Speaking of economic wars: In solar power systems, essentially all of the smart electronic boxes (inverter/controller/battery management/etc.) are manufactured in China. US brands are almost entirely contract manufactured, and typically OEM rebrands of a Chinese design with some amount of customization. This is especially true of the current devices of choice for private and small business solar installations: The AIO (all in one) box, which simplifies installation, operation, and monitoring. The main EG4 (Texas) AIO, for instance, is a rebrand of a Luxpower (China) product, the (Chinese) Deye inverters are rebranded for Sol-Arc, sold in the northern US and central America, called Sunsync and sold in the EU, called inverex and sold in Pakistan and so on and so forth.
The Chinese are not interested in the competition between these rebrands -- each is given a region and a monopoly for what is sold there. There has been speculation and concern that such China-manufactured products may contain a backdoor to allow remote shutdown, which could be used to cripple both the US electrical grid and stand-alone solar powered sites should relations with China sour into open or cold war. People who have worried have been told that they are racist, fear-mongering conspiracy theorists for having such ideas, because of Climate Change.
Well, on November 15, the tin hats have been proven correct once again, at least in terms of Deye products. Deye "bricked" a number of Deye-branded AIO inverters, mainly in Puerto Rico, but some reported in the US, Canada, Pakistan and Costa Rica.
The inverters were shut down and displayed the following message:
This inverter is not allowed use at Pakistan/USA/UK
Pakistan contact inverex
USA contact Sol-Arc
EU contact Sunsync
Pls return to your supplier.
The following page requires a 5 digit passcode to start This passcode is generated overseas
Please have your passcode ready. [PROCEED]
So if you got the message in error, you could in theory get your inverter to start again. Otherwise you have a nice brick. This appears to be response to a Sol-Arc suit claiming Deye was not doing enough to stop dealers from selling Deye-branded versions of their inverters in their contracted exclusive territories, but you cannot rule out a Chinese cyberwar limited trial shot after the Trump election, preparing for conflict with the US, with the above as a cover story.
It's been two weeks and nobody has reported receiving any passcodes so far.
Discussion thread here in the DYI solar forum. There are thousands of messages but not a lot more information than what I posted here.
Here in Sweden I ordered an Austrian solar inverter (Fronius) when we had our PV install in 2020. But the supply was out. So our installer swapped in a Huawei last-minute, instead, to my chagrin. That turned out to be just one challenge ours and other firms had with supply and working capital that year as the installer went into bankruptcy just as our system was put in, and we only barely got the panels installed at all, with another 14 local customers left in the lurch.
So, now I'm about a third of the way through the useful life of this Huawei inverter and thinking that I'll definitely pay what it takes to spring for a non-Chinese one when it's time to replace it. I certainly hope in the meantime that I'll not be the victim of a cyberattack or "bricking" the next time Sweden pisses off China! In any case, I assume that our entire national electricity grid and auxiliary telco systems are potentially vulnerable to such sabotage, so my Chinese solar inverter could be the least of my problems.
We had almost the same story as you. The young and competent group that installed our solar dropped out of the business and the fellow who took over went to jail. Wellcome to the wonderful world of being the sys admin of another household system.
I am in Sweden too. Our samfällighet (note: this is a Swedish thing. It's sort of like a condominum association, if I understand how that works in the USA) keeps getting pestered about these wonderful deals to install solar panels on the roofs of our houses and save money. I haven't been able to find a Swedish manufacturer that isn't just a chinese rebrand. Know of any?
Well, firstly, don't let fear of Chinese industrial sabotage prevent you from springing for buying something that makes sense in the meantime. As I said, Chinese equipment is in everything already, so there's no escaping it if there really is a whole backdoor ticking time-bomb in everything coming off Chinese manufacturing lines. Secondly, even if things are manufactured in Sweden or Europe, they still are often drawing from intermediate goods and parts from China, which could, theoretically, also introduce such a vulnerability. It's easy to wonder whether paranoia is warranted or an overreaction!
That said, I think it's still important to support Swedish domestic industrial capacity for the reasons stated in Noah's essay. I drive a Volvo even though Volvo is owned by a Chinese company. My Volvo was at least still manufactured in Sweden. It's a shame that Swedish governments in the early 2000s and 2010s didn't see protecting local manufacturing as a priority, but they've belatedly gotten wiser to the threat. I think Swedish consumers should be willing to pay more to do the same.
And there actually do seem to be some niche solar producers in Sweden, like Midsummer in Järfälla. I was trying to purchase German panels and Austrian equipment for my home, but failed. Probably easier today.
Basically, over the past decades, progressives have been so preoccupied with whether they could tear down the military-industrial complex, they didn't stop to think about whether they should.
This is unserious. No one tore down the military- industrial complex. It was the deliberate choice of American companies to shift manufacturing overseas while opposing tariffs. Wall Street cheered this on, making more money on foreign loans and financial products rather than lending money to domestic manufacturers. The destruction of unions meant the end of the principal support for tariffs and investment in domestic manufacturing. None of what Noah describes is a revelation — it was the natural result of off-shoring and free trade. Indeed, America has been functionally pursuing an anti-industrial policy since the 80’s.
American workers paid the price for this situation. It is entirely predictable that American companies now want taxpayer dollars to bring back industrial capacity. This may work in a few select areas but we have lost 2 generations of knowledge regarding industrial production.
Our laissez faire economic system has generated a lot of profits but has left us with not only a decimated industrial capacity but fully exposed to the aggressive, disciplined, multi-faceted and coordinated economic strategy Noah describes. The US not only has no plan to combat this but lacks any institutional structure with authority and resources with which to do so; indeed, many American companies and conservative groups have long opposed any such undertakings as putting us on the road to serfdom. They vehemently opposed the recent industrial policy intended to encourage domestic chip manufacturing and it hard to see any principled way for them to change course now.
You apparently don’t read the same things I do. I’ve seen endless attacks on the military industrial complex from the left and uniform votes to diminish spending for defense. The stupidity of exploiting the “peace dividend” certainly wasn’t done by the left alone, as the right in its long current state as the Republican Party proved itself as able as Democrats to spend like drunks when they had power during Bush II’s administration.
Also, unions got a nasty reputation. Hoffa, Jablonsky’s murder, the mob seen everywhere in unions, and many seeing no value received for their dues. The exception is government workers whose circumstances are greatly different than those of industrial and service workers.
Isn't the massive pressure for Western government to cut defense spending driven fundamentally by their ever-rising (pension and healthcare) expenditures on old people?
Richard Aboufalia, a great observer of all things flying, as a good take on Elon's tweet about the end of the manned jet fighter.
" In 1957, the UK Defence White Paper stated that the English Electric Lightning would be the last crewed fighter the UK needed, because missiles were the future. The UK, like other powers, quickly discovered that not all security problems could be solved by lobbing missiles at them.
After bombers and missiles, fighters were going to be vanquished by UCAVs. The US FY 2001 defense authorization act, passed in 2000, aimed to make “one-third of the aircraft in the operational deep strike force aircraft fleet” unmanned. Fast forward 25 years, it’s Zero Percent."
"The problem is that combat aircraft need payload and range, especially range. That makes them expensive, mandating survivability equipment (EW, etc.). Until we have guaranteed encrypted connectivity with no latency, they need sensors, too. At that point, a human in the cockpit is a tiny part of the cost buildup, and an insurance policy against vehicle loss or capture. Also, having a human on station is essential for Operations Other Than War (OOTW). So, while they proved useful as targeted assassination tools, UCAVs weren’t worth it as fighter surrogates."
I take his point, but I'm always wary of these sorts of arguments. That is the arguments that go "X has always claimed Y and always been wrong". It's a good heuristic when you don't have the ability to look at things from first principles.
I mean, is the claim that automated systems will *never* be good enough? That seems ludicrous to me. Thus the argument hinges on *when* they're good enough.
Aboufalia’s point is that pundits and experts make bold predictions about systems disrupting & dominating the landscape in the future and fall far short of what reality actually enfolds. He’s not saying unmanned/automated systems won’t play a role. He’s saying these systems will play a role far smaller than envisioned.
In a similar way, dominant military powers (including the UK and US) have often fallen for the appealing fiction that high-tech seapower or airpower can stand in for sheer mass and manpower in war. But you can't win a war (or more specifically the peace) with aerial bombardment, as all the Gulf Wars taught Americans (and as Vietnam and the WWII Strategic Bomber Commend had long before). You also can't launch enough super-high-tech cruise missiles to pacify your foes, no matter how many times Americans tried it during the GWOT and during the Clinton years before. Way back in the Truman and Eisenhower Administrations, military planners took very seriously the idea that the novel advent of atomic weapons could be a "cheap" way to win wars without having to spill the money and blood that the world wars had demanded. They were wrong, too.
Russia has been lobbing missiles of all kinds at Ukraine for years now and it's still the hundreds of thousands of bodies it's compelling to the East that are actually moving the front lines. Its own nuclear bluster hasn't accomplished much and it's still grinding it out with a smaller, non-nuclear neighbor. Ukraine, for its part, is fielding an impressive swarm of drones, but to little strategic effect in the war of attrition. That war will be won or lost by millions of men in muddy holes with a hail of artillery shells flying overhead in a manner that is disturbingly similar to WWI.
You probably could "win" a war with aerial bombardment alone if you used nuclear weapons, but most armies usually prefer not to turn the land they're fighting over into a pile of radioactive ash.
Well, again, you have the issue of "winning the peace." So even if the defeated adversary isn't a desiccated waste like something out of "Fallout," you have to occupy it with boots on the ground, endure a potential insurgency, and somehow engineer either an outright indefinite colonial occupation or install a sympathetic government that's both friendly to your interests and legitimate enough to actually survive for any relevant period of time. We can count on less than one hand the number of times that all of that has actually been pulled off and the answer is WWII-era Japan and Germany, only.
Even with the maximum application of manpower and conventional force, wars are pretty impossible to really "win" now, if they ever were.
Noah, you’re making a classic mistake that non-military commentators commit.
Technologies don’t become obsolete because a counter exists, they become obsolete when something else can do the job better.
Drones may be good at delivering small payloads, but they’re not remotely close to the fighter jet’s air-to-air capability, let alone an improvement on it.
Until stealth UCAVs can down an F-35 AND any model of drone can deliver large payloads on targets within minutes, jet fighters will still be needed.
