Why China is About to Start a Trade War 

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The part about steel is incorrect. The Pittsburgh steel industry collapsed in the 70s, before china opened up. It collapsed because its steel mills were inefficient compared to the Japanese

"a trade war.... sponsored by Brilliant" 😂

My goodness, there is literally about nothing in this video that is remotely accurate. 1. The primary beneficiary of Chinese government loans aren't private enterprises but State Owned Enterprises, largely due to the legacy of transitioning from a state-owned economy to a centrist if not market-oriented economy (especially prevent unemployment in the 1990's). The Chinese steel industry has large over-capacity but still receives government loans precisely for this reason and it doesn't affect a steel mill in Pittsburgh one bit. Around 70% of all Chinese government loan programs go to these SOE's 1a. Some random private company that exports bicycles or shirts can expect a government subsidy of about zero. See point 1 2. Private "strategic" industries mentioned in this video such as EV or solar panels point to Chinese subsidies, but I wonder why it neglected all those European and American subsidies that continue to this day. No mention of the $7,500 subsidy for Tesla but only if its battery and eventually all material and parts are produced in the US? And don't get me started on solar panel subsidy. The Europeans basically started that. Let's not also forget the Chip Act for semi-conductors, farm subsidy, Build Back Better and whole slew of acts that came out just this past year. Oh, who could forget Boeing. This makes claims of Chinese subsidy highy facetious 3. Cut corporate tax rates? See TAX CUTS and Jobs Act of 2017. Also, fun fact, corporate tax rates are higher in China. Want to see a tax haven, see Ireland, where a whole slew of Euro/American companies are domiciled. I'm sure it's because of the number of sheeps there 4. Cutting down on unemployment, social security, pension and disability benefits? You mean, when those government-ran (of course) plans went insolvent in the 1990's because they ran out of other people's money? That seems to be happening to every government ran social security, pension or healthcare plan globally 5. Sure, China constructed roads, bridges, ports and pipelines for the benefit of "private corporations" if we pretend the public doesn't benefit from those, such as having employment opportunity. It also helps if we ignore the pesky fact that China also built whole slew of public transportation, schools/universities, theaters, parks etc. It helps if we pretend that the Chinese government doesn't directly subsidize its population in cost of living and what have you 6. Ignore environmental regulations? Per the Air Quality Life Index produced by the University of Chicago, China reduced its particulate emissions by 42.3% between 2013 to 2021 and lengthed the life expectancy of its citizens by 2.2 years. Without China, the global emissions average would have INCREASED instead of DECLINED. What this video doesn't point out is that, China is not ignoring environmental regulations. But rather, when you have a poverty-stricken populace in the 80's and 90's, alleviating poverty had to take priority. Now that it has reached certain level of its economic development, it can consider other aspirations 7. Keeping its currency values artificially low? You mean like the US and Europe that can conjure money out of thin air? That doesn't devalue its currency? 8. France has a competitive advantage of producing wine? What's the opportunity cost of all that land/water producing said wine? How many jobs does it create? How much value-added economic activity does it generate? A manufacturing economy, even textile or unskilled labor is FAR MORE value added than producing wine. You start by providing poor laborers with jobs and prospect with the goal of climbing the value chain. That is China's industrial policy. From shirts and toys to electronics to telecommuncation to Artificial Intelligence and beyond. Your vineyard will produce the same land/water intensive niche product year after year. China has NO comparative advantage in producing tea, rice or porceline in the era of industrial level farming and cheap labor abroad. It buys rice (and other raw materials) for LESS THAN A QUARTER the cost from countries like Vietnam then sells MANUFACTURED GOODS back to Vietnam, retaining all the value-added activities 9. Its no coincidence it produces the world's cheapest bikes and television. Because it has BY FAR the most complete supply chain, world class logicistics/supply chain management, large relatively-skilled (as opposed to unskilled) labor and world-beating infrastructure with a government that is very business friendly. It doesn't produce the world's cheapest toys and cloths. Hasn't for almost a decade now. Know why? Because those are only LABOR-INTENSIVE 10. In a world swimming with debt, perhaps don't call on China to boost domestic consumption too soon too quickly? Which one is it? Does China have a debt problem or savings problem? Because you can't have both

I see, it's a "But at what cost?!" video.

