E Scott Sumner Destroys Financial Times Fear Of China

The Financial Times has come out with an article fearful of China. Scott Sumner of the Mercatus Center decimated it. For the FT, fear of losing a cultural war with China must be widely understood. The FT said:

 While tariffs are President Donald Trump’s personal preoccupation, fears over losing an economic and cultural war (and possibly a real one at some point) with China is a worry that is shared broadly in the US, no matter what circles you travel in.

Sumner destroys the FT author's arguments by pointing out a few choice facts:

1. The worry of losing a cultural war with China is not widespread. Both Sumner and I have never met anyone who worries about that. I watched Japan movies like Godzilla, but confess I have never watched a Chinese movie. I am sure Chinese folks have watched a boatload of US movies.

2. Many companies in America do not have the freedom to sell technologies in China, making the FT author's claim that American companies can sell where they like not universally true. Globalization means you sell where you can and make money. Globalization is not inherently evil. But there has to be a common sense approach, not forcing nations to bend to the will of the United States or to US big finance. There is a dark side to globalization. It usually involves politics.

3. We worried that Japan would overtake us. Never happened, really. Yes, they sell cars. But they performed better with fewer needed repairs. The parts from Japan actually have improved American cars and their performance! Japan puts factories in America and Japanese citizens love American products. Both nations have prospered from the relationship.

Americans must grasp that China is potentially the largest and most wealthy customer for US business. If it were a mine it is the largest mine in the world. American business must mine China! Chinese people love US products!

(Click on image to enlarge)

USA had massive tariffs in its early development, far greater than the average of 14 percent for China. Chart was uploaded by Wikipedia user James4 for common use.

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Disclosure: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment ...

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Gary Anderson 5 months ago Author's comment

Update: If the USA is serious about protecting technology, then just stop US companies from accessing the Chinese market. Of course, China will get the technology by other means later, but US companies will be out of the loop. It appears that the USA government is overstepping its bounds. It wants USA companies to access China while maintaining control of all the technology. That has to be a slap in the face to China, and must be viewed by the Chinese government as being downright insulting. Don't look for progress on this issue as talks resume or don't resume. The talks don't matter if this issue takes center stage in the relationship between the two nations. Trump is either naive or wants to take the entire world economy down, including us!