The worst way to compete against China

The worst way to compete against China
Photo by Martin Martz / Unsplash

After more than a decade of keeping on thinking China was the low-cost sweatshop of the rest of the world, the U.S. and Europe are having a rude awakening. China is now publishing more patents than the rest of the world and, step by step, starts to dominate every tech and industrial sector.

So, of course, both the U.S. and Europe are now growing "concerned."

For instance, the now painfully obvious domination of every aspect of electric mobility by China has sparked an EU investigation into Beijing's financial support for the EV industry. Count to ten, and we'll be discussing tariffs on Chinese EV imports.

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If a surge in government support for strategic industries risks fueling a global subsidy war, then the European Union may have just sparked one of its biggest battles.

The irony is that however defensive we get about tackling China's subsidies, it won't change the growing market's perception that Chinese vehicles are technologically better.

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There's no single amount of tariffs that will change the fact that our entire car manufacturing sector has been strategically incompetent. An optimistic view would be to trust that a turnaround is now starting. In this case, tariffs would be a viable short-term tactic to slow down China's exports and allow us to rebuild some level of competency. Sadly, there are few hints (if any) that EU automakers got the memo.

Meanwhile, the payback we'll have to endure from China when we will need to access their proprietary technology might be difficult to bear... As always, when discussing automotive, remember that this is true for a dozen or more other sectors, from luxury to energy.

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China is the current king of new nuclear power construction. The US is attempting to launch a comeback, but its still unknown whether that will be successful.

This is the critical danger for us: thinking that tariffs are a magical Great Wall that will insulate us from having to outcompete, outsmart, outdesign, and outplay critical competitors. And if in doubt, ask yourself if you think that using Trump's playbook for too long seems a bright idea.