americans were far and away proudest about their country’s freedom. Wealth, military power, political system… all far behind freedom. What were the Chinese most proud about? Science and technology followed by economic development, then power and so on... See also the stats saying Chinese kids want to be astronauts, Americans want to be youtubers.
You can see a clear national strategy coming from the top down and widely embraced by the population, China wants to lead in all facets of science and technology. They’ve had great success in dominating whole sectors like solar panels, electric cars, 5G and drones. More electric vehicles are made in China than Europe, Japan and America combined.
In addition to science, there’s also ‘national rejuvenation’ which means annexing Taiwan and presumably becoming the world’s strongest superpower. A Chinese acquaintance told me about how the media was going on about the race to acquire ‘Zeus-shield’ (AEGIS-tier) destroyers, it reminded me a little of pre-1914 Dreadnought discourse: We want eight and we won’t wait! Those who are insufficiently nationalistic on the Chinese internet sometimes get cancelled and dogpiled by extremely online, hysterical women. They’re called ‘little pink’ and heaven help you if you besmirch the reputation of the People's Liberation Army - the censors will be knocking on your door. There’s a certain level of nationalist-jingoism in stuff like Wolf Warrior 2 and The Battle at Lake Changjin (China’s two highest grossing films) that might shame even neocons, were such a thing physically possible. I conclude that national rejuvenation is fairly popular too.
The Chinese ending caption:
I’m not saying that a focused national strategy is automatically great. The Soviets had a national strategy and failed because the strategy was based on wrong premises (that communism worked, for one). China’s system does encourage a certain amount of fraud, they accept that handing out billions to semiconductor development companies will produce a lot of waste and failures. That’s a price they pay for speed. However, it seems a much more effective national strategy than America’s.
If pressed, I’d define US national strategy as DEI, green economics and the Rules-Based International Order.
Firstly, the US’s national strategy is unpopular. A lot of people are unhappy about DEI conflicting with meritocracy, a race spoils programs has winners and losers within the country. Green economics are expensive and the rules-based order has many high-profile detractors – Trump for one. An unpopular strategy is harder to implement and it carries the risk of getting reversed. Strategic limbo is not a good place to be. What Americans actually want is freedom, yet US national strategy is going in the other direction.
Secondly, the US strategy seems much less workable. DEI saps efficiency but the rules-based order needs a powerful war machine to suppress two great powers. At the same time, green economics demands huge amounts of capital for investment. It has never been shown that a major economy can operate purely off renewable energy, green economics has a remarkable similarity to communism in its untested and transformative nature. While China invests heavily in renewables, they are also committed to coal power – China is building enormous amounts of power infrastructure generally as part of their commitment to industrialization and technology.
Charitably, there could be a synergy between DEI and the rules-based order in that privileging blacks will make them more likely to support the US in the global struggle. Even so, said synergy seems much weaker than the ‘technology -> economic/military power’ spiral that China’s committed to. African nations weren’t terribly powerful in the Cold War and they aren’t strong now. Wagner can casually coup three of them while mostly focused on Ukraine – Ukraine might be worth 50 or 100 Malis and Nigers.
Thirdly, the US strategy is unfocused and contradictory. There’s nobody at the top directing all the strands into a single, harmonious grand strategy. Thus the DEI strand can harm the Rules-Based Order and interfere with reshoring semiconductors. Greedy and unconstrained companies can consolidate or offshore their production in the first place, creating and maintaining these vulnerabilities. They can lobby so that the state won’t stop them doing share buybacks with their CHIPS funding. The American Affairs article suggests that recipient firms can even invest in Chinese manufacturing facilities under certain conditions, defeating the whole point of the operation! While the US might want to sabotage Chinese growth, they also want access to China’s huge solar industry.
There are also contradictions in China’s strategy – they admit the need to learn tech from overseas but national rejuvenation makes foreign countries anxious about China’s intentions. Nevertheless, the contradictions in US strategy seem greater to me. In the US you have many groups struggling for control, a multi-sided tug of war: hence the existence of this forum. China is not monolithic but the ruling faction enjoys incredible dominance over big tech, doves and liberals. After a significant state harassment campaign they shut down the Beijing LGBT centre.
Fourthly, US strategy seems more focused on wielding strength rather than accumulating it, spending rather than investing. Rhetorically, the strategy is justified with economic theory but those don’t seem to be the underlying reasons. For instance, globalization under the rules-based-order clearly hurt US power. American deindustrialization and offshoring of key industries was harmful and destabilizing. DEI cannot help but undermine meritocracy and efficiency. Recent research has undermined McKinsey studies on the [economic value of diversity](https://thefederalist.com/2024/04/03/new-study-shows-mckinseys-studies-promoting-dei-profitability-were-garbage/
In contrast, Chinese strategy revolves around cultivating strength. Technological power enables military strength, strength grants economic privileges. A victorious China could extract more resources from contested sea areas, Paperclip Taiwanese scientists, open up markets for their export industry.
Lest it seem that I’m slagging on the US excessively, my home country of Australia is just as bad, possibly worse. We dithered on procuring submarines for a decade, costing billions. Now we’re buying hypothetical Virginias that the US probably can’t even produce (the US submarine force is considered understrength already) after snubbing France and Japan. Our military is fundamentally unserious. Our national strategy is to prop up our economy selling iron and coal to China, even as we ally with America against China. Meanwhile we’re also playing the green/DEI game.