I’m convinced Polymatter and Wendover live in the same house

Exporting surplus is literally what every country does

Part of this video is a good historical recap of China's challenges, but the conclusion it draws from those historical events are dubious. The US and Europe loves to call things as "dumping" and "trade war" when other countries have goods to sell, but when they have goods to sell to other countries they demand that other countries must open up. This is the nature of trade ... every country feels threatened when their own consumers prefer to buy foreign goods (because it's cheaper, better quality, better value, or whatever the reason might be), because then the government would start to lose control over the local economy. "Economic competition" is good until someone becomes so good that the "game" feels "unfair". What China is doing is exaclty what the US and Europe did during the 70s - 90s, when it "dumped" its excess production capacity into emerging markets, offering goods and services at good prices, and gobbling up new customers abroad. It's tiresome to hear the "boy who call wolf" when economic competition creates winners and losers. This is the inherent risk of opening for free trade, which is that you risk having foreign companies outselling in your local market, and gaining control of your local economy. The US and Europe can't preach free trade for everyone else, but then call "foul play" when they start to feel the negative consequences. This video is more about "trade politics" than it is "trade economics".

Boeing receives enormous subsidies from the US, the same as Airbus in the EU. Both dump their products internationally. If your story holds true, then the US didn't pay her people generous enough to buy more private planes.

"Why China is About to Start a Trade War" - my question about assertions like this is whether or not the author will make a follow up to their claim. If there is no trade war, will there be a "Why I Was Wrong" video, or are we just baiting viewers with a fear-inducing headline here? I say this as a longtime viewer of PolyMatter, big fan of the videos in general.

This video is an actual embarrassment. 4:02 could literally be talking about the US. 4:43 even more so. Yet it tries to present the statements as unique flaws of the Chinese economy. For God's sake, it tries to tell you that exporting surplus products is a sinister undertaking. Globalization, anyone? And as for the subsidies are bad argument, apart from the whole "infrastructure is unfair competitive advantage" bull, the US also provides ginormous tax breaks for companies, especially for manufacturing, for example. Not to mention countries like South Korea, which I am sure get a glowing review on this channel, which are basically industry zones first and countries second. And the title of the video... are you having a laugh? Circa 2017 is when protectionist tariffs were escalated, BY THE USA, and it still continues with the banning of selling advanced microchips, and the actual GODDAMN SUBSIDIES granted for research in chip manufacturing. But sure, China is the one starting a trade war.

You cannot convince me that this channel does not get some sort of subsidies from the state department

What a stretch to use French wine as an example. French agriculture is heavily subsidized and protected. And they only get away with the high prices because they were able to come up with this denomination protections that I don't know how they were able to enforce internationally. Remove the subsidies and the French farmers would no longer be able to play farm.

There is no reason to assume China wouldn't try to export cars at some point, because it is basically the playbook of other East Asian countries -- Japan and South Korea.

PolyMatter and China deserve to be together. FOREVER.

Every PollyMatter video, “China has a problem..”

Imagine being so american that "china has a problem: grocery is too cheap"

The Map is wrong with France, Germany and Netherlands. You need to switch France and Germany :)

How Polymatter evaluates the quality of products: Bridges: How sturdy are they? Trains: How fast are they? Airports: How...clean are they? 😂

Things are way too affordable Said noone ever

The part about France is also wrong. France has absolutely colossal subsidies for wine, including regularly paying growers to rip up vines... Which then get replanted and ripped up again... A good friend's in-laws did this a few years ago in Le Gers. There are lots of import quotas for many, many agricultural products, and plenty of tariffs. Europe, and particularly France, are absolutely not free market at all, and there are plenty of very nasty chemicals that don't get banned, in spite of scientific studies showing they should be, because of lobbies. Do better.