ED: All that said, though, the overall thesis is still correct. The US is woefully underprepared. It saddens me to admit that Taiwan is basically unwinnable unless we have some sort of magic cyber advantage that ALSO cancels out the dramatic damage the Chinese could do with a cyberattack of their own. And this is all because we didn't prepare our MIC starting 20, 10, heck even just 3-4 years ago, to win a missile-and-drone war over the Taiwan Strait.
We should just start focusing on how to prepare to merely weather the first phase of the next conflict and win the second. But, of course, Trump won't do that. The best we can hope for is that he bumbles so erratically that it distracts our adversaries from lapping us too hard.
Another thing that I wish Noah would at least acknowledge is where all those munitions would go in the opening weeks of an existential hot war. China is not capable of directly threatening NA-based manufacturing. Not even close. Those little drones can’t fly across the Pacific Ocean, and while you’ll assuredly get some acts of sabotage here or there those are easy to defend against - and the damage easier to recover from - when compared to, say, a fleet of B-21s carrying dozens/hundreds of standoff weapons with 1000lb warheads.
Which is to say that a lot of the most critical wartime manufacturing capability will likely cease to exist in the span of days or weeks. We can argue about how successful it will be or the exact percentages, but the point remains that China does not have the capability to credibly threaten the US/NA in this way yet and likely won’t have it anytime soon. The US and its allies very much do have that capability with regard to China. And then the question changes from “can the US build more batteries than China” to “can the US build cruise missiles and stealth bombers faster than China can build battery factories?” And the answer to that question is a resounding “Yes.”
Those millions of drones can’t DO anything without a soft target within a few dozen miles of wherever they’re deployed. They can’t threaten a carrier group or a stealth fighter or bomber. They are useless against a submarine that just launched 100 stealth cruise missiles that might single-handedly disable or destroy 10% of your battery-making capacity in one go. They can’t threaten the mainland US - you’d have to ship them here first and it’s not so easy to sneak millions of armed drones past customs during a war.
Also on the battery front: a drone does not require a huge battery. This battery manufacturing advantage would matter a lot if we’re talking about grid-scale storage or EVs or otherwise things that consume a lot of battery production capacity. A drone battery is not one of those things. Battery powered fighter jets and stealth bombers are a pipe dream with any current or planned battery technology.
To put another way, a fraction of the battery production capacity of the US/NA would be plenty to equip all of the drones China builds today, ten times over. The batteries aren’t the limiting factor here. Maybe we have enough battery capacity to build a billion drones per year but China can build 6 billion - assuming the batteries ONLY go towards drones. Does that actually matter? I don’t think it’s a given that it does. Nevermind potential upsets to that equation, like laser weapons becoming fielded en masse and completely undermining or eliminating the possibility that drones in any quantity will be a decisive factor in a war.
It’s like saying we’ll definitely lose a war because China can make a trillion steak knives per month but the US can only make 10 billion! Sure they can be weapons; but most things don’t become world-beating super-weapons just because you built a lot of them. This is in a similar vein to hand wringing about who can build more artillery shells. E.g. if China can’t establish a beachhead in Taiwan, then those quadrillion artillery shells they can crank out every nanosecond might as well be on the moon for all the good they’ll do.
In the long run I agree wholeheartedly with the premise, so this is somewhat nitpicking. But it makes it a little harder to take the viewpoint as seriously as it deserves to be taken when pretty basic and obvious (IMHO) issues like this are assumed to be irrelevant because one number is bigger than another. I massively respect Noah and I think he is constantly on the money here when it comes to flagging our industrial and military capacity as a major issue that must be addressed for liberal democratic values to continue to dominate, and the world to flourish as a result. In light of such stakes it’s not too much to ask for a bit more consideration of these factors, maybe adding a consultant or two. I’m available! 😇😁
You should write a post about what the world would look like if China successfully invaded Taiwan.
I know US allies would lose trust in the US’s ability or willingness to protect them. Computer chips might be a million times more expensive (or full of Chinese spyware). But how different would that world be?
I'm skeptical of any "slippery slope" arguments, but there's also the matter of what happens after China is able to break through the "first island chain." Would it be some nightmarish version of the Cold War "domino theory" of Communist dominance over a region?
Or would China "just" be content to consolidate its position in the "Greater China Region" of Taiwan and HK, with the possible continuation of its de facto annexation of the entire South China Sea?
I'm also skeptical that China could even pull it off. This is a military operation that's WAY harder than D-Day, with an unprecedented amphibious invasion over a huge and stormy strait, under heavy fire that is only the beginnings of the challenges that await that force on the beach trying to sweep a mountainous island imprinted with decades of fortifications and defenses. And, again, remember that this is a military that's essentially untested in actual combat since 1979. It's hard to do stuff like this! Like with D-Day, you couldn't just stage a surprise invasion: there would also be months or years of preparations that would be increasingly obvious to outside observers. Think about Russia's mobilization for the comparatively "easy" overland invasion of neighboring Ukraine. If people didn't see that coming, that's only because they assumed Putin was bluffing and wouldn't dare actually pull the trigger. In China's case, there would be no plausible deniability to the unimaginably large naval mobilization for half a year that it would have to stage to give the operation any chance of success.
Either way, assuming China could actually pull it off, Taiwan's fall would pose a potentially existential risk to both Japan and South Korea, which rely on the Taiwan Strait for the vast majority of their imports and exports. Suddenly that extremely vital international sea lane becomes domestic Chinese territory, sealable at any time. That would definitely introduce a level of martial paranoia in both Japan and South Korea that might encourage them to dust off their Cold War nuclear weapon programs and buy the ultimate insurance for real this time. Not that that would resolve their sudden strategic dilemma: China would still have its hands on their throats. So they might vacillate between appeasing their neighbor or rapidly militarizing against it. Again, though, neither stance would resolve the structural vulnerability that is now permanent.
I've posed this question before: would the Taiwanese leadership actually put up a fight as we've seen in Ukraine against the Russians, if China actually attempted to invade?
So, let me say firstly that we have no clue. We've all heard the Clausewitz quote (or was it Prussian Field Marshal Helmuth von Moltke the Elder...?), "No plan survives first contact with the enemy." That works in both ways, too. China might decide to go for it and IMMEDIATELY come to regret it.
It was far from clear to outside observers that Ukraine had the fight in them, even to themselves. People (especially Putin) also *overestimated* Russia's ability to steamroll the Ukrainians in days or weeks.
So, from where I sit, I see a Taiwan that has some major structural advantages in defending an island at some remove from the Chinese mainland from a potent, yet untested military that would not be able to quickly amass the usual ratio of force to ensure victory in an amphibious assault. And the Chinese aren't the first to assess this: they're dealing with the exact same dilemma that the Americans weighed in trying to dislodge the Japanese from Taiwan in WWII. The Americans at the height of their military power decided not to go for it. Just like they decided that any conventional invasion of Japan would be a disaster.
On the other hand, Taiwan isn't showing much fight currently. They aren't budgeting as if they are a nation under existential threat of invasion. Their too-small and under-resourced military can't even meet its modest recruitment goals. One reason for that is that military service is ill-paid and low-status in high-income, high-tech Taiwan. Are we seeing a country that's too decadent to survive? Taiwanese people do seem to be rather blasé about the whole thing. Which isn't unusual, certainly: I'd say the same thing about Europeans in the face of a very real Russian threat. Or even Americans, for that matter, when we aren't really getting serious about domestic industrial capacity, per Noah's essay.
And what would "getting serious" look like? During the height of the Cold War, countries were spending 6-7% of their GDP on the military. Taiwan spends 1%. During WWII, the UK and Soviet Russia were spending *80%* of their GDP on the military. That's what you do when you actually perceive threat. It would mean higher prices, less convenience, many difficult fiscal tradeoffs, lives disrupted by mandatory conscription and military service, and a culture of vigilance and resilience. Taiwan reportedly isn't there. So, either the Taiwanese are right that this whole thing is overblown, or they just don't want to pay the price to be free of Chinese domination.
But maybe that changes the minute it's clear that China is actually serious in its threats and the implications are drawn into stark relief? That seems to be what happened in Ukraine.
Taiwan has a major weakness that Ukraine doesn't. Ukraine's back is up against a sympathetic Europe. Cross the border into Poland and the shooting stops. Taiwan has no such backstop.
Would the Taiwanese industrial leadership permit their factories to be bombed? Maybe they'd make the calculation that they'd still be rich under CCP rule.
Even more so, they're an island and will run out of food, fuel, etc. at some point. I believe the Chinese playbook is less "D-Day" and more "Cuban missile crisis"; create a blockade and dare the US to break it.
I agree with you. If I were China and determined to annex Taiwan, this is what I would do.
-It creates a way for Taiwan's allies to squirrel out of coming to her defense. During the Cuban Missile Crisis, JFK could have decided that brinksmanship wasn't worth it and looked the other way. Trump will be very likely to opt for appeasement and no other Quad ally is going to come to Taiwan's aid without the enthusiastic leadership of the United States, even if it creates a strategic liability for them.
-Like a siege, a blockade plays to the strengths of the attacker who has access to resupply vs. the defender who is slowly strangled. Taiwan is almost entirely dependent upon fossil fuel imports for its primary energy (which is another example of the country just not taking resilience very seriously at all).
-It also creates optionality for China, in that it could just continue the siege, call it off without losing too much face or deterrence, or "escalate to de-escalate" by making a feint of actual invasion or overwhelming missile barrage designed to get everyone to "negotiate" Taiwan's de facto surrender.
-It is also bloodless and wouldn't surface harrowing media images of Taiwanese suffering under Chinese barrage and invasion, reducing the humanitarian impulse and geopolitical outrage to "do something."
-Lastly, blockades can go on for a long time and become boring, even if they persist. Western citizens will lose interest after a few months, like they have in every other conflict (including Ukraine). Especially in our era of disruption, where the latest outrage only lasts one news cycle before being displaced by the next one.
I don't foresee China opting for this in the next year or two, but it might well-do in the back-half of a Trump Administration.
I had an old friend, who flew during the Qemoy Matsu dustup in the 50's. Great guy and sadly gone now. It is interesting that Qemoy and Matsu are still controlled by Taiwan and are only a couple of miles from the mainland. Another point on the first island chain is that Japanese islands are 100miles or so from Taiwan.
I wonder what will happen to the Chinese sand islands in the South China Sea when they are hit by a typhoon.
Well, considering the speed at which they have dredged up these islands out of nothing and fortified them in the first place, I don't think that would do much to dissuade them creating facts on the ground in the South China Sea, honestly.
