China’s Export Addiction Is Even Worse Than America’s Import Addiction

In defending President Donald Trump’s tariffs, much has been said about the American economy slowly imploding from importing and consuming far more than it exports and produces, resulting in a global trade deficit amounting to trillions of dollars every year. Common sense would suggest this is not sustainable, and that a course correction is necessary before the country is fully spent and incapable of financially supporting itself, let alone the rest of the world.

But what about countries that depend on exporting most of their goods? Both sides tend to agree that they have been profiting greatly from the current arrangement. Most nations in East Asia have built up their industrial sectors, increased their manufacturing capacity, and have grown from rural backwaters into high-tech, developed societies in the span of a few decades because of this fact alone.

Nevertheless, relying solely on exports can also present serious problems, especially in socialist counties like China. In order to monopolize the manufacturing of nearly all consumer goods, China subsidizes most of its industry, ignores environmental regulations, keeps workers’ wages low, and forces citizens to buy domestic products.

By purposely keeping its people poor, unfree, and carelessly polluting their environment, China can attract foreign businesses to produce their products cheaply there. Meanwhile, the elites on both sides of this trade make gargantuan profits that effectively allow them to dictate policy and guide the public discourse in their respective countries.

While there is still an incentive for export-driven economies to automate and educate their people (since untrained slave labor is less productive), there is little reason to innovate and take risks. Whether it’s a sweatshop making plastic baubles or a factory making smartphones, the underpaid drones staffing and managing these places are still underpaid drones, regardless of their respective training.

Modernization without Liberalization

In hindsight, this is why “opening up” China to foreign investment and making it a trading partner never liberalized the country. If the vast majority of Chinese laborers were never allowed to keep any of the wealth they produced and never enjoyed any rights to free assembly or speech, where would they find the means to change their leadership? Without the presence of American or British armies to enforce such individual freedoms (as in Japan, South Korea, Taiwan, or Singapore), China’s economy simply modernized without liberalizing.

If anything, the willingness to trade with China had the opposite effect of what was intended: China has become less democratic, less free, and less capitalistic as a result of becoming the world’s largest producer of goods. Its elites have been empowered and incentivized to oppress and exploit their people by keeping wages low, creating hazardous work conditions, and denying them access to foreign goods. It probably doesn’t help either that American technology companies supply the CCP with state-of-the-art digital technology its officers then use to oppress and delude their people even more.

And yet, for all its advantages, China’s economy is even more dependent on endless exports than America’s economy is on endless imports. Whatever manufacturing capacity the U.S. has lost, China has an undeveloped retailing capacity. Even if it lowered tariffs on American exports to nothing and economically “opened up to America,” few of its people could comfortably afford most American goods. Yes, enough Chinese will pay for a ticket to watch aggressively censored and airbrushed Disney movies, but they can’t afford much else coming out of the U.S. of A.

Another Great Depression?

Worse still, this dependence on production is even less sustainable than America’s overconsumption. China’s workforce is aging, and its birthrate is well below replacement levels. The same should be said about buyers in the West who also are aging, not having children, and find themselves increasingly unable to buy Chinese products. Even if Trump maintained the same flow of cheap Chinese imports we’ve had up to this point, China’s economy would still necessarily contract in the coming decades.

This leaves the CCP with two options: find a way to maintain production levels and continue its current system as long as possible, or scale down production, privatize the system, and develop its own retail market.

Because Chinese elites desperately prefer the former option that keeps them on top, they are working feverishly to automate all their factories and farms by training millions more engineers, expanding their domestic infrastructure, stealing as much a intellectual property as they can, and developing AI that can replace human laborers.

Although the defenders of the current trading status quo will wax poetic about comparative advantage and how that creates cheaper, better goods while avoiding monotonous, back-breaking work, what they’re really defending is an arrangement that benefits elites, stifles innovation and freedom, and drains the overall wealth of the American middle class. As such, they are compelled to dream up elaborate slippery slopes that lead to $100,000 iPhones and another Great Depression.

It seem more likely that they’re afraid Trump’s tariffs will do what free trade promised to do, but never did: make Americans richer, make China freer, and give both nations a real path forward.

Auguste Meyrat is the founding editor of The Everyman, a senior contributor to The Federalist, and has written essays for Newsweek, The American Mind, The American Conservative, Religion and Liberty, Crisis Magazine, and elsewhere. Follow him on X and Substack.