16:26 Germany and France switched places :o

The wine is a poor example as there are numerous protections in place for agricultural goods in France, and more broadly, in the EU. Notably, what differentiates sparkling wine and Champagne is just the place of origin. The name is legally protected, and that extends internationally via trade agreements.

Are you telling me that america and Europe don't pay subsidies to every industry.

Someone didn't do their homework on the obscene amounts of agricultural subsidies French and EU governments provide to their farmers

*United States slaps tariffs on and creates protectionism policies for China*.......PolyMatter: Why China is About to Start a Trade War

The first minute of this video made me think I was having some sort of weird fever dream.

China: build a road to help people move around. Polymatter: it could be a violation of trade law. This logic is completely mind-blowing

It is sad to see PolyMatter's video quality declining so much and have to resort to anti-China clickbait

We have a problem in Canada where everything is getting so expensive that life is unaffordable for many people. We'd gladly welcome price deflation.

PolyMatter: Affordable Cars: Unethical Expensive Cars: Comparative Advantage!!! How educated.

It's unfortunate that PolyMatter has to resort to anti-Chinese sensationalism due to a significant decline in video quality.

2:18 China no longer offers cheap labor. Their factories are very efficient and produce goods at much lower cost.

that europe map min 16:26 looks a bit alternate history.

I'd love a $15,000 BYD option in Canada, can't lie... 😬

16:26 damn i knew geopolitics were turbulent atm but france and germany switching places wasn't on my bingo card

wrong data:over 30 million cars were sold in China market in 2023, not 20-25 million,China car market is larger than the US and EU combined.

"Start"? I thought we've been in one since 2017

another problem on china lol this channel should just be named ChinaMatter

Whining about China being unfair to the rest of the world and their workers working too hard will not change the non competitiveness of America. Stop spending trillions on wars and use that money to help American industries and workers.

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I'm not so sure about the takeaways from this video, my impression is Polymatter took a rather simplistic view here and I'm quite worried about the emotionally charged language throughout the video, too. It's not hard to utilize China's authoritarian system and use it as an explanation for why the government cannot get consumption up. However, when taking more data into the picture, this explanation doesn't hold up. Compared to Western countries, consumption does account for a lower share of GDP (just above half, compared to 2/3 in the US and UK) but this is the case all over East Asia. The Taiwanese and South Korean economies rely even less on consumption. So, the actual reason why Chinese people are frugal can't because they have low social security. What unites these countries is the high cost of raising children, especially regarding education and marriage, which are common reasons why families save money. I similarly disagree with the notion that China has suddenly decided to flood Western markets with EVs. What the video is leaving out is that BYD is already the biggest car exporter in the world. Why would they not sooner or later tap into Europe and America? This isn't some sudden grand strategy but a rather normal development and of course not China will start this 'trade war' but the countries who are insecure about this change. What I agree with is that China is restructuring its economy, but in a different way than implied here. Polymatter have talked about it for a long time: China's record growth numbers cannot go on indefinitely, but now that it happens, they act as if getting the numbers back up is China's only solution, when in reality, even the CCP has realized by now it has to make growth more sustainable and let more people benefit from it. 'Quality over quantity' is widely being discussed in Chinese leadership now (BRI projects for example are now called 'small but beautiful') and I'm astonished this channel isn't talking about this at all but sticks to blaming its authoritarian nature. Source for most of this: "The New China Playbook" by Keyu Jin (London-based economist)

Slovenia mentioned!!!

I am a company owner of China. I know how much cost for social insurance and tax paid for a employee. It is pretty high. The enterprise is actually highly taxed. Actually the reason for saving high is not because of low social insurance.For subsidy part， I dont know other trades, for green energy part, the government never paid on time. Believe me, making business is hard, competation is so high. I believe that is why there are more competitive company in China. For consumer part, you can see how many apple, tesla, bmw, benz, audi ... bought by Chinese people, actually, the luxury cars are only ones having up sells in China's foreign brands. Chinese also buy a large amount of electric vehicles.