Blockading Taiwan with its large and growing navy would serve China’s purpose. It would put the US in the position of a naval war with a China close to its bases and the US far away, attacking mainland China with those concomitant risks, or pretending that mouth-music actually meant something. The CCP is very skilled in playing the Warm War game.
Yeah, Japan and South Korea would have to make tough decisions. But what would happen afterwards? Cold War II, or would China become a US-post-Cold-War kind of hegemonic power on the world stage?
There might be too many variables to make a good prediction at the moment
It's clear that no matter what China is going to shake up the power balance in the Pacific. Let's say that China is able to annex Taiwan without a global war and then we're a few years out from that paradigm shift. Perhaps by blockade, as suggested above. It's now 2030 and Taiwan as integral part of China is as normal as we now find Hong Kong's diminished status.
To China, this new equilibrium of dominance over the First Island Chain and by extension the Western Pacific, will be just right and proper, in the same way that a rising United States imposed the Monroe Doctrine on the American Hemisphere. Or how the post-WWII order invited in the American Century, with American military bases hosted in 120+ countries.
Because that's the thing about being the hegemon: you're legitimate in your own eyes! It's important to also see the current state that China is trying to disrupt from a more objective angle: China today is ringed and nearly encircled by American military bases and allies on all sides! At one point that even included its Western frontier, with the twenty-year American occupation of Afghanistan and alliance with Pakistan. That's an unusual state of affairs!
Americans, if they think about it at all, see this as normal and good and don't perceive that defense is experienced as offense to your adversaries. So we'll experience any rollback in that unprecedented power-projection ability to be threatening and intolerable, initially. America's allies will also be initially very threatened by the inversion of the power-dynamic, even as the Pax Americana hasn't always been welcomed by everyone all the time. We'll still have the "unsinkable aircraft carriers" of Guam and Hawaii and some nominal military presence in Japan, Australia, and South Korea, but it will be clear that we cannot match China in her backyard across the "tyranny of distance" that the Pacific Ocean represents. Probably, military agreements with the Philippines, Vietnam, and Singapore will be softer, cancelled out by parallel Chinese basing, or negated entirely by one side or the other (as we've already seen in the Philippines until recently). So, basically, Americans trying to dictate anything in SE Asia or East Asia will become as laughable as China or Russia trying to rule the Caribbean or Mediterranean. That will be a huge shift for people like me born in the late 20th Century, but maybe not that weird, actually?
And I'm not trying to be "whatabouttist" here, either. I do think that an American geopolitical order has many benefits over a Chinese-dominated one, at least under the current CCP regime under Xi's increasingly nationalistic leadership. As China dominates the Western Pacific and begins to roll back American influence to the Second Island Chain or further, it's going to be noticeably worse in every way for China's neighbors, in my view. East Asia will revert to the historical norm of being tributary states to The Middle Kingdom, forcibly subject to its economic and diplomatic order and with their own interests and sovereignly subservient to China's. Japan's share of the world economy is already decreasing relative to China's. That will continue as China continues to swallow its electronics, auto, and manufacturing exports industries. Ditto with South Korea. So these wealthy East Asian democracies will be countries in inexorable decline and always forced into placating China. Maybe they will even be forced to hand over key islands and oceanic territories to their big brother next door, as countries surrounding the South China Sea have already had to, de facto.
But, on the other hand, this new situation will quickly become normal and tolerable. The world's economy already flows through China today. And trade with China is both profitable and increasingly unequal, at the same time. So many Japanese, Korean, Singaporean, Malaysian, Taiwanese, Philippine, Vietnamese, and Australian elites will be quite happy with the "new boss same as the old boss" dynamic, and be drawn into the benefits of allegiance to China, as long as they play by China's rules. The same will happen even across the Pacific in the United States. Americans, like the British before them, may grow fatigued of maintaining their shadow empire over the horizon and forget the tangible benefits to them it brought. Like today, they will have some angst around the economic shifts that a Chinese rise have created, with domestic winners and losers. But, ultimately, they may even enjoy the fruits of greater Asian integration under Chinese dominance. And, like today, China will co-opt American elites into its imperium, blunting criticism and resistance to its dominance. Eventually, we'll see nothing remarkable about China, one of the world's most populous countries, dominating Asia-Pacific, at least.
If China's population were growing, I think the state of affairs you lay out would have a high likelihood.
And it still could come to pass. In taking Taiwan in a short war, affairs could change greatly in a short period of time. But it's more likely to be a longer process, which China likely doesn't have.
China's great moment appears to already be over, but with some remaining momentum, it has about a decade in which it could dominate. By 2040 its economy will likely be shrinking, it will have an older population than Japan, and not much ability to project more power.
One of the less-explored futurism concepts that I find optimistic is that we're all swiftly getting too old to wage war the way we could when there was a surplus of young men.
I'd argue that for my whole life and decades prior war as a means of achieving desired political goals had already been rendered more outmoded and ineffective than people generally believe. You just can't "win" the way people seem to think you can. And the cultural memory of WWII is extremely unhelpful in this regard because it encourages us to aim for total victory and regime change as a desirable outcome of military conflict. But how many times since then has any war actually achieved the stated aims of the combatants? Whether it's the US' various 21st Century fiascos in Iraq, Afghanistan, Libya, Syria, et al or Israel's most recent war in Gaza/Lebanon, it's just inevitable that there's a lot of killing and suffering and then the result is an unstable muddle, at best, and a humiliating retreat, at worst. And I say that not as a moral judgement of those conflicts, but just as an obvious observation. I see no way that any offensive combatant in any of the conventional conflicts live in the world today can really win. So, I think you still invest in your military enough to make yourself "hard target" for anyone stupid enough to come in swinging, but you don't do the swinging yourself.
I think the Chinese leadership understands that their geopolitical wave has crested already and that 2008-2018 was really the peak of their amazing, generation-long bull run and national dynamism. Therefore, there's a strong incentive to go for Taiwan while they can and while their relative economic, demographic, and military strength is at its apex. That makes the late 2020s a very dangerous time. But will they amass enough capability in time, before those advantages begin to erode and domestic entropy sets in?
I still don't see that China are actually now ready to wage a full-scale Taiwan invasion or maybe even a successful blockade in the short-term. So what strikes me as most dangerous is the degree to which Xi actually understands his limitations. Putin didn't. And even if Russia doesn't "win" decisively in Ukraine (whatever vague way they're defining that), he'll still have created an utter catastrophe for Ukraine and the world. Xi may do the same in Taiwan. We Americans certainly did that in our various wars in the "Greater Middle East" (which we lost, all).
Agreed regarding China's window and opportunities, and I similarly worry about Xi's understanding of his situation.
I sympathize with the view that wars are never won without total victory, and the muddles it often yields. It reminds me of how Chair of the JCS Fitz in the West Wing lamented that he didn't know when they were and weren't at war any more.
However, I disagree that wars are never won without total victory or regime change, although certain types of war, especially those involving occupation, seem almost guaranteed to not reach their goals. But the idea that wars aren't won is a view that occurs because we tend to focus on the failures since they leave irritants to remind us.
Examples from my lifetime that spring to mind include numerous revolutions and coups, Yom Kippur War, the Falklands War, Panama, Eritrea, second Chechnya war, South Ossetia's annexation, the war on ISIS, the Gulf War and Cold War I.
Before the Ukrainian War, the urgency of this transformation was not clear (at least to me). But now we readily can see that conventional warfare has not become obsolete. And we should now see that China is a threat, no matter how much we wish that a sensible competitive friendship could be possible. Therefore, although industrial policies to protect or create industries that would be needed in time of war would be inefficient in that they would only increase the global oversupply, they are necessary.
Not pretty. Stockpiles of arms tend to lead to their being used. But in the absence of a global understanding (which seems like a pie dream at the moment), we have to stockpile and prepare.
I will never forgive Hillary Clinton for abandoning the TPP and losing the 2016 election. Everything since has been a failing rearguard action ineptly trying to save the Pax Americana from certain doom. The 2024 election is likely one of the final nails in the proverbial coffin.
We started losing back in 1984. Wal-Mart, aka China-Mart, imported a conservative 6% plus of goods from China. Growing to import more than 10% of all US China based imports.
But, BigCorp Welch and company wanted globalization and zero dampening regulations or retardation on China imports and manufacturing off shoring. IP? The American quarterly report system killed long term thinking. Friedman said greed is good boys no matter what. Maximize profits today because in the 80s, the prospect of no tomorrow was actually real.
But I know if called, US auto engineers can once again come to the aid of their country.
Congratulations on yet another well-thought-out and well-articulated article!
Another worrisome aspect for the global economy is that if and when the U.S. and its allies succeed in shielding their markets from Chinese goods, China will likely redirect its exports to other developing countries. This is because China continues to prioritize stimulating aggregate demand through exports rather than domestic consumption.
In 2023, China’s exports totaled approximately $3.2 trillion (30% of global output), with about half directed to the U.S., E.U., Japan, and South Korea, and the other half to the rest of the world. China’s competitive advantage in manufacturing is not primarily driven by low labor costs but by an efficient production ecosystem characterized by massive economies of scale, an extensive domestic supply chain, organizational efficiency, and a well-trained, disciplined workforce.
Under the current global economic arrangements, this dynamic could lead to a system in which one country—China—dominates the production of industrial goods for the entire world. Meanwhile, the importing countries would be relegated to producing food, non-tradable services like haircuts, and IOU notes to pay for the goods supplied by China.
I would love to see the balance of the IRA directed away from paying companies to assemble Chinese battery components so we can rich people to buy EVs and more toward national security concerns -
Manufacturing the small batteries that drones use
Battery R&D and basic research
Materials science and manufacturing/operations management (sponsoring engineering students to get into these fields).
We should definitely lean on the Germans, Japanese and S Koreans in our manufacturing effort (just as we outsource some weapons and aircraft parts to BAe and to EU firms) given their expertise in machine tools and manufacturing (though they’ve outsourced a lot to China as well)
As manufacturing becomes more fully automated, countries with cheap land prices, cheap electricity, low taxes and good freight rail networks can be competitive - the US can be competitive on most of these
I think India was one of the first casualties and the world didn't even notice. I have no way to prove it, though. I wish I did or could at least investigate the matter
Great post. Trump tariffs may help. I do not believe China would ever attack the US or whichever country it deems an adversary directly. It will continue to do so indirectly. The S&P 500 is sending the wrong signal. You'd think stock markets which are, to put it crudely, crowdsourced future predicting machines, would know better. By not repeating the mistakes that the USSR did by interfering in the US' spheres of influence (at the end of the day, Taiwan rarely matters to the average American), they will continue to build and build
I would like to also extend this analysis to the EU, and in particular Germany and other smaller, but important manufacturing hubs like the France, Netherlands, Italy, Poland, and even Sweden. Why are they missing the trick?
