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Why China is winning the trade war

Why China is winning the trade war

87 comments

·October 23, 2025

gethly

West moved to service-based economies whilst east built their heavy industries and mining. As services can be always built, the west doomed itself the day it started shipping manufacturing to the east and thinking it can just do the high paying easy jobs from thereon. This is simply the effect of doing globalism the wrong way.

The best part? There is no fixing this. The west cannot afford to start industrialising because it lacks skilled manual labour, it put too many legal obstacles regarding ecology, the costs are astronomical which makes it unviable form day one, and most importantly - it lacks cheap energy which is absolutely crucial to have a blossoming heavy industries.

In short, the west is f'd. Especially Europe as the continent has depleted its natural resources over the millennia.

sct202

There is always a way out and Europe is starting from an advanced spot. Japan went from a isolated medieval country with very little resources except for people and became an industrial power in 40 years.

aaomidi

And now their economy is in a very bad state.

nipponese

They are talking about 1850 - 1890, not 1950 - 1990.

ndiddy

The past 50 years of American economic policy has basically been "look how much money we can make if every other country acts against its own interests indefinitely".

noir_lord

People can be trained, legal obstacles can be removed and yeah it'll be expensive if they choose to do it.

That said if Putin went completely off the deep end and invaded eastern Europe you'd be amazed how fast planning laws on building stuff went out the window - Democratic governments can move fast when they have to but tend towards inaction when they don't.

It's also quite entertaining to just write off Western Europe based on resource availability - China itself is quite poor on natural resources (which is why they've played the long game in Africa so well, they get resources and build a market to sell manufactured goods to at the same time - it's been masterful realpolitik from them).

dataviz1000

Also, Afghanistan. I met a Chinese woman while I was traveling Japan. She was showing me pictures of her last two trips, Nigeria and Afghanistan. She owns a business in her city and employs people from those two countries. They had invited her to visit their homes. I remember thinking looking at how much the people adored her in the images and videos from Afghanistan that she is very dangerous and probably doesn't know it. She had me holding her bags as she was shopping for Rolex watches and handmade tea sets in Kyoto taking advantage of the currency rates in Japan. I'm in South America now and saw first hand how China has huge influence in Peru and Panama. My neighbors in the airbnb in a luxury condo in Lima were mostly business people from China in the mining industry who also spoke English. There is a lot of Canadian mining influence in Peru also. China is also far more connected to Ecuador and Bolivia. Good thing the US still has close ties with Colombia .... oh, wait, they attacked the US Embassy with bow and arrows last week.

If Elon wants access to that lithium he needs to get his shit together.

Good thing for the United States the single most influential person in Latin America is from the United States, Bad Bunny.

noir_lord

Indeed - We are kind of inured to it the "west" (or western aligned so we can include Japan, Korea and Taiwan) because we use Chinese production but we don't use all of it preferring to buy our own brands even if they are using Chinese components or straight made in China but if you step to the edges of the west (say Hungary which is the one I know the best) you see Chinese brands everywhere because they are as good and frequently cheaper and outside of those areas the gap widens further.

The US did (and does) have a counter balance in its complete domination of the tech landscape, excellent sources of capital, "loose" immigration policies and excellent universities - all of which they set on fire for reasons I don't entirely as a European understand.

bilbo0s

>which is why they've played the long game in Africa so well, they get resources and build a market to sell manufactured goods to at the same time - it's been masterful

There are definitely two future bad possible outcomes for the US, and one nightmare future scenario for the US.

One bad outcome scenario is that China and subsaharan Africa figure out that they're better off working in concert than working at odds with each other. (This seems to be happening.)

The other bad outcome scenario is that the EU and subsaharan Afica figure out that they're better off working in concert than working at odds with each other. (This doesn't seem to be happening as far as I can tell?)

The nightmare scenario is, of course, that China, the EU, and subsaharan Africa actually figure out that they don't really even need the rest of us.

uvaursi

Given the size of China’s internal economy I think they already know, just on their own, that they don’t need anyone else and any agreements with other countries are just cherries on top, because you can take Europe and fill a Chinese village with it. This is not a prediction of the future.

padjo

The trick is to not treat it like a zero sum game and to realise that to live a middle class life in America/Europe is to live life of luxury that almost nobody in human history could ever have dreamed of.

maxglute

Well question is how long the structure that enables that life can be sustained. A lot of it is simply inertial from being tech hegemon which makes west price setters, i.e. FX fixers able to leverage indispensable technology to drive up western purchasing power. Once that's gone, when PRC basically can sell you everything the west use to that enables modern development all the leverage is gone and purchasing power will revert towards mean, which for developed countries = down. Things may only decline/contract vs others so fast, but likely noticable amount within a few generations.

alecco

Very hard but not impossible.

fidotron

China is the idea-mine for western services these days too.