French wine example is unfortunate. There is nothing as subsidised as European agriculture

My guess is that tariffs based on "Made in America" content will be raised to sufficient levels to prevent imports of cars assembled in China. That sounds like a policy that will happen regardless of who wins the election. Especially since EVs are sitting on lots as it is.

I'm surprised at how poorly this video has been made, it's not what I have expected at all

is the first minute of this video an out-of-season April fools joke?

As someone who lives right next to what used to be a huge bycicle factory in Slovenia, but is sadly now defunct, the opening statement hit differently 😢😅

16:27 my guy… you got Germany and France backwards 😂😂😂

I have been trading for about 6 months now and just about every mine, it backfires and slaps me in my face. Nearly impossible for me to catch more than a few points I try to do top down analysis but it doesn't work for me . I say to myself, clearly I'm in the 90% that lose money, so I open a demo account, do my analysis, then take the opposite of what I would normally take and get the same result. I'm starting to feel hopeless, any advice for a struggling trader?

This guy needs to fact check himself

The title has Typo? Mistakenly wrote China instead of USA. LOL.

I still can't get over how funny it was seeing China absorbing a county I live next to in a Johnny Harris video. Like I already know manufacturing is mostly dead where I am from, I don't think it was completely China that did that thought.

Keep up with the China videos, you've got competition now

Show a Foreign Direct Investments chart along with the GDP growth and where it is today, that will answer the question how many of those cars will be permitted on EU/US markets.

hmm groceries, basic necessities for people are "too" cheap. Is it better to have inflation?

In many western countries children used to work in mines well into the 20th century. To think that we developed with regulations on labor and the environment is laughable.

The engineer's dilemma is to make something as cheap as possible that just passes standards for safety.

Bro’s acting like the USA doesn’t heavily subsidise their key industries

This video is also a pretty good handbook on how to write a Cyberpunk economy

Polymatter is too obsessed with Chinese, it's like his Chinese girlfriend broke his heart

Would’ve liked to see included in the video if there is a plan from Beijing if Europe starts introducing heavy tariffs on the cars, and exports don’t sell well in Europe

Watching this on x2 speed saved me. You talk too slow and drag the video where it’s not needed

The video editing is really good! The best use of B-roll I have seen on these styles of shows

The building highlighted at 1:32 is a Field and Stream, the REI is actually across the parking lot in the rectangular building. Funny to see a local place on a YT video.

I'm tired of these new buys every week, just to make up some assets with low percentage on my $236k portfolio and try to keep everything around 10%. Do you think these stocks you just mentioned are safe buys to outperform the market this year?

This was a phenomenal video, good explanations of complex things

16:25 I can see you're an American XD

At 16:23 you have confused France and Germany on the map 😶

My biggest take away was that continuing to purchase cheap Chinese products will eventually bankrupt the country that produces them. I have to be missing something, but this was a super interesting video.

cant say this enough your voice is totally bad ass perfect for narrating

Capitalism is a scourge when cheap food is considered a bad thing

Comparative advantage is not relative to other countries but rather within one country. Econ 101.

Francis Scott Key Bridge in Baltimore (shipping port) just collapsed because a ship ran into it. 🤔

Wait, did you say the buildings and bridges are too sturdy. Have you heard of "tofu dreg" construction?

Make video about slovenian bicycle industry

The rate at ehich you are pumping new videos is pretty crazy ngl

The solution to increasing consumption, to deflation and to their national debt are all the same, easy to implement and can be implemented at the drop of a hat however: print lots of money and give it directly to consumers. As such, I'm not really surprised that they have no particular urgency to do it, when they can instead continue to leverage their current economic model to move further up the value chain. In addition, high savings is it's own solution; after a long enough period of time, that stockpile of saved money by each consumer will grow to the extent that it will diminish the urgency with which each individual feels that they need to save, and thus the savings rate will decrease naturally by itself, albeit over a fairly lengthy period of time (>10 years).