It's tempting to just indulge in schadenfreude towards Germany for its auto sector sleeping on the EV transition, Green politics unnecessarily cratering energy supply by taking nuclear power plants offline just in time for the Russian invasion of Ukraine, etc.
But, "people r so dumb," isn't a satisfying explanation to me.
Germany has some structural impediments to out-competing China that probably it can't do that much about: One of them being the fact of its extremely low birth rate and demographic collapse. Which means fewer workers and an over-reliance on immigration to (temporarily) fill the gap... in turn driving far-right backlash. That's also a factor for both Japan and South Korea's flagging competitiveness. And not something that anyone, including China, has really figured out.
Germany is also merely a medium-sized country of less than 85 million that exists in the not-quite-single-market of the European Union. Maximum, you're selling tariff-free to 450 million Europeans as a German firm, plus another 14 million in the wider EEA. That's still smaller than the 500 million North Americans living under the NAFTA/USMCA free trade area! And both of them *COMBINED* are smaller than the domestic market of Mainland China. So China clearly enjoys a scale that's totally different than any of its competitors. Yes, Americans, Canadians, and Western Europeans are all more rich per-capita than Chinese people are, but that's no replacement for the scale you can enjoy at double the population of producers and consumers under the same single market. If you paired NAFTA/USMCA and the EU/EEA together in a single free trade area (ain't gonna happen), then you'd have better scale, but you'd still deal with the geographic, regulatory, linguistic, legal, and cultural diversity of two continents across an ocean from each other that together have the same population as a single, contiguous country.
Lastly, Germany's energy challenges are Europe's resource challenges: the place never has had much raw stuff to work with. There's hardly any oil or natural gas outside of the Northern British Isles, Norway, and the Netherlands. Germany and Poland have tons of (especially filthy) coal, but coal is a major pollutant, outmoded, and decreasingly cost-competitive. Nuclear power has made up the difference against the paucity of energy consumables, especially in places like France, Sweden, and Finland... but Europe has no domestic source of uranium. Hydropower in Europe, as elsewhere, is unevenly distributed, tapped out in terms of supply, and decreasingly productive in an increasingly drought-prone climate. Last you have solar and wind, which run into their own scaling and political issues totally outside of their well-known intermittency limitations. And how to address the later? With lithium batteries... from China! And if you can't make energy cheap and reliable, you can't have cost-competitive manufacturing. China struggles with similar energy security concerns, but China is the world's single largest primary energy producer as well as consumer, drawing from its own domestic stocks of coal, oil, natural gas, renewables, and nuclear.
The best industrial policy in the world couldn't navigate around those dilemmas. And, frankly, I don't think that China's bull run of export and manufacturing dominance will last as well beyond 2030, either. Because, belatedly, it's also facing some of the same brick walls. It has a demographic collapse on its hands even steeper than Germany's, but delayed. It's domestic market, therefore, is already and will continue to shrink exponentially. As will its heretofore largely unfettered access to export markets (primarily the United States' and EU's). That creates a death spiral of decreasing demand and supply that it will struggle to escape, especially with so much overcapacity baked-in. And its energy challenges will continue, with the insufficient domestic supply of fossil fuels continuing to dwindle in economically-exploitable reserves and the cost curves of renewables hitting a limit and maybe even reversing once the supply of inputs begins to wane. Technological advances will reconcile some of these limitations, as they have for the likes of Japan, but we're still talking about a fevered run-up of competitiveness that reverses into a gentle glidepath downwards, best-case. And a China that's short of young bodies, profitable markets, productive inputs, and primary energy might think twice before throwing its weight around in the 2030s, after all.
And one reason why Germany's car industry vs China's is struggling is that its traditional advantage was the knowledge base built up over decades of making and refining ICE cars: much of that knowledge will be worthless in an EV age.
Plus China is poor enough that it will have millions of households just buying their first cars, while rich Western countries (and Japan) will only be buying the far smaller number of cars needed to replace existing ones which wear out. (Plus the Russo-Ukrainian war will have deprived Japan of Siberia as a place to offload its old cars: it's why most cars in Vladivostok have the steering wheel on the wrong side!)
... unless you count Greenland. Now the current government there has banned the mining of uranium, but that could be reversed. https://en.wikipedia.org/wiki/Kvanefjeld
Don't France and Germany both have uranium deposits, even if they don't actually mine them any more because they considered it too environmentally damaging?
I read somewhere that the reason that the French aren't mining is that their resource is not of good enough quality. I do not know if this is true. I don't know about the situation in Germany. In Sweden we have some reserves, and the current government wants to start mining them. There was supposed to be a report about this out earlier this year, but it has been delayed. The government has been busy with all the other reports it has to make about all the other laws it wants to change. https://www.mining.com/sweden-to-remove-uranium-ban/ But what we have isn't supposed to be any where as rich as the resources in Greenland.
I don't know why having a domestic source of uranium really matters to Europe, when friendly countries outside Europe with market economies will sell it to them.
I agree that free trade between Europe and North America isn't going to do much for scaling. The distance, cultural issues, etc. just grind down the usefulness. NAFTA is a great fit for the 3 parties, with many industries operating as if it's a single market, especially autos. Meanwhile, Canada has free trade with the EU, but it's almost gone unnoticed - both Canada and the EU have had poor economic performance in the decade since they established free trade between them.
Yeah, so much of the NAFTA-derived economic integration between the immediate neighbors of the US has been in creating cross-border manufacturing clusters. This is arguably much more economically important than the independent trade of goods produced exclusively in Mexico or Canada. A lot of the Detroit auto industry has actually long been in Canada, taking advantage of the original reason why the Upper Midwest became industrialized: the ease of moving heavy stuff around the Great Lakes! And ditto now for Mexico's Northern Corridor, where it's hard to even say whether something was truly "Hecho en Mexico" or "Made in USA" because it's oftentimes really both.
If the Great Lakes and the Rio Grande are the membranes of cross-North American manufacturing, the waters of the East and South China Seas are the equivalent for China, with a dense trade in intermediate goods across those sea lanes between Korea, Japan, Taiwan, Malaysia, Vietnam, Indonesia, and the Philippines. There's just nothing like that available to Europe right now, with the potential future exception of the Mediterranean and North Africa (especially Morocco, Algeria, and Egypt) or Turkey.
Due to the distance, the North Atlantic isn't going to be that, either, probably, so I'd be dubious about the potential for a real two-way trade in intermediate goods between North America and Europe.
Better than I could have said it. It's disappointing that most American politicians have no clue about how their economy is so well integrated with Mexico and Canada, and therefore how treating them as separate economies is nonsensical in many contexts.
I would add though that Michigan and Ontario's tight automotive integration is actually thwarted more than helped by the Great Lakes, since the intermediate goods travel almost exclusively by JIT trucking, and mostly over the bottleneck that is the single Ambassador Bridge.
Which is why the Gordie Howe Bridge, due to open next fall between Detroit and Windsor, is welcome news.
Your comment on Germany depending on immigration reminds of reading the US Census report on population projections using several assumptions of policies. The one that caught my eye was the one where all immigration was stopped now. In 2100 the US would be 100million smaller.
The way to avoid war is intertwine manufacturing and food supply.
When I was working DoD strategy I don't recall ever looking at a full on kinetic China/US conflict CONUS. China's principle US conflict strategy is Assasians Mace where they would use some form of knockout blow to win.
US air superiorty would atrit a lot of China infrastructure before we saw on the ground troop kinetic battle.
FPVs need to launch relatively close to the target. We can send B2s from Whiteman global 24x7.
Battle ideas like Musks are not new. Military has wargamed that back as far as 1995 if not further. You do wargames to develop strategy and doctrine. You have opposing teams acting as China or US and look at an attack idea like FPV and a response idea, if which there are many. F35 mission is not the same as FPV.
Some sort of forward deployed FPV container package might be interesting first strike weapon on a CONUS base, but only first strike.
Starlink is a great example hedge against Assasians Mace. It is virtually impossible to take down given the number of satellites. It is safe to assume the US military figured this out before Musk and nudged deployment in many ways to buttress China first strike strategy.
I love Musk. But many of his pursuits were dreamed up by others. His rare skill is to drive ideas forward into reality.
These are incredibly salient points I wish Noah would incorporate into these posts. It’s the primary weakness from my POV.
If you don’t can’t keep your manufacturing infrastructure safe from threats then it doesn’t matter how superior it is. Even a very expensive bomb or cruise missiles is cheaper and easier to build than a new factory. China can’t threaten the US this way anytime soon. Cyber warfare and minor acts of sabotage - sure. Dropping 20k lbs of explosives onto a factory, not so much. China on the other hand CAN be held at risk this way.
And I would find it very hard to believe they’re too proud or ignorant not to know that.
Having worked at Tesla as a senior design engineer I also agree about Musk. He is brilliant and extremely capable - just not in quite the ways the general public thinks. He’s neither an engineering genius or an idiot.
I was at McDonnell Douglas and Boeing. We spent a lot of time developing the precursor for reusable rockets, high-speed satellite interconnects, high-speed machining, design for manufacturing, tooless manufacturing, friction stir welding, superplastic forming, etc. We did it in the 80s and more in the 90s, but still when the tech was pretty nascent. I am glad to see that SpaceX and Tesla have built on these technologies where we left off. It took decades to get these things right. Many have the same vision. Many have similar tenacity as Musk. Ford did not invent the car, he figured out how to assemble the existing processes to make them better.
I am particularly sensitive to anyone articulating a military force structure policy without having done a bunch of wargames. The enemy is creative, and asymmetric threats are, by their nature, unpredictable.
Speaking of economic wars: In solar power systems, essentially all of the smart electronic boxes (inverter/controller/battery management/etc.) are manufactured in China. US brands are almost entirely contract manufactured, and typically OEM rebrands of a Chinese design with some amount of customization. This is especially true of the current devices of choice for private and small business solar installations: The AIO (all in one) box, which simplifies installation, operation, and monitoring. The main EG4 (Texas) AIO, for instance, is a rebrand of a Luxpower (China) product, the (Chinese) Deye inverters are rebranded for Sol-Arc, sold in the northern US and central America, called Sunsync and sold in the EU, called inverex and sold in Pakistan and so on and so forth.