Aunche

I for one enjoy my cushy white collared job and breathing air with little pollution. China has it's own very difficult problems that they have to deal with. Consumer demand is low for their economy, their birth rate is even lower than Japan's, and the finances of a lot of local governments are held together by some very opaque threads.

diego_moita

> it put too many legal obstacles regarding ecology,

The biggest problem isn't ecology. It is labor regulation.

One example: Apple handled all its manufacturing to FoxCon because workers committing suicide in their factories is a FoxCon's problem hidden in Shenzhen, it isn't Apple's problem.

Another example: you can't have German companies starting huge projects because in Germany you just can't do the massive firings that Microsoft, Meta and AWS do when these projects fail.

And the list goes on to infrastructure and land rights. Building a pipeline from Canada to the Gulf of Mexico, passing through farm land? Even Republicans would get scared of that.

The truth is that building physical stuff is very hard on the people that do it and sometimes even dangerous.

rybosworld

This is America's version of Brexit.

People are getting what they voted for and they'll be very unhappy with the consequences.

ChrisRR

Unfortunately brexit meant that a hell of a lot of people behind the scenes scrambled to keep life running as usual, so that brexiteers could just say "See? Everything's fine"

locallost

Unfortunately it will lead to further manipulation, as nobody can accept it's their fault. The world is in terrible shape.

vdupras

America is in terrible shape. The world without it as the World Police/Bully is not necessarily worse.

locallost

Unfortunately since the rhetoric worked in the US, copycats have been multiplying in the west, and it's been working. Whatever the forces at play are, they seem to be the same everywhere. Discontent is a fertile ground for manipulation.

tim333

Did they really vote for that? I'm not American but have been quite surprised by the ever changing Trump tariff lottery. Brexit on the other hand was kind of predictable.

diego_moita

> Did they really vote for that?

Yes, even if they don't know it.

You don't sniff cocaine with the intention of getting addicted to it. But you get addicted if you take it and you should know that. So, in the end, you do sniff cocaine to get addicted.

You don't vote to a demagogue to get shafted. But you get shafted if you do so. Therefore ...

Reubend

The tariffs have been a disaster for the American economy. What a tremendous unforced error.

garciasn

We have been assured that short-term pain will turn into long-term gain. Unfortunately, politicians never play the long game; only the citizenry does, by force.

allenrb

My knee-jerk response is that they (China) can “make stuff” and we (USA) cannot. And thinking about it a little more, not sure this is all that far from the mark.

noir_lord

Pretty much - the US spends more on it's military than the next 9 countries combined where the Chinese produce more than the next 9 countries combined.

So if the US is a military superpower then China is a manufacturing superpower.

Anyone who knows history knows how dangerous it is to fight someone who can out produce you even if you start with a military advantage (WWII - Japan and US, Yamamato knew it well)

> "In the first six to twelve months of a war with the United States and Great Britain I will run wild and win victory upon victory. But then, if the war continues after that, I have no expectation of success" - Yamamato.

If the US had continued business as usual they could have divided the world between them but they seem determined to burn every possible bridge they can and live in splendid isolation - which is great except if you are running a massive imbalance on physical goods...

China doesn't really have to do anything to "win" on the international stage - when your enemy is making a mistake don't interrupt him applies and they have their own issues at home.

epistasis

The US can make stuff, and up until Trump took office it was going through the most massive expansions of factory capacity it has seen since the post WW2 boom.

However this year seems to be trying to cancel all those big wins. We do have chip manufacturing, but since most of the battery, solar panel, and EV factories went into largely Trump-voting areas, they are all at risk since they are politically disfavored technologies.

maxglute

TBF Trump1 had consistently positive manufacturing PMI until covid. A lot of that didn't workout. Biden sustained that for 1st half of his term, but manufacturing PMI negative since 2023 and hasn't recovered. Some of that was reshoring effort from covid... question how that played out. Rest of it was dumping chips money. More accurate to say US tried to make stuff under Trump1 and Biden in response to PRC making all the stuff. But it's questionable US will end up making anything except chips because that's strategic priority, which they can't do as profitablly as TW, but it's sector with high capex that skews manufacturing PMI to appear US plans to make more stuff than they acutally are. Though TBH, as you say Trump2 isn't even trying to build according to PMI because he's fixated on engineering a 3rd term.

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alecco

With plentiful energy and a scalable supply chain it would be easy to recover using robots and AI. But the West's leadership has been destroying both for decades. And I mean both sides in most Western countries (Republicans/Democrats, Tories/Labour, etc).

