China’s Real Industrial Crisis Isn’t Overcapacity – It’s Hollowing Out
Why Beijing fears becoming Britain
Grüezi!
1 The Fear Is Back To Front
Everyone in Washington, Brussels, and Westminster is terrified of Chinese industrial might. Tariffs proliferate. Export controls tighten. Politicians warn of manufacturing apocalypse.
Meanwhile, in Beijing, policymakers are panicking about the opposite problem.
The Communist Party’s 15th Five-Year Plan commits to maintaining manufacturing at “an appropriate level” of GDP.
The accompanying interpretation, released three weeks ago, spells out the anxiety:
“Some advanced economies have attempted to revive their manufacturing sectors after deindustrialisation, but it has proven to be extremely difficult.”
They’re looking at Britain. Manufacturing: 30% of GDP in the 1970s, 8% today. Four decades of reindustrialisation talk. Zero reversal.
They’re looking at America’s Rust Belt – where an NBER study of 1,993 cities across six countries found the US had the lowest share of former manufacturing hubs that successfully recovered. Detroit. Dayton. Youngstown. Decades of decline from which the region “has never recovered.”
They’re warning themselves.
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