AMAC EXCLUSIVE
When American voters head to the polls to vote for the next president this fall, one of the most important choices they will make is on the future of manufacturing policy in the United States. After four years under President Joe Biden largely defined by lackluster growth and empty promises about a resurgence of “made in America” products, the country now has the opportunity to return to the successful policies of former President Donald J. Trump – a prospect which rightly has Chinese officials concerned.
Recognizing the immense appeal of Trump’s efforts to revitalize the American manufacturing sector, Joe Biden pledged on the campaign trail in 2020 to make a similar commitment to bringing more manufacturing jobs back to the United States.
But like virtually every other promise Biden made, that promise failed to materialize. According to the Institute for Supply Management, the American manufacturing sector contracted again in February for the 16th consecutive month, “with demand slowing, output easing, and inputs remaining accommodative.”
Meanwhile, China has seen Biden’s failed policies as an opportunity to revive its own manufacturing sector after years of slowing Chinese growth due to the hardline approach taken by Trump and China’s socialist command economy.
When Chinese President Xi Jinping rose to power in 2013, it was on promises of economic rejuvenation and the realization of the “Chinese Dream,” where a booming economy was fueled by China’s status as a “world factory.”
With Xi’s ascent, however, “the economic growth began to decelerate for the first time in history since the production cycle bottomed out,” Professor Shū Chén Xīng told me. Shū was formerly a law and economics professor and high-ranking official at the Chinese Central Financial and Economic Affairs Commission before defecting to the West.
In response to slowing economic growth, in 2015 Xi launched “Made in China 2025,” an ambitious initiative aimed at making China the dominant power in high-tech manufacturing. The broader goal of the program was to set China on a course to overtake the United States as the world’s largest economy.
Xi ordered economic reforms designed to strengthen and enlarge state-owned monopolies, hoping that U.S. consumer and capital markets would continue to finance his plan. At first, it seemed to be working, with both political parties in the United States failing to stem the hollowing out of America’s manufacturing sector.
But then came Trump’s unexpected victory in 2016. Professor Shū described Trump’s policies as “pouring cold water” on Xi’s manufacturing dreams.
Trump proceeded to impose tariffs on hundreds of billions of dollars in Chinese goods, incentivizing more companies to re-shore production to the United States. Overall, Trump led the creation of 1.2 million manufacturing and construction jobs during his tenure.
Partially as a result of the Trump policies, Chinese economic growth slowed dramatically, a trend which continued even into the Biden years. While many commentators have blamed slowing growth entirely on Xi’s pandemic policies, it is Trump’s agenda which ended the practice of the U.S. government facilitating the rise of China’s economy. Trump also awakened many Western investors to the dangers of doing business in China.
To his credit, Biden has wisely kept a number of Trump’s tariffs in place. But his policy priorities in other areas, namely his ambitions for a “green revolution,” have provided a new opening for Beijing to gain the advantage in the ongoing economic competition.
One former advisor to the Central Committee of the Chinese Communist Party, who spoke to me on the condition of anonymity, said that the CCP “saw Biden’s climate policies as a reflection of Mao’s Great Leap Forward” in the sense that they “looked like a plan in the spirit of the centrally commanded economy with precisely defined goals that socialist countries never achieve” but nonetheless pour endless resources into.
Xi also saw Biden’s climate agenda as an opportunity to open up a new market for Chinese electric vehicles, lithium batteries, and solar cells, referred to collectively in China as “green things.” While Chinese EVs have not made an appearance on American roads – yet – the United States has been flooded with Chinese batteries and solar panels that are effectively subsidized by the U.S. government through Biden’s green energy programs. The CCP economic journal, which I reviewed, found that without exports of green things, “China’s 2023 GDP would have been 2-2.5 percent lower.”
Xi and other Chinese leaders understand that Trump’s election would mean the end of favorable policies from Washington. As Professor Shū told me, “People around Xi refer to Biden as Shui Wang, which means ‘Sleepy King,’ since it is a smooth time for them compared to the four previous years.” Trump’s re-election, Shū said, would be a “Chinese nightmare.”
Trump has notably called for even higher tariffs on Chinese goods – possibly as high as 60 percent or (even 100 percent in the case of Chinese automobiles). A former CCP advisor told me that Chinese economists “don’t know how to respond to Trump’s new policies.”
“No one doubts that a Trump-initiated China-U.S. decoupling is ongoing,” Professor Shū said. “But China wants to slow that process down.” Trump’s election, though, would supercharge it.
As Rep. Mike Gallagher, the outgoing chair of the House Select Committee on the CCP, said last August, “De-industrialization is a policy choice. And it’s been the favored policy of both parties for far too long.”
Trump’s election in 2016 bucked that trend and set the United States on a course to a manufacturing resurgence that would deal a devastating blow to China’s dream of global economic dominance. Now, Trump has a chance to complete that mission if he can win back the White House this November.
Ben Solis is the pen name of an international affairs journalist, historian, and researcher.