"Madness. Madness and stupidity."

ToucanLoucan

With plentiful energy and scalable supply chain we could've also done it with the people we already have, without creating huge swaths of the country that look barely better off than the fishing villages we blew to shit in Vietnam.

Unfortunately that's not as profitable in the short term as financializing the entire economy was, and we don't make decisions here based on good long-term planning, we let the failsons of the last generations industrial titans decide things they barely comprehend from positions they didn't earn, and they ran the economy into the ground, exactly as the monarchs of eras past did elsewhere.

blitzar

Did America even say thank you? They don't have any cards. They could have at least worn a suit.

nipponese

To all those saying “China can make stuff and the US cannot”: it seems like the “robots” are really coming to both economies in the next decade, and they’re going to put more Chinese human labor out of work than US labor due to the sheer scale of China’s labor force.

With hundreds of millions of dudes out of work, I don’t think “good” things are going to happen with regards to East-Asian political stability.

maxglute

PRC roboticizing more than RoW combined to PLUG bluecollar workforce gap, they're already short on manufacturing labour supply. Well rather kids don't want to assemble widgets. The goal is always to maintain current industrial base with fraction of headcount from demographic contraction, and by "100s millions" out of work, we're really talking about 10s of millions going to retirement and hopefully robots can keep the machine brrrting to replace productivity and drive down costs so system can caretake 10sm retirees with cheap goods - PRC manufacturing sector already down to like 120m from 250m high in 200s. Another 20m in next decade is easily absorbable. PRC just trying to keeping things steady, bad things are going to happen to every one else when they realize they don't have PRC industrial chains to replicate affordable abundance. It's going to extra screw developing economies now labour saving tech + US shifting away from global consumer via tariffs going to kill export-led model dead, and there really isn't another model on the horizon to replace it. VS west PRC going to weather fine at least longer for the simple reason they have stupid high household savings rate, this isn't leveraged US households living paycheck to paycheck that will lead to different tier of instability.

jacknews

this is as impenetrable as it looks

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giardini

Lots of unemployed young males is a preindicator for war. Governments sometimes fear losing control and so will start a war to kill off the young males.

dakial1

The main difference here is that Trump is satisfied with the narrative/appearance of winning, and not really winning. There is no 4D chess on his side other than appear tough and a winner.

China is in it for the long run, they have a strategy and the poorly thought and planned actions of Trump have opened the world to China, so these 3 next years might be the definitive moment when China becomes the de-facto leader of the world.

I imagine that the nail in the coffin would be China managing to get the Yuan as the international currency to trade with its partners.

tim333

I'm not sure anyone is a winner from that sort of trade war. It's more that the US is able to shoot itself in the foot while causing modest damage to China.

Sort of like the wonders of Brexit that the UK is still dealing with.

uvaursi

This was true in the 90s if you were lucky enough to immigrate to China and work there for a bit. You would have seen it unfolding and the West would have been none the wiser, as they were fed with an outdated, short lived period of China which painted it in a slow moving, old fashioned light.

This didn’t happen yesterday and it’s not because of Trump. This started decades ago and unfortunately people who raised concerns were laughed out of the room.

shrubble

Yes people were complaining in the late 1990s about large plants being bought by the Chinese and then the Clinton administration allowing 20k visas for the Chinese workers to take the plant apart and ship it to China.

UncleEntity

Oh, it's worse than that. The companies who moved production overseas are the ones who taught them the advanced manufacturing technologies necessary to make the now offshorn products (looking at you, Apple).

While being able to walk into a Walmart and buy a microwave for $20 is good for 'society' its not so good if you want to onshore microwave production and have to compete against these 'Everyday Low Prices' coming in from overseas.

leviliebvin

Hypothetically speaking, if the average Chinese person was as wealthy as the average American, how would that affect the world economy and geopolitics? What is America so afraid of?

axus

One global hegemon is bad enough, then we'd have two!

But actually it will be embarrassing when China puts an end to the "freedom of navigation" of all those US Navy ships circling their borders.

bluGill

China is clearly aiming to take over Taiwan, and if they can't do it peacefully they are building up a military that can do it. America should be afraid of that.

China clearly support Russia in their war on Ukraine despite pretending neutrality. Europe should be afraid.

China is doing lots of other geopolitical things that you should be afraid draws you in.

realusername

The day the US isn't the top economy, the status of the dollar is threatened and that's the top reason why the US is where it is in the first place.

4gotunameagain

> What is America so afraid of?

Everything. The whole empire exists on the basis of exploitation, and existence of enemies. The US military industrial complex has immense power, and it needs a reason to exist, and keep existing.

ChrisRR

I haven't read the article, but my presumption is that because china hold all the cards