The Chinese are not interested in the competition between these rebrands -- each is given a region and a monopoly for what is sold there. There has been speculation and concern that such China-manufactured products may contain a backdoor to allow remote shutdown, which could be used to cripple both the US electrical grid and stand-alone solar powered sites should relations with China sour into open or cold war. People who have worried have been told that they are racist, fear-mongering conspiracy theorists for having such ideas, because of Climate Change.
Well, on November 15, the tin hats have been proven correct once again, at least in terms of Deye products. Deye "bricked" a number of Deye-branded AIO inverters, mainly in Puerto Rico, but some reported in the US, Canada, Pakistan and Costa Rica.
The inverters were shut down and displayed the following message:
This inverter is not allowed use at Pakistan/USA/UK
Pakistan contact inverex
USA contact Sol-Arc
EU contact Sunsync
Pls return to your supplier.
The following page requires a 5 digit passcode to start This passcode is generated overseas
Please have your passcode ready. [PROCEED]
So if you got the message in error, you could in theory get your inverter to start again. Otherwise you have a nice brick. This appears to be response to a Sol-Arc suit claiming Deye was not doing enough to stop dealers from selling Deye-branded versions of their inverters in their contracted exclusive territories, but you cannot rule out a Chinese cyberwar limited trial shot after the Trump election, preparing for conflict with the US, with the above as a cover story.
It's been two weeks and nobody has reported receiving any passcodes so far.
Discussion thread here in the DYI solar forum. There are thousands of messages but not a lot more information than what I posted here.
https://diysolarforum.com/threads/china-kills-all-non-sol-ark-branded-deye-unit-in-the-usa-this-morning.94349/
Here in Sweden I ordered an Austrian solar inverter (Fronius) when we had our PV install in 2020. But the supply was out. So our installer swapped in a Huawei last-minute, instead, to my chagrin. That turned out to be just one challenge ours and other firms had with supply and working capital that year as the installer went into bankruptcy just as our system was put in, and we only barely got the panels installed at all, with another 14 local customers left in the lurch.
So, now I'm about a third of the way through the useful life of this Huawei inverter and thinking that I'll definitely pay what it takes to spring for a non-Chinese one when it's time to replace it. I certainly hope in the meantime that I'll not be the victim of a cyberattack or "bricking" the next time Sweden pisses off China! In any case, I assume that our entire national electricity grid and auxiliary telco systems are potentially vulnerable to such sabotage, so my Chinese solar inverter could be the least of my problems.
We had almost the same story as you. The young and competent group that installed our solar dropped out of the business and the fellow who took over went to jail. Wellcome to the wonderful world of being the sys admin of another household system.
I am in Sweden too. Our samfällighet (note: this is a Swedish thing. It's sort of like a condominum association, if I understand how that works in the USA) keeps getting pestered about these wonderful deals to install solar panels on the roofs of our houses and save money. I haven't been able to find a Swedish manufacturer that isn't just a chinese rebrand. Know of any?
Well, firstly, don't let fear of Chinese industrial sabotage prevent you from springing for buying something that makes sense in the meantime. As I said, Chinese equipment is in everything already, so there's no escaping it if there really is a whole backdoor ticking time-bomb in everything coming off Chinese manufacturing lines. Secondly, even if things are manufactured in Sweden or Europe, they still are often drawing from intermediate goods and parts from China, which could, theoretically, also introduce such a vulnerability. It's easy to wonder whether paranoia is warranted or an overreaction!
That said, I think it's still important to support Swedish domestic industrial capacity for the reasons stated in Noah's essay. I drive a Volvo even though Volvo is owned by a Chinese company. My Volvo was at least still manufactured in Sweden. It's a shame that Swedish governments in the early 2000s and 2010s didn't see protecting local manufacturing as a priority, but they've belatedly gotten wiser to the threat. I think Swedish consumers should be willing to pay more to do the same.
And there actually do seem to be some niche solar producers in Sweden, like Midsummer in Järfälla. I was trying to purchase German panels and Austrian equipment for my home, but failed. Probably easier today.
Absolutely brilliat. Clarifies and deepens the argument I and advanced manufacturing colleagues are championing in the UK. Thank you
Unfortunately, no credit was given to Biden/Harris for: 1) Keeping Trump's China tariffs in place, and then 2) Raising tariffs on Chinese EV's.
The latter will--ironically--keep Tesla solvent. Something the mega-MAGA Musk has shown not an iota of appreciation or gratitude for.
Basically, over the past decades, progressives have been so preoccupied with whether they could tear down the military-industrial complex, they didn't stop to think about whether they should.
Yep
This is unserious. No one tore down the military- industrial complex. It was the deliberate choice of American companies to shift manufacturing overseas while opposing tariffs. Wall Street cheered this on, making more money on foreign loans and financial products rather than lending money to domestic manufacturers. The destruction of unions meant the end of the principal support for tariffs and investment in domestic manufacturing. None of what Noah describes is a revelation — it was the natural result of off-shoring and free trade. Indeed, America has been functionally pursuing an anti-industrial policy since the 80’s.
American workers paid the price for this situation. It is entirely predictable that American companies now want taxpayer dollars to bring back industrial capacity. This may work in a few select areas but we have lost 2 generations of knowledge regarding industrial production.
Our laissez faire economic system has generated a lot of profits but has left us with not only a decimated industrial capacity but fully exposed to the aggressive, disciplined, multi-faceted and coordinated economic strategy Noah describes. The US not only has no plan to combat this but lacks any institutional structure with authority and resources with which to do so; indeed, many American companies and conservative groups have long opposed any such undertakings as putting us on the road to serfdom. They vehemently opposed the recent industrial policy intended to encourage domestic chip manufacturing and it hard to see any principled way for them to change course now.
You apparently don’t read the same things I do. I’ve seen endless attacks on the military industrial complex from the left and uniform votes to diminish spending for defense. The stupidity of exploiting the “peace dividend” certainly wasn’t done by the left alone, as the right in its long current state as the Republican Party proved itself as able as Democrats to spend like drunks when they had power during Bush II’s administration.
Also, unions got a nasty reputation. Hoffa, Jablonsky’s murder, the mob seen everywhere in unions, and many seeing no value received for their dues. The exception is government workers whose circumstances are greatly different than those of industrial and service workers.
Isn't the massive pressure for Western government to cut defense spending driven fundamentally by their ever-rising (pension and healthcare) expenditures on old people?
Richard Aboufalia, a great observer of all things flying, as a good take on Elon's tweet about the end of the manned jet fighter.
" In 1957, the UK Defence White Paper stated that the English Electric Lightning would be the last crewed fighter the UK needed, because missiles were the future. The UK, like other powers, quickly discovered that not all security problems could be solved by lobbing missiles at them.
After bombers and missiles, fighters were going to be vanquished by UCAVs. The US FY 2001 defense authorization act, passed in 2000, aimed to make “one-third of the aircraft in the operational deep strike force aircraft fleet” unmanned. Fast forward 25 years, it’s Zero Percent."
"The problem is that combat aircraft need payload and range, especially range. That makes them expensive, mandating survivability equipment (EW, etc.). Until we have guaranteed encrypted connectivity with no latency, they need sensors, too. At that point, a human in the cockpit is a tiny part of the cost buildup, and an insurance policy against vehicle loss or capture. Also, having a human on station is essential for Operations Other Than War (OOTW). So, while they proved useful as targeted assassination tools, UCAVs weren’t worth it as fighter surrogates."
I take his point, but I'm always wary of these sorts of arguments. That is the arguments that go "X has always claimed Y and always been wrong". It's a good heuristic when you don't have the ability to look at things from first principles.
I mean, is the claim that automated systems will *never* be good enough? That seems ludicrous to me. Thus the argument hinges on *when* they're good enough.
Aboufalia’s point is that pundits and experts make bold predictions about systems disrupting & dominating the landscape in the future and fall far short of what reality actually enfolds. He’s not saying unmanned/automated systems won’t play a role. He’s saying these systems will play a role far smaller than envisioned.
Yes, and my point is that merely pointing out that these predictions have been wrong doesn't actually tell us if they're currently wrong.
https://richardaboulafia.com/december-2024-letter
In a similar way, dominant military powers (including the UK and US) have often fallen for the appealing fiction that high-tech seapower or airpower can stand in for sheer mass and manpower in war. But you can't win a war (or more specifically the peace) with aerial bombardment, as all the Gulf Wars taught Americans (and as Vietnam and the WWII Strategic Bomber Commend had long before). You also can't launch enough super-high-tech cruise missiles to pacify your foes, no matter how many times Americans tried it during the GWOT and during the Clinton years before. Way back in the Truman and Eisenhower Administrations, military planners took very seriously the idea that the novel advent of atomic weapons could be a "cheap" way to win wars without having to spill the money and blood that the world wars had demanded. They were wrong, too.
Russia has been lobbing missiles of all kinds at Ukraine for years now and it's still the hundreds of thousands of bodies it's compelling to the East that are actually moving the front lines. Its own nuclear bluster hasn't accomplished much and it's still grinding it out with a smaller, non-nuclear neighbor. Ukraine, for its part, is fielding an impressive swarm of drones, but to little strategic effect in the war of attrition. That war will be won or lost by millions of men in muddy holes with a hail of artillery shells flying overhead in a manner that is disturbingly similar to WWI.
You probably could "win" a war with aerial bombardment alone if you used nuclear weapons, but most armies usually prefer not to turn the land they're fighting over into a pile of radioactive ash.
Well, again, you have the issue of "winning the peace." So even if the defeated adversary isn't a desiccated waste like something out of "Fallout," you have to occupy it with boots on the ground, endure a potential insurgency, and somehow engineer either an outright indefinite colonial occupation or install a sympathetic government that's both friendly to your interests and legitimate enough to actually survive for any relevant period of time. We can count on less than one hand the number of times that all of that has actually been pulled off and the answer is WWII-era Japan and Germany, only.
Even with the maximum application of manpower and conventional force, wars are pretty impossible to really "win" now, if they ever were.
Noah, you’re making a classic mistake that non-military commentators commit.
Technologies don’t become obsolete because a counter exists, they become obsolete when something else can do the job better.
Drones may be good at delivering small payloads, but they’re not remotely close to the fighter jet’s air-to-air capability, let alone an improvement on it.
Until stealth UCAVs can down an F-35 AND any model of drone can deliver large payloads on targets within minutes, jet fighters will still be needed.
