Neither Tariffs Nor Export Controls Will Stop China’s Industrial Engine

The world is abuzz about China’s ascension to technological supremacy, but beneath the headlines lies a more profound reality: Beijing’s industrial engine has been quietly scaling up mature technologies that drive modern economies. Unlike the focus on cutting-edge innovations like AI and semiconductors, China’s true strength lies in its ability to manufacture, not just create.

The notion of “China shock” – first coined during the 1990s when cheap Chinese goods flooded global markets – has been revived with the rise of electric vehicles, batteries, solar panels, and other high-tech industries. However, this narrative oversimplifies the issue, shifting attention from China’s alleged dumping of subsidized goods to who will power industrial growth in emerging markets from Asia to Latin America.

According to Ziang Liu, a researcher at King’s College London and associate fellow of the Royal Historical Society, today’s competition is more about production than trade. This shifts the focus from tariffs and export controls – often touted as solutions to China’s industrial rise – to understanding the underlying dynamics driving Beijing’s manufacturing prowess.

China excels in scaling up technologies like solar panels, which have become increasingly cost-competitive with traditional energy sources. In 2022, China accounted for over 50% of global photovoltaic module production, dwarfing its closest competitors. This dominance has significant implications for the world’s energy landscape, particularly as countries look to transition to renewable power.

The narrative around China’s technological leapfrogging often overlooks the crucial role of state support and investment in driving innovation. Beijing’s industrial policies have long been guided by a pragmatic approach that balances economic efficiency with strategic objectives. This has enabled Chinese manufacturers to develop robust supply chains, nurture local talent, and adapt quickly to changing market conditions.

The consequences of China’s industrial ascendancy extend far beyond trade balances or high-tech competition. As Beijing continues to invest heavily in infrastructure development and industry upgrading, its manufacturing prowess will likely shape global economic patterns for decades to come. The United States and Europe would do well to recognize this reality and adjust their strategies accordingly.

Policymakers should reevaluate the effectiveness of export controls as a means to curb China’s industrial rise. While these measures may seem appealing in the short term, they are unlikely to stem Beijing’s momentum. Instead, they might even backfire by driving Chinese manufacturers underground or encouraging them to seek out more vulnerable markets.

To grasp the full extent of China’s industrial muscle, it’s essential to look beyond the shiny surface of high-tech innovation and examine the underlying manufacturing capabilities that drive modern economies. This requires a nuanced understanding of Beijing’s policies, investment strategies, and industrial development priorities – as well as a willingness to challenge prevailing narratives about China’s rise.

Ultimately, the real challenge for policymakers is not to contain China’s industrial growth but to adapt to its implications. As emerging markets continue to industrialize and global economic patterns shift, it’s essential to recognize Beijing’s role in driving production and innovation. Only then can we begin to chart a course for a more equitable and sustainable global economy.

The clock is ticking – or rather, the factory floor is whirring – as China’s industrial engine continues to rev up. It’s time for the world to take note of Beijing’s manufacturing prowess and start crafting policies that acknowledge its significance. The future of global industry depends on it.