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John Woods's avatar

I appreciate the problem Western economies have with Chinese subsidies but, back 70 years ago, we had the same problem with Japanese technology. The Japanese had no problem setting up factories to produce goods for export with Made in Britain on them because they had named the location of the factories as Britain. We solved this problem by becoming as efficient as the Japanese by allowing them to open factories in Britain to produce the goods we needed. The French had eleven companies producing washing machines when the Common Market opened the borders and import tariffs were abolished. Most of the French factories closed down due to the Italian washing machines being better and cheaper. The same happened in Britain when the restrictions on Japanese motor cars were removed.

A worse problem arose at the start of the 20th century when Germany started a race to build a bigger warship fleet than the Royal Navy. This eventually led to WW1. Given the nature of politics and that China is a dictatorship bent on taking revenge for all the humiliations inflicted on them before 1949, we need to find a way to accommodate their annoyance. No good quoting Machiavelli about making them our friends instead of treating them as our enemies. China looks on weakness as an opportunity to exploit. My advice is to continue to outcompete them in technology using government subsidies to the same extent that China does. That will require cooperation between the countries of the West, in particular the Western members of the G7. It has to start with the Americans who are richer and better placed than Europeans to exploit the advantages of mass production.

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Alex Newkirk's avatar

I will admit that I started sweating when after I submitted my proposal, I got around to listening to the china shock Hexapodia and Noah said to Brad "we do not need a strategic chips reserve". The die was already cast. Thanks again for running this, it was a genuine delight

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