ED: All that said, though, the overall thesis is still correct. The US is woefully underprepared. It saddens me to admit that Taiwan is basically unwinnable unless we have some sort of magic cyber advantage that ALSO cancels out the dramatic damage the Chinese could do with a cyberattack of their own. And this is all because we didn't prepare our MIC starting 20, 10, heck even just 3-4 years ago, to win a missile-and-drone war over the Taiwan Strait.
We should just start focusing on how to prepare to merely weather the first phase of the next conflict and win the second. But, of course, Trump won't do that. The best we can hope for is that he bumbles so erratically that it distracts our adversaries from lapping us too hard.
Well, note that I explicitly agreed that fighters and drones are complements! 🥰
Another thing that I wish Noah would at least acknowledge is where all those munitions would go in the opening weeks of an existential hot war. China is not capable of directly threatening NA-based manufacturing. Not even close. Those little drones can’t fly across the Pacific Ocean, and while you’ll assuredly get some acts of sabotage here or there those are easy to defend against - and the damage easier to recover from - when compared to, say, a fleet of B-21s carrying dozens/hundreds of standoff weapons with 1000lb warheads.
Which is to say that a lot of the most critical wartime manufacturing capability will likely cease to exist in the span of days or weeks. We can argue about how successful it will be or the exact percentages, but the point remains that China does not have the capability to credibly threaten the US/NA in this way yet and likely won’t have it anytime soon. The US and its allies very much do have that capability with regard to China. And then the question changes from “can the US build more batteries than China” to “can the US build cruise missiles and stealth bombers faster than China can build battery factories?” And the answer to that question is a resounding “Yes.”
Those millions of drones can’t DO anything without a soft target within a few dozen miles of wherever they’re deployed. They can’t threaten a carrier group or a stealth fighter or bomber. They are useless against a submarine that just launched 100 stealth cruise missiles that might single-handedly disable or destroy 10% of your battery-making capacity in one go. They can’t threaten the mainland US - you’d have to ship them here first and it’s not so easy to sneak millions of armed drones past customs during a war.
Also on the battery front: a drone does not require a huge battery. This battery manufacturing advantage would matter a lot if we’re talking about grid-scale storage or EVs or otherwise things that consume a lot of battery production capacity. A drone battery is not one of those things. Battery powered fighter jets and stealth bombers are a pipe dream with any current or planned battery technology.
To put another way, a fraction of the battery production capacity of the US/NA would be plenty to equip all of the drones China builds today, ten times over. The batteries aren’t the limiting factor here. Maybe we have enough battery capacity to build a billion drones per year but China can build 6 billion - assuming the batteries ONLY go towards drones. Does that actually matter? I don’t think it’s a given that it does. Nevermind potential upsets to that equation, like laser weapons becoming fielded en masse and completely undermining or eliminating the possibility that drones in any quantity will be a decisive factor in a war.
It’s like saying we’ll definitely lose a war because China can make a trillion steak knives per month but the US can only make 10 billion! Sure they can be weapons; but most things don’t become world-beating super-weapons just because you built a lot of them. This is in a similar vein to hand wringing about who can build more artillery shells. E.g. if China can’t establish a beachhead in Taiwan, then those quadrillion artillery shells they can crank out every nanosecond might as well be on the moon for all the good they’ll do.
In the long run I agree wholeheartedly with the premise, so this is somewhat nitpicking. But it makes it a little harder to take the viewpoint as seriously as it deserves to be taken when pretty basic and obvious (IMHO) issues like this are assumed to be irrelevant because one number is bigger than another. I massively respect Noah and I think he is constantly on the money here when it comes to flagging our industrial and military capacity as a major issue that must be addressed for liberal democratic values to continue to dominate, and the world to flourish as a result. In light of such stakes it’s not too much to ask for a bit more consideration of these factors, maybe adding a consultant or two. I’m available! 😇😁
You should write a post about what the world would look like if China successfully invaded Taiwan.
I know US allies would lose trust in the US’s ability or willingness to protect them. Computer chips might be a million times more expensive (or full of Chinese spyware). But how different would that world be?
I'm skeptical of any "slippery slope" arguments, but there's also the matter of what happens after China is able to break through the "first island chain." Would it be some nightmarish version of the Cold War "domino theory" of Communist dominance over a region?
Or would China "just" be content to consolidate its position in the "Greater China Region" of Taiwan and HK, with the possible continuation of its de facto annexation of the entire South China Sea?
I'm also skeptical that China could even pull it off. This is a military operation that's WAY harder than D-Day, with an unprecedented amphibious invasion over a huge and stormy strait, under heavy fire that is only the beginnings of the challenges that await that force on the beach trying to sweep a mountainous island imprinted with decades of fortifications and defenses. And, again, remember that this is a military that's essentially untested in actual combat since 1979. It's hard to do stuff like this! Like with D-Day, you couldn't just stage a surprise invasion: there would also be months or years of preparations that would be increasingly obvious to outside observers. Think about Russia's mobilization for the comparatively "easy" overland invasion of neighboring Ukraine. If people didn't see that coming, that's only because they assumed Putin was bluffing and wouldn't dare actually pull the trigger. In China's case, there would be no plausible deniability to the unimaginably large naval mobilization for half a year that it would have to stage to give the operation any chance of success.
Either way, assuming China could actually pull it off, Taiwan's fall would pose a potentially existential risk to both Japan and South Korea, which rely on the Taiwan Strait for the vast majority of their imports and exports. Suddenly that extremely vital international sea lane becomes domestic Chinese territory, sealable at any time. That would definitely introduce a level of martial paranoia in both Japan and South Korea that might encourage them to dust off their Cold War nuclear weapon programs and buy the ultimate insurance for real this time. Not that that would resolve their sudden strategic dilemma: China would still have its hands on their throats. So they might vacillate between appeasing their neighbor or rapidly militarizing against it. Again, though, neither stance would resolve the structural vulnerability that is now permanent.
I've posed this question before: would the Taiwanese leadership actually put up a fight as we've seen in Ukraine against the Russians, if China actually attempted to invade?
So, let me say firstly that we have no clue. We've all heard the Clausewitz quote (or was it Prussian Field Marshal Helmuth von Moltke the Elder...?), "No plan survives first contact with the enemy." That works in both ways, too. China might decide to go for it and IMMEDIATELY come to regret it.
It was far from clear to outside observers that Ukraine had the fight in them, even to themselves. People (especially Putin) also *overestimated* Russia's ability to steamroll the Ukrainians in days or weeks.
So, from where I sit, I see a Taiwan that has some major structural advantages in defending an island at some remove from the Chinese mainland from a potent, yet untested military that would not be able to quickly amass the usual ratio of force to ensure victory in an amphibious assault. And the Chinese aren't the first to assess this: they're dealing with the exact same dilemma that the Americans weighed in trying to dislodge the Japanese from Taiwan in WWII. The Americans at the height of their military power decided not to go for it. Just like they decided that any conventional invasion of Japan would be a disaster.
On the other hand, Taiwan isn't showing much fight currently. They aren't budgeting as if they are a nation under existential threat of invasion. Their too-small and under-resourced military can't even meet its modest recruitment goals. One reason for that is that military service is ill-paid and low-status in high-income, high-tech Taiwan. Are we seeing a country that's too decadent to survive? Taiwanese people do seem to be rather blasé about the whole thing. Which isn't unusual, certainly: I'd say the same thing about Europeans in the face of a very real Russian threat. Or even Americans, for that matter, when we aren't really getting serious about domestic industrial capacity, per Noah's essay.
And what would "getting serious" look like? During the height of the Cold War, countries were spending 6-7% of their GDP on the military. Taiwan spends 1%. During WWII, the UK and Soviet Russia were spending *80%* of their GDP on the military. That's what you do when you actually perceive threat. It would mean higher prices, less convenience, many difficult fiscal tradeoffs, lives disrupted by mandatory conscription and military service, and a culture of vigilance and resilience. Taiwan reportedly isn't there. So, either the Taiwanese are right that this whole thing is overblown, or they just don't want to pay the price to be free of Chinese domination.
But maybe that changes the minute it's clear that China is actually serious in its threats and the implications are drawn into stark relief? That seems to be what happened in Ukraine.
Taiwan has a major weakness that Ukraine doesn't. Ukraine's back is up against a sympathetic Europe. Cross the border into Poland and the shooting stops. Taiwan has no such backstop.
Would the Taiwanese industrial leadership permit their factories to be bombed? Maybe they'd make the calculation that they'd still be rich under CCP rule.
Even more so, they're an island and will run out of food, fuel, etc. at some point. I believe the Chinese playbook is less "D-Day" and more "Cuban missile crisis"; create a blockade and dare the US to break it.
I agree with you. If I were China and determined to annex Taiwan, this is what I would do.
-It creates a way for Taiwan's allies to squirrel out of coming to her defense. During the Cuban Missile Crisis, JFK could have decided that brinksmanship wasn't worth it and looked the other way. Trump will be very likely to opt for appeasement and no other Quad ally is going to come to Taiwan's aid without the enthusiastic leadership of the United States, even if it creates a strategic liability for them.
-Like a siege, a blockade plays to the strengths of the attacker who has access to resupply vs. the defender who is slowly strangled. Taiwan is almost entirely dependent upon fossil fuel imports for its primary energy (which is another example of the country just not taking resilience very seriously at all).
-It also creates optionality for China, in that it could just continue the siege, call it off without losing too much face or deterrence, or "escalate to de-escalate" by making a feint of actual invasion or overwhelming missile barrage designed to get everyone to "negotiate" Taiwan's de facto surrender.
-It is also bloodless and wouldn't surface harrowing media images of Taiwanese suffering under Chinese barrage and invasion, reducing the humanitarian impulse and geopolitical outrage to "do something."
-Lastly, blockades can go on for a long time and become boring, even if they persist. Western citizens will lose interest after a few months, like they have in every other conflict (including Ukraine). Especially in our era of disruption, where the latest outrage only lasts one news cycle before being displaced by the next one.
I don't foresee China opting for this in the next year or two, but it might well-do in the back-half of a Trump Administration.
I had an old friend, who flew during the Qemoy Matsu dustup in the 50's. Great guy and sadly gone now. It is interesting that Qemoy and Matsu are still controlled by Taiwan and are only a couple of miles from the mainland. Another point on the first island chain is that Japanese islands are 100miles or so from Taiwan.
I wonder what will happen to the Chinese sand islands in the South China Sea when they are hit by a typhoon.
Well, considering the speed at which they have dredged up these islands out of nothing and fortified them in the first place, I don't think that would do much to dissuade them creating facts on the ground in the South China Sea, honestly.