In my opinion, the US should follow a more defensive freedom-centric strategy. Dump DEI and green economics and reduce regulations to foster industry. Let people build things, fewer approvals and more construction. Less spying and less censorship. Lower taxes, lower spending. Defend allies without going off on overseas adventures. Instead of an expensive power-projection military, pivot towards a defensive military. More fortifications and missiles, fewer aircraft carriers. Instead of trying to penetrate defended airspace with stealth aircraft, try and defend airspace instead.
Now obviously this won’t happen. It takes a lot of luck, skill and organization to change course for a country like the US. Strategy isn’t coherently decided by a grand planner or a committee as in China, it’s a hodgepodge of vibes, class interests and traumas. Internal or external shocks are important – COVID prompted a global shift towards self-reliance.
Questions: Do you think national strategies are a good idea? Do you agree with my characterization of national strategy for either country?
My complaint with this sort of analysis is that it treats countries as if they were a monolith, like players in a grand strategy game. And they're not, they composed of many different people who all have different goals. Perhaps some of them want to expand and increase their national power, like players in a game of Risk. But most are happy to just sit back, defend what they have, and grow the economy. Iceland might not be powerful on the global stage, but they're doing a great job being happy, prosperous, and secure.
For China especially, I just don't see them wanting to expand aggressively. They're like the US and India- they already have a huge amount of land, people, and resources, there's no need for them to expand. They might attack Taiwan and other nearby islands, but that's more of a political issue. It would be difficult for them to incorporate non-Chinese people into their country- most of us wouldn't even be able to understand what the hell the government is saying, since we can't read Chinese.
I think this view of expansionist-imperialist history is colored a bit by England. They were an island nation, so they had to build a big navy to protect themselves. But once they built that big navy, it was easy to sail around the world, picking up colonies everywhere, which provided more resources, which fed a bigger navy, etc. Other small mercantile countries did a similar thing- Spain, Portugal, Holland, Japan, etc. but England was the most successful. But that's not universal, it's just the unique situation of being a small, technologically advanced, island nation.
What China needs is economic growth and the only way I see that happening is increased trade with the rest of the world. Noah Smith has a locked article arguing that China is doubling down on manufacturing to save their economy as the real estate bubble pops. Makes sense. But you can see the contradictions in this strategy- part of why Chinese manufacturing is so competitive is that their workers are so cheap. And there's a limit on just how much stuff the rest of the planet can buy...
So I guess my view is that no, national strategies are not a good idea, because there are so many different people in power who all have their own idea of what the "national strategy" should be. Perhaps the generals want to beef up the military to fight endless wars of aggression, while the politicians just want cheap toys to grow the economy and make the middle class happy, while the academicians care more about cultural goals like DEI or Communism or whatever. In the end the result is a muddle of all three.
Factories, even small ones, are pretty quickly adopting robotics and other forms of automation. I visited a factory that manufactured dental crowns and had about forty employees. CNC robots manufactured the teeth from blocks of ceramic and artists manually finished the coloring on the teeth to match the client's existing teeth.
There was a team of 3D modelers that fed models to the CNC, but the owner was looking to use AI to reduce or eliminate the amount of work needed in that area.
This is true, and ultimately a detriment to China in terms of manufacturing strategy as the advanced robotics factories have to be installed in place of the old ones, and there are multiple reasons- ranging from economic to political- to build your new manufacturing low-labor-cost factory in somewhere other than China. China could be the place... but if the cost-savings are primarily from the automation, you could just build them behind someone else's tariff wall, and not risk being caught in the geopolitical risk factors.
Currently China is trying to leverage the sunk-cost advantage, rather than a worker advantage, but the key investors on the more advanced robotics factories are external companies, and they are the ones being pressured (or lured) by other governments to be elsewhere.
China will have its own robotics factories all the same, but the normal international response to this is tariff walls to prevent dumping, and the more China leverages it's current strength to keep barries low for its own advantages, the more diplomatic costs it incurs even as it expands the dependence on others to consume.
And this would explain why China needs to expand its international influence to try to prevent tariffs.
Ayup. And why the Japanese economic strategy of farshoring (Japanese companies investing into foreign countries instead of japan), and broader American/western 'friendshoring' (investing manufactories in more local supply chains in friendly-ish countries) is the crux of the US/western divestment strategy: by putting the industry in non-chinese countries, it guides those countries to have an interest in tariffs as an anti-dumping measure in order to keep domestic industry viable and employing.
A further... issue? Contingency? Is that as the PRC investments more influence/resources into keeping trade barriers low, the dependence on the maritime flows increases. This increases the advantage of the US's blue water capabilities, as while the PRC has invested significantly in local maritime denial capabilities, it's ability to project maritime power remains limited and subject to both phsyical and economic disruption. If/when there comes a conflict, the PRC's ability to maintain the low-tariff dynamic will be militarily and not just politically challenged, and various countries will have strong incentives to assume more direct control of their PRC-paid for investments and sell to viable consumers even as the PRC is cut off.
Not a clear or clean approach by any means, but one of the key strategic questions for the US in a conflict with the PRC is how to manage/mitigate the economic fallout.
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