How Musk and Swift can resolve US-China relations

I just spent a week in Beijing and Shanghai, meeting with Chinese officials, economists and entrepreneurs, and let me get right to the point: While we were sleeping China took a great leap forward in high-tech manufacturing of everything.

If no one has told Donald Trump, then I will: His nickname on Chinese social media today is “Chuan Jianguo” — meaning “Trump the (Chinese) Nation Builder” — because of how his relentless China bashing and tariffs during his first term as president lit a fire under Beijing to double down on its efforts to gain global supremacy in electric cars, robots and rare materials, and to become as independent of America’s markets and tools as possible.

“China had its Sputnik moment — his name was Donald Trump,” Jim McGregor, a business consultant who lived in China for 30 years, told me. “He woke them up to the fact that they needed an all-hands-on-deck effort to take their indigenous scientific, innovative and advanced manufacturing skills to a new level.” The China that Trump will encounter is a much more formidable export engine. Its advanced manufacturing muscles have exploded in size, sophistication and quantity in the last eight years, even while consumption by its people remains puny.

China’s export machine is so strong now that only very high tariffs might really slow it down, and China’s response to very high tariffs could be to start cutting off American industries from crucial supplies that are now available almost nowhere else. That kind of supply-chain warfare is not what anyone, anywhere needs.

The Chinese experts I spoke with during my trip two weeks ago would like to avoid that battle. The Chinese still need the US market for their exports. But they will not be pushovers. Both Beijing and Washington will be much better off with a bargain — one that imposes a gradual increase in US tariffs, while both of us do what we needed to do long ago.

What is that? I call it the “Elon Musk-Taylor Swift paradigm.” America would use higher tariffs on China to buy time to lift up more Elon Musks — more homegrown manufacturers who can make big stuff so we can export more to the world and import less. And China would use the time to let in more Taylor Swifts — more opportunities for its youth to spend money on entertainment and consumer goods made abroad, but also to make more goods and offer more services — particularly in health care — that its own people want to buy.

But if we don’t use this time to respond to China the way we did to the Soviet Union’s 1957 launch of Sputnik, the world’s first artificial satellite, with our own comprehensive scientific, innovative and industrial push, we will be toast.

Here’s another way the China that Trump will face in 2025 looks a lot different from his last go-round. If Trump were even to tell China, “Hey, I’ll let you off the hook on tariffs, if you build more factories in America,” that would definitely help reduce our trade deficit with Beijing, but it might not be such a vote-getter for Republicans. Because here is what China would say: “Sure, how many factories would you like? Forty? Fifty? But there’s one thing. The assembly lines will all be staffed by robots, and we can even operate them remotely.” But there is another reason for China’s headlong rush to robotisation: demographic necessity. In America, strong trade unions and a growing population make robots the natural enemy of working people, because of how they supplant blue-collar labour. China’s population collapse and its heavy restrictions on trade unions make introducing more and more robots to factory floors both economically essential and politically easier.

In the last seven years alone, the number of babies born in China fell from 18 million to 9 million. The latest projection is that China’s current population of 1.4 billion will decline by 100 million by 2050 and possibly by 700 million by the end of the century. To preserve its own standard of living and be able to take care of all its old people, with a steadily shrinking working population, China will drive the robotisation of everything for itself — and the rest of the world.

As for my neighbours in America, I have a confession. I caught a virus in China that I never imagined I’d get: “Elon Musk appreciation.” I’d become so disgusted with the way Musk had been using his X megaphone to bully defenceless people and fawn over Trump that I just wanted that Elon Musk to shut up and go away. But there is another Elon Musk. The genius engineer-entrepreneur who can make stuff, big stuff — electric cars, reusable rockets and satellite internet systems — as well as anyone in China can, and often better.

Musk at his best is the one American manufacturer the Chinese fear and respect. It is crazy to me that Trump is wasting Musk on the project of shrinking the US bureaucracy — under the acronym DOGE, for the informal “Department of Government Efficiency” — when he should be leading another DOGE, a government office for enabling more Americans to “Do Good Engineering.” In sum, America needs to tighten up, but China needs to loosen up. — The New York Times.