Blockading Taiwan with its large and growing navy would serve China’s purpose. It would put the US in the position of a naval war with a China close to its bases and the US far away, attacking mainland China with those concomitant risks, or pretending that mouth-music actually meant something. The CCP is very skilled in playing the Warm War game.
Good points, thanks!
Yeah, Japan and South Korea would have to make tough decisions. But what would happen afterwards? Cold War II, or would China become a US-post-Cold-War kind of hegemonic power on the world stage?
There might be too many variables to make a good prediction at the moment
It's clear that no matter what China is going to shake up the power balance in the Pacific. Let's say that China is able to annex Taiwan without a global war and then we're a few years out from that paradigm shift. Perhaps by blockade, as suggested above. It's now 2030 and Taiwan as integral part of China is as normal as we now find Hong Kong's diminished status.
To China, this new equilibrium of dominance over the First Island Chain and by extension the Western Pacific, will be just right and proper, in the same way that a rising United States imposed the Monroe Doctrine on the American Hemisphere. Or how the post-WWII order invited in the American Century, with American military bases hosted in 120+ countries.
Because that's the thing about being the hegemon: you're legitimate in your own eyes! It's important to also see the current state that China is trying to disrupt from a more objective angle: China today is ringed and nearly encircled by American military bases and allies on all sides! At one point that even included its Western frontier, with the twenty-year American occupation of Afghanistan and alliance with Pakistan. That's an unusual state of affairs!
Americans, if they think about it at all, see this as normal and good and don't perceive that defense is experienced as offense to your adversaries. So we'll experience any rollback in that unprecedented power-projection ability to be threatening and intolerable, initially. America's allies will also be initially very threatened by the inversion of the power-dynamic, even as the Pax Americana hasn't always been welcomed by everyone all the time. We'll still have the "unsinkable aircraft carriers" of Guam and Hawaii and some nominal military presence in Japan, Australia, and South Korea, but it will be clear that we cannot match China in her backyard across the "tyranny of distance" that the Pacific Ocean represents. Probably, military agreements with the Philippines, Vietnam, and Singapore will be softer, cancelled out by parallel Chinese basing, or negated entirely by one side or the other (as we've already seen in the Philippines until recently). So, basically, Americans trying to dictate anything in SE Asia or East Asia will become as laughable as China or Russia trying to rule the Caribbean or Mediterranean. That will be a huge shift for people like me born in the late 20th Century, but maybe not that weird, actually?
And I'm not trying to be "whatabouttist" here, either. I do think that an American geopolitical order has many benefits over a Chinese-dominated one, at least under the current CCP regime under Xi's increasingly nationalistic leadership. As China dominates the Western Pacific and begins to roll back American influence to the Second Island Chain or further, it's going to be noticeably worse in every way for China's neighbors, in my view. East Asia will revert to the historical norm of being tributary states to The Middle Kingdom, forcibly subject to its economic and diplomatic order and with their own interests and sovereignly subservient to China's. Japan's share of the world economy is already decreasing relative to China's. That will continue as China continues to swallow its electronics, auto, and manufacturing exports industries. Ditto with South Korea. So these wealthy East Asian democracies will be countries in inexorable decline and always forced into placating China. Maybe they will even be forced to hand over key islands and oceanic territories to their big brother next door, as countries surrounding the South China Sea have already had to, de facto.
But, on the other hand, this new situation will quickly become normal and tolerable. The world's economy already flows through China today. And trade with China is both profitable and increasingly unequal, at the same time. So many Japanese, Korean, Singaporean, Malaysian, Taiwanese, Philippine, Vietnamese, and Australian elites will be quite happy with the "new boss same as the old boss" dynamic, and be drawn into the benefits of allegiance to China, as long as they play by China's rules. The same will happen even across the Pacific in the United States. Americans, like the British before them, may grow fatigued of maintaining their shadow empire over the horizon and forget the tangible benefits to them it brought. Like today, they will have some angst around the economic shifts that a Chinese rise have created, with domestic winners and losers. But, ultimately, they may even enjoy the fruits of greater Asian integration under Chinese dominance. And, like today, China will co-opt American elites into its imperium, blunting criticism and resistance to its dominance. Eventually, we'll see nothing remarkable about China, one of the world's most populous countries, dominating Asia-Pacific, at least.
If China's population were growing, I think the state of affairs you lay out would have a high likelihood.
And it still could come to pass. In taking Taiwan in a short war, affairs could change greatly in a short period of time. But it's more likely to be a longer process, which China likely doesn't have.
China's great moment appears to already be over, but with some remaining momentum, it has about a decade in which it could dominate. By 2040 its economy will likely be shrinking, it will have an older population than Japan, and not much ability to project more power.
One of the less-explored futurism concepts that I find optimistic is that we're all swiftly getting too old to wage war the way we could when there was a surplus of young men.
I'd argue that for my whole life and decades prior war as a means of achieving desired political goals had already been rendered more outmoded and ineffective than people generally believe. You just can't "win" the way people seem to think you can. And the cultural memory of WWII is extremely unhelpful in this regard because it encourages us to aim for total victory and regime change as a desirable outcome of military conflict. But how many times since then has any war actually achieved the stated aims of the combatants? Whether it's the US' various 21st Century fiascos in Iraq, Afghanistan, Libya, Syria, et al or Israel's most recent war in Gaza/Lebanon, it's just inevitable that there's a lot of killing and suffering and then the result is an unstable muddle, at best, and a humiliating retreat, at worst. And I say that not as a moral judgement of those conflicts, but just as an obvious observation. I see no way that any offensive combatant in any of the conventional conflicts live in the world today can really win. So, I think you still invest in your military enough to make yourself "hard target" for anyone stupid enough to come in swinging, but you don't do the swinging yourself.
I think the Chinese leadership understands that their geopolitical wave has crested already and that 2008-2018 was really the peak of their amazing, generation-long bull run and national dynamism. Therefore, there's a strong incentive to go for Taiwan while they can and while their relative economic, demographic, and military strength is at its apex. That makes the late 2020s a very dangerous time. But will they amass enough capability in time, before those advantages begin to erode and domestic entropy sets in?
I still don't see that China are actually now ready to wage a full-scale Taiwan invasion or maybe even a successful blockade in the short-term. So what strikes me as most dangerous is the degree to which Xi actually understands his limitations. Putin didn't. And even if Russia doesn't "win" decisively in Ukraine (whatever vague way they're defining that), he'll still have created an utter catastrophe for Ukraine and the world. Xi may do the same in Taiwan. We Americans certainly did that in our various wars in the "Greater Middle East" (which we lost, all).
Agreed regarding China's window and opportunities, and I similarly worry about Xi's understanding of his situation.
I sympathize with the view that wars are never won without total victory, and the muddles it often yields. It reminds me of how Chair of the JCS Fitz in the West Wing lamented that he didn't know when they were and weren't at war any more.
However, I disagree that wars are never won without total victory or regime change, although certain types of war, especially those involving occupation, seem almost guaranteed to not reach their goals. But the idea that wars aren't won is a view that occurs because we tend to focus on the failures since they leave irritants to remind us.
Examples from my lifetime that spring to mind include numerous revolutions and coups, Yom Kippur War, the Falklands War, Panama, Eritrea, second Chechnya war, South Ossetia's annexation, the war on ISIS, the Gulf War and Cold War I.
Before the Ukrainian War, the urgency of this transformation was not clear (at least to me). But now we readily can see that conventional warfare has not become obsolete. And we should now see that China is a threat, no matter how much we wish that a sensible competitive friendship could be possible. Therefore, although industrial policies to protect or create industries that would be needed in time of war would be inefficient in that they would only increase the global oversupply, they are necessary.
Not pretty. Stockpiles of arms tend to lead to their being used. But in the absence of a global understanding (which seems like a pie dream at the moment), we have to stockpile and prepare.
Yep
I will never forgive Hillary Clinton for abandoning the TPP and losing the 2016 election. Everything since has been a failing rearguard action ineptly trying to save the Pax Americana from certain doom. The 2024 election is likely one of the final nails in the proverbial coffin.
We started losing back in 1984. Wal-Mart, aka China-Mart, imported a conservative 6% plus of goods from China. Growing to import more than 10% of all US China based imports.
But, BigCorp Welch and company wanted globalization and zero dampening regulations or retardation on China imports and manufacturing off shoring. IP? The American quarterly report system killed long term thinking. Friedman said greed is good boys no matter what. Maximize profits today because in the 80s, the prospect of no tomorrow was actually real.
But I know if called, US auto engineers can once again come to the aid of their country.
Congratulations on yet another well-thought-out and well-articulated article!
Another worrisome aspect for the global economy is that if and when the U.S. and its allies succeed in shielding their markets from Chinese goods, China will likely redirect its exports to other developing countries. This is because China continues to prioritize stimulating aggregate demand through exports rather than domestic consumption.
In 2023, China’s exports totaled approximately $3.2 trillion (30% of global output), with about half directed to the U.S., E.U., Japan, and South Korea, and the other half to the rest of the world. China’s competitive advantage in manufacturing is not primarily driven by low labor costs but by an efficient production ecosystem characterized by massive economies of scale, an extensive domestic supply chain, organizational efficiency, and a well-trained, disciplined workforce.
Under the current global economic arrangements, this dynamic could lead to a system in which one country—China—dominates the production of industrial goods for the entire world. Meanwhile, the importing countries would be relegated to producing food, non-tradable services like haircuts, and IOU notes to pay for the goods supplied by China.
Excellent piece
I would love to see the balance of the IRA directed away from paying companies to assemble Chinese battery components so we can rich people to buy EVs and more toward national security concerns -
Manufacturing the small batteries that drones use
Battery R&D and basic research
Materials science and manufacturing/operations management (sponsoring engineering students to get into these fields).
We should definitely lean on the Germans, Japanese and S Koreans in our manufacturing effort (just as we outsource some weapons and aircraft parts to BAe and to EU firms) given their expertise in machine tools and manufacturing (though they’ve outsourced a lot to China as well)
As manufacturing becomes more fully automated, countries with cheap land prices, cheap electricity, low taxes and good freight rail networks can be competitive - the US can be competitive on most of these
I think India was one of the first casualties and the world didn't even notice. I have no way to prove it, though. I wish I did or could at least investigate the matter
Great post. Trump tariffs may help. I do not believe China would ever attack the US or whichever country it deems an adversary directly. It will continue to do so indirectly. The S&P 500 is sending the wrong signal. You'd think stock markets which are, to put it crudely, crowdsourced future predicting machines, would know better. By not repeating the mistakes that the USSR did by interfering in the US' spheres of influence (at the end of the day, Taiwan rarely matters to the average American), they will continue to build and build
Taiwan matters to anyone who uses a cellphone or computer, since nearly all depend on chips made by TSMC, even Intel seems to be floundering.
