America, We Regret to Inform You That China Is Eating Your Lunch
In global manufacturing at least
Every once in a while, I’m writing about one thing and then something happens that makes me set aside my intended project and completely change gears. That’s why you’re receiving this post instead of the one I’ve been working on for the past few days. Yesterday, I posted a clip from an interview between Tucker Carlson (yes, you read it correctly) and a billionaire hedge fund investor. Here is the text, followed by the clip:
I’ve never posted anything from Tucker Carlson’s “show,” so this should give you an indication of how important this is. This clip is from an interview TC did with Ray Dalio, the billionaire co-chief investment officer at Bridgewater Associates, the world’s largest hedge fund. In this clip, Dalio explains to TC why the manufacturing jobs that Trump has convinced MAGA he’s going to bring back to “make America first” will never fucking return. Anyone who says otherwise is either an uninformed imbecile or lying through their teeth.
My objective was to underscore how far-fetched the idea is that Trump, or anyone else, can bring manufacturing jobs lost to China back to the United States. Even Dave Chapelle, who is no economist, knows what a harebrained thing this is for Trump to even promise:
Given that even a comedian understands how silly the idea of bringing China’s cheap labor back to America is, I didn’t think my little post would be controversial. But alas, I’d forgotten that I live in a country filled with American exceptionalism true believers, who against all evidence, think our country is numero uno in everything. One person commented that “Biden proved otherwise,” referring to the CHIPS Act. The truth is that, even if we manage to hit the Act’s goal of 20% of global production, which isn’t a slam dunk, we won’t even be close to China’s manufacturing juggernaut.
The real intent of the CHIPS legislation is to reduce American dependence on Taiwanese and South Korean chip manufacturing, which together account for almost half of the world’s chip production (that said, China manufactures around a fifth of total chip production). China factors into the equation because U.S. corporations depend so heavily on chips manufactured in Taiwan, there is a huge supply chain risk should a conflict between the Chinese government and Taiwan break out.
CHIPS is a good piece of legislation, but from a global manufacturing perspective, it’s an expensive drop in the bucket, according to recent research (emphasis added):
The CHIPS Act also aims to boost the U.S. share of the world’s advanced chips to 20% by 2030 from none today. But the Peterson report argued that such a leap would require additional government subsidies and overcoming shortages of skilled labor and electricity. It also noted that South Korea and Taiwan are offering their own chipmaking giants generous tax credits to protect their lead in the market. Asking whether the U.S. can meet that 20% goal, the Peterson [the Peterson Institute for International Economics] researchers conclude: “Maybe.”
China’s ascent in global manufacturing is decades in the making. When I had my investment business in Arkansas in the mid-nineties, my firm hosted the First Lady of Ghana and a delegation including the country’s finance and trade ministers, and its ambassador to the United States. In our discussions, I was blown away by the foothold China had established in their country. And that was thirty-odd years ago.
Still, I was totally unaware of what a global manufacturing badass China has become. Then I saw this video a few weeks ago on TikTok. I was so skeptical, that I fact-checked each category to be sure it was accurate. Guess what? It is.
As if on cue, this tidbit from Bloomberg about China’s off-the-chain EV production landed in my inbox this morning (emphasis added):
BYD is the carmaker on everyone’s lips at the moment and the chatter may be about to get even louder. China’s best-selling automaker is due to report its full-year earnings on Monday and revenue could top $100 billion — a first for BYD that would also put it ahead of Tesla, whose 2024 sales were $97.7 billion…
The battery company turned carmaker already sells about the same number of EVs as Tesla — 1.76 million in 2024 versus Tesla’s 1.79 million — but is much larger when all of its other passenger hybrid car sales are included. BYD’s total car deliveries last year climbed to 4.25 million, almost as many as Ford. For 2025, BYD thinks it will ship as many as 6 million vehicles.
To top it off, last week BYD announced it’s introducing EV technology that charges to nearly 250 miles of range in about five minutes; as fast as filling up at the pump. It’s no wonder Elon Musk is getting secret China briefings and hawking his raggedy Cybertrucks in front of the White House.
The US is still number one in armament exports, however…
That video really illustrates how strong China is. I applaud the goals and implementation of the CHIPS act but it sounds as if without the support of the federal government, all the advances will now be DOA. Add that to our loss of standing throughout the world now and it’s clear China is poised to fill the void and do so with more expertise and at a far cheaper cost. Thanks for highlighting this latest Trump disaster.