Why China is About to Start a Trade War

Audio Editing by Donovan Bullen
Editing by José Gámez
Motion Graphics by Vincent de Langen
Writing, Thumbnail Design, and Direction by Evan

This includes a paid sponsorship which had no part in the writing, editing, or production of the rest of the video.

With video from Getty Images
With video from Reuters
With maps provided by MapTiler/OpenStreetMap Contributors and GEOlayers 3

[PolyMatter]

Brilliant has a new course on Large Language Models (LLMs) that I think you would find especially interesting. Have a great weekend!

[fallout]

The part about steel is incorrect. The Pittsburgh steel industry collapsed in the 70s, before china opened up. It collapsed because its steel mills were inefficient compared to the Japanese

[TheGrandFissure]

"a trade war.... sponsored by Brilliant" 😂

[eternalobi]

You cannot convince me that this channel does not get some sort of subsidies from the state department

[metallurgico]

Imagine being so american that "china has a problem: grocery is too cheap"

[TheRealZura]

I’m convinced Polymatter and Wendover live in the same house

[AnonAzn-huls]

Exporting surplus is literally what every country does

[KenoticMuse]

Part of this video is a good historical recap of China's challenges, but the conclusion it draws from those historical events are dubious. The US and Europe loves to call things as "dumping" and "trade war" when other countries have goods to sell, but when they have goods to sell to other countries they demand that other countries must open up. This is the nature of trade ... every country feels threatened when their own consumers prefer to buy foreign goods (because it's cheaper, better quality, better value, or whatever the reason might be), because then the government would start to lose control over the local economy. "Economic competition" is good until someone becomes so good that the "game" feels "unfair". What China is doing is exaclty what the US and Europe did during the 70s - 90s, when it "dumped" its excess production capacity into emerging markets, offering goods and services at good prices, and gobbling up new customers abroad. It's tiresome to hear the "boy who call wolf" when economic competition creates winners and losers. This is the inherent risk of opening for free trade, which is that you risk having foreign companies outselling in your local market, and gaining control of your local economy. The US and Europe can't preach free trade for everyone else, but then call "foul play" when they start to feel the negative consequences. This video is more about "trade politics" than it is "trade economics".

[cunxu]

Things are way too affordable

Said noone ever

[JB]

I see, it's a "But at what cost?!" video.

[doneiliragaba]

Every PollyMatter video, “China has a problem..”

[banbooblue]

Boeing receives enormous subsidies from the US, the same as Airbus in the EU. Both dump their products internationally. If your story holds true, then the US didn't pay her people generous enough to buy more private planes.

[henreator]

It is sad to see PolyMatter's video quality declining so much and have to resort to anti-China clickbait

[cosmiceye]

PolyMatter and China deserve to be together. FOREVER.

[voidvector]

There is no reason to assume China wouldn't try to export cars at some point, because it is basically the playbook of other East Asian countries -- Japan and South Korea.

[mindreader]

My goodness, there is literally about nothing in this video that is remotely accurate.
1. The primary beneficiary of Chinese government loans aren't private enterprises but State Owned Enterprises, largely due to the legacy of transitioning from a state-owned economy to a centrist if not market-oriented economy (especially prevent unemployment in the 1990's). The Chinese steel industry has large over-capacity but still receives government loans precisely for this reason and it doesn't affect a steel mill in Pittsburgh one bit. Around 70% of all Chinese government loan programs go to these SOE's
1a. Some random private company that exports bicycles or shirts can expect a government subsidy of about zero. See point 1
2. Private "strategic" industries mentioned in this video such as EV or solar panels point to Chinese subsidies, but I wonder why it neglected all those European and American subsidies that continue to this day. No mention of the $7, 500 subsidy for Tesla but only if its battery and eventually all material and parts are produced in the US? And don't get me started on solar panel subsidy. The Europeans basically started that. Let's not also forget the Chip Act for semi-conductors, farm subsidy, Build Back Better and whole slew of acts that came out just this past year. Oh, who could forget Boeing. This makes claims of Chinese subsidy highy facetious
3. Cut corporate tax rates? See TAX CUTS and Jobs Act of 2017. Also, fun fact, corporate tax rates are higher in China. Want to see a tax haven, see Ireland, where a whole slew of Euro/American companies are domiciled. I'm sure it's because of the number of sheeps there
4. Cutting down on unemployment, social security, pension and disability benefits? You mean, when those government-ran (of course) plans went insolvent in the 1990's because they ran out of other people's money? That seems to be happening to every government ran social security, pension or healthcare plan globally
5. Sure, China constructed roads, bridges, ports and pipelines for the benefit of "private corporations" if we pretend the public doesn't benefit from those, such as having employment opportunity. It also helps if we ignore the pesky fact that China also built whole slew of public transportation, schools/universities, theaters, parks etc. It helps if we pretend that the Chinese government doesn't directly subsidize its population in cost of living and what have you
6. Ignore environmental regulations? Per the Air Quality Life Index produced by the University of Chicago, China reduced its particulate emissions by 42.3% between 2013 to 2021 and lengthed the life expectancy of its citizens by 2.2 years. Without China, the global emissions average would have INCREASED instead of DECLINED. What this video doesn't point out is that, China is not ignoring environmental regulations. But rather, when you have a poverty-stricken populace in the 80's and 90's, alleviating poverty had to take priority. Now that it has reached certain level of its economic development, it can consider other aspirations
7. Keeping its currency values artificially low? You mean like the US and Europe that can conjure money out of thin air? That doesn't devalue its currency?
8. France has a competitive advantage of producing wine? What's the opportunity cost of all that land/water producing said wine? How many jobs does it create? How much value-added economic activity does it generate? A manufacturing economy, even textile or unskilled labor is FAR MORE value added than producing wine. You start by providing poor laborers with jobs and prospect with the goal of climbing the value chain. That is China's industrial policy. From shirts and toys to electronics to telecommuncation to Artificial Intelligence and beyond. Your vineyard will produce the same land/water intensive niche product year after year. China has NO comparative advantage in producing tea, rice or porceline in the era of industrial level farming and cheap labor abroad. It buys rice (and other raw materials) for LESS THAN A QUARTER the cost from countries like Vietnam then sells MANUFACTURED GOODS back to Vietnam, retaining all the value-added activities
9. Its no coincidence it produces the world's cheapest bikes and television. Because it has BY FAR the most complete supply chain, world class logicistics/supply chain management, large relatively-skilled (as opposed to unskilled) labor and world-beating infrastructure with a government that is very business friendly. It doesn't produce the world's cheapest toys and cloths. Hasn't for almost a decade now. Know why? Because those are only LABOR-INTENSIVE
10. In a world swimming with debt, perhaps don't call on China to boost domestic consumption too soon too quickly? Which one is it? Does China have a debt problem or savings problem? Because you can't have both

[headerbidding]

China: build a road to help people move around.
Polymatter: it could be a violation of trade law.
This logic is completely mind-blowing

[changshu]

PolyMatter:
Affordable Cars: Unethical
Expensive Cars: Comparative Advantage!!!
How educated.

[michaelflores]

"Why China is About to Start a Trade War" – my question about assertions like this is whether or not the author will make a follow up to their claim. If there is no trade war, will there be a "Why I Was Wrong" video, or are we just baiting viewers with a fear-inducing headline here? I say this as a longtime viewer of PolyMatter, big fan of the videos in general.

What a stretch to use French wine as an example. French agriculture is heavily subsidized and protected. And they only get away with the high prices because they were able to come up with this denomination protections that I don't know how they were able to enforce internationally. Remove the subsidies and the French farmers would no longer be able to play farm.