I would like to also extend this analysis to the EU, and in particular Germany and other smaller, but important manufacturing hubs like the France, Netherlands, Italy, Poland, and even Sweden. Why are they missing the trick?
It's tempting to just indulge in schadenfreude towards Germany for its auto sector sleeping on the EV transition, Green politics unnecessarily cratering energy supply by taking nuclear power plants offline just in time for the Russian invasion of Ukraine, etc.
But, "people r so dumb," isn't a satisfying explanation to me.
Germany has some structural impediments to out-competing China that probably it can't do that much about: One of them being the fact of its extremely low birth rate and demographic collapse. Which means fewer workers and an over-reliance on immigration to (temporarily) fill the gap... in turn driving far-right backlash. That's also a factor for both Japan and South Korea's flagging competitiveness. And not something that anyone, including China, has really figured out.
Germany is also merely a medium-sized country of less than 85 million that exists in the not-quite-single-market of the European Union. Maximum, you're selling tariff-free to 450 million Europeans as a German firm, plus another 14 million in the wider EEA. That's still smaller than the 500 million North Americans living under the NAFTA/USMCA free trade area! And both of them *COMBINED* are smaller than the domestic market of Mainland China. So China clearly enjoys a scale that's totally different than any of its competitors. Yes, Americans, Canadians, and Western Europeans are all more rich per-capita than Chinese people are, but that's no replacement for the scale you can enjoy at double the population of producers and consumers under the same single market. If you paired NAFTA/USMCA and the EU/EEA together in a single free trade area (ain't gonna happen), then you'd have better scale, but you'd still deal with the geographic, regulatory, linguistic, legal, and cultural diversity of two continents across an ocean from each other that together have the same population as a single, contiguous country.
Lastly, Germany's energy challenges are Europe's resource challenges: the place never has had much raw stuff to work with. There's hardly any oil or natural gas outside of the Northern British Isles, Norway, and the Netherlands. Germany and Poland have tons of (especially filthy) coal, but coal is a major pollutant, outmoded, and decreasingly cost-competitive. Nuclear power has made up the difference against the paucity of energy consumables, especially in places like France, Sweden, and Finland... but Europe has no domestic source of uranium. Hydropower in Europe, as elsewhere, is unevenly distributed, tapped out in terms of supply, and decreasingly productive in an increasingly drought-prone climate. Last you have solar and wind, which run into their own scaling and political issues totally outside of their well-known intermittency limitations. And how to address the later? With lithium batteries... from China! And if you can't make energy cheap and reliable, you can't have cost-competitive manufacturing. China struggles with similar energy security concerns, but China is the world's single largest primary energy producer as well as consumer, drawing from its own domestic stocks of coal, oil, natural gas, renewables, and nuclear.
The best industrial policy in the world couldn't navigate around those dilemmas. And, frankly, I don't think that China's bull run of export and manufacturing dominance will last as well beyond 2030, either. Because, belatedly, it's also facing some of the same brick walls. It has a demographic collapse on its hands even steeper than Germany's, but delayed. It's domestic market, therefore, is already and will continue to shrink exponentially. As will its heretofore largely unfettered access to export markets (primarily the United States' and EU's). That creates a death spiral of decreasing demand and supply that it will struggle to escape, especially with so much overcapacity baked-in. And its energy challenges will continue, with the insufficient domestic supply of fossil fuels continuing to dwindle in economically-exploitable reserves and the cost curves of renewables hitting a limit and maybe even reversing once the supply of inputs begins to wane. Technological advances will reconcile some of these limitations, as they have for the likes of Japan, but we're still talking about a fevered run-up of competitiveness that reverses into a gentle glidepath downwards, best-case. And a China that's short of young bodies, profitable markets, productive inputs, and primary energy might think twice before throwing its weight around in the 2030s, after all.
And one reason why Germany's car industry vs China's is struggling is that its traditional advantage was the knowledge base built up over decades of making and refining ICE cars: much of that knowledge will be worthless in an EV age.
Plus China is poor enough that it will have millions of households just buying their first cars, while rich Western countries (and Japan) will only be buying the far smaller number of cars needed to replace existing ones which wear out. (Plus the Russo-Ukrainian war will have deprived Japan of Siberia as a place to offload its old cars: it's why most cars in Vladivostok have the steering wheel on the wrong side!)
re: Europe has no domestic source of Uranium
... unless you count Greenland. Now the current government there has banned the mining of uranium, but that could be reversed. https://en.wikipedia.org/wiki/Kvanefjeld
Don't France and Germany both have uranium deposits, even if they don't actually mine them any more because they considered it too environmentally damaging?
I read somewhere that the reason that the French aren't mining is that their resource is not of good enough quality. I do not know if this is true. I don't know about the situation in Germany. In Sweden we have some reserves, and the current government wants to start mining them. There was supposed to be a report about this out earlier this year, but it has been delayed. The government has been busy with all the other reports it has to make about all the other laws it wants to change. https://www.mining.com/sweden-to-remove-uranium-ban/ But what we have isn't supposed to be any where as rich as the resources in Greenland.
I don't know why having a domestic source of uranium really matters to Europe, when friendly countries outside Europe with market economies will sell it to them.
I agree that free trade between Europe and North America isn't going to do much for scaling. The distance, cultural issues, etc. just grind down the usefulness. NAFTA is a great fit for the 3 parties, with many industries operating as if it's a single market, especially autos. Meanwhile, Canada has free trade with the EU, but it's almost gone unnoticed - both Canada and the EU have had poor economic performance in the decade since they established free trade between them.
Yeah, so much of the NAFTA-derived economic integration between the immediate neighbors of the US has been in creating cross-border manufacturing clusters. This is arguably much more economically important than the independent trade of goods produced exclusively in Mexico or Canada. A lot of the Detroit auto industry has actually long been in Canada, taking advantage of the original reason why the Upper Midwest became industrialized: the ease of moving heavy stuff around the Great Lakes! And ditto now for Mexico's Northern Corridor, where it's hard to even say whether something was truly "Hecho en Mexico" or "Made in USA" because it's oftentimes really both.
If the Great Lakes and the Rio Grande are the membranes of cross-North American manufacturing, the waters of the East and South China Seas are the equivalent for China, with a dense trade in intermediate goods across those sea lanes between Korea, Japan, Taiwan, Malaysia, Vietnam, Indonesia, and the Philippines. There's just nothing like that available to Europe right now, with the potential future exception of the Mediterranean and North Africa (especially Morocco, Algeria, and Egypt) or Turkey.
Due to the distance, the North Atlantic isn't going to be that, either, probably, so I'd be dubious about the potential for a real two-way trade in intermediate goods between North America and Europe.
Better than I could have said it. It's disappointing that most American politicians have no clue about how their economy is so well integrated with Mexico and Canada, and therefore how treating them as separate economies is nonsensical in many contexts.
I would add though that Michigan and Ontario's tight automotive integration is actually thwarted more than helped by the Great Lakes, since the intermediate goods travel almost exclusively by JIT trucking, and mostly over the bottleneck that is the single Ambassador Bridge.
Which is why the Gordie Howe Bridge, due to open next fall between Detroit and Windsor, is welcome news.
Your comment on Germany depending on immigration reminds of reading the US Census report on population projections using several assumptions of policies. The one that caught my eye was the one where all immigration was stopped now. In 2100 the US would be 100million smaller.
Wow, that's shocking, but not surprising!
Noah has been thinking ahead of the curve on industrial policy and national security. I hope Important People take notice.
The way to avoid war is intertwine manufacturing and food supply.
When I was working DoD strategy I don't recall ever looking at a full on kinetic China/US conflict CONUS. China's principle US conflict strategy is Assasians Mace where they would use some form of knockout blow to win.
US air superiorty would atrit a lot of China infrastructure before we saw on the ground troop kinetic battle.
FPVs need to launch relatively close to the target. We can send B2s from Whiteman global 24x7.
Battle ideas like Musks are not new. Military has wargamed that back as far as 1995 if not further. You do wargames to develop strategy and doctrine. You have opposing teams acting as China or US and look at an attack idea like FPV and a response idea, if which there are many. F35 mission is not the same as FPV.
Some sort of forward deployed FPV container package might be interesting first strike weapon on a CONUS base, but only first strike.
Starlink is a great example hedge against Assasians Mace. It is virtually impossible to take down given the number of satellites. It is safe to assume the US military figured this out before Musk and nudged deployment in many ways to buttress China first strike strategy.
I love Musk. But many of his pursuits were dreamed up by others. His rare skill is to drive ideas forward into reality.
These are incredibly salient points I wish Noah would incorporate into these posts. It’s the primary weakness from my POV.
If you don’t can’t keep your manufacturing infrastructure safe from threats then it doesn’t matter how superior it is. Even a very expensive bomb or cruise missiles is cheaper and easier to build than a new factory. China can’t threaten the US this way anytime soon. Cyber warfare and minor acts of sabotage - sure. Dropping 20k lbs of explosives onto a factory, not so much. China on the other hand CAN be held at risk this way.
And I would find it very hard to believe they’re too proud or ignorant not to know that.
Having worked at Tesla as a senior design engineer I also agree about Musk. He is brilliant and extremely capable - just not in quite the ways the general public thinks. He’s neither an engineering genius or an idiot.
Interesting feedback.
I was at McDonnell Douglas and Boeing. We spent a lot of time developing the precursor for reusable rockets, high-speed satellite interconnects, high-speed machining, design for manufacturing, tooless manufacturing, friction stir welding, superplastic forming, etc. We did it in the 80s and more in the 90s, but still when the tech was pretty nascent. I am glad to see that SpaceX and Tesla have built on these technologies where we left off. It took decades to get these things right. Many have the same vision. Many have similar tenacity as Musk. Ford did not invent the car, he figured out how to assemble the existing processes to make them better.
I am particularly sensitive to anyone articulating a military force structure policy without having done a bunch of wargames. The enemy is creative, and asymmetric threats are, by their nature, unpredictable.
Damn Noah. This one is serious. Are we getting serious about solutions?
- Is the next post on "what we do about it"
- I think we need like a 10 point post - here is what we need to do