Trade war didn't stop since 2018. This video was uploaded slight ahead of the date Janet Yellen visit to China with a similar talking point, very interesting indeed

The problem here is _worse_ and harder than this program lays out. Many countries in Asia and Europe have very similar demographic and economic problems to the ones that plague the prc. Add in nationalism and you have a deadly brew. Many European and Asian countries are looking at population declines and low or no growth in demand in the future. Add ongoing subpar overall growth in Africa and you can see what manufacturers and exporters around the _world_ are worried about. To his credit, I think Zeihan figured a lot of this stuff out _years_ ago.

Can somebody good at economics explain to me how consumption foster economic growth and makes an economy more resilient? Intuitively, you are not producing anything of value by simply consuming. Sure, companies make more profit out of more consumption, but ultimately, no value is brought into the country's economy. How is it considered to have the same importance as exports?

I have a mathematical question. If the Chinese government provide sizable subsidies to all industries, how does it make its ends meet? And how low is the labor cost to be considered low? Why a lot of countries with much lower labor cost does not prevail?

Because they are not in inflation They are in deflation Double edge sword.

already seen it on nebula, good video

16:29 I think France and Germany are mixed up

It’s unfortunate and disappointing to see that the video quality on this channel declining. It used to be one of the very few sources from outsiders that stimulate insightful discussion on complex issues in China. But it has since degenerated into a click baity, self repeating mediocrity, possibly with the intention for more view and profit. As someone who has lived in both China and U.S. for many many years, I understand the immense difficulty of unraveling these issues, especially when they are controversial. That’s why I used to respect this channel, often writing long comments to share my experience and observations, until the recent few videos. For this video specifically, the author failed to provide an intellectually satisfying conclusion. The “trade war” in the most general sense has been ongoing for many years on all kinds of goods. Therefore it’s no surprise that EVs are now becoming the commodity of interest. The analysis leading to it is somewhat insightful, but it has too much repetition and almost feels like a deliberate act to extend the length of the video. The most unacceptable part is the ending. A “trade war” is looming, so what? What would be the economic consequences to China and the rest of the world? I know it’s hard to provide an answer without stirring up some angry comments, but ending the video here is just lame. The whole “trade war” thing just felt like a cliche that has been abused by thousands of other mediocre medias online. I spent 20 minutes watching this video for this? Sorry but I will unsubscribe, from nebula as well. This might be my last comment on this channel if nothing improves. While I don’t blame the author for playing safe, focusing on views and profit, I won’t pay for it anymore, due to the lack of intellectual value.

Just a short explaination about why the consumption of Chinese people didn't bounce back after the pendemic, as mentioned at the beginning of the video: China has a uncomplete health care system that hasn't covered the majority of its population, especially the older generation (because there wasn't a health care system yet back in the day). When the pendemic came, there were a great amount of families realizing how expensive a health care was, especially without insurences. Combined with the fact that the world is getting more and more unstable in various way, people tends to save money for unexpected changes in life rather than spending them off.

how is that a "trade war" if they are trying to export more of their cars to other countries? Isn't that the opposite of a trade war?

Hi the video is good. Could you do a video on the Nuclear Triad and its significance in today's world with many conflicts.

So Chinese workers are capable of living and saving half of their salary (I wish I could) and they have an overabundance of purchasing power compared to 30 years ago, being able to purchase food, appliances and cars that would have been unimaginable to their grandparents. Seems to me like they’re doing quite well economically. Yes, Consumption could now be higher, but I would argue that those policies have allowed their spectacular growth and prosperity in the first place.

SEATTLE MENTIONED

Chinese bridges too strong? Uhh... American infrastructure is out of date but there is evidence that Chinese building materials and standards are sub standard.

Your bicycles are now made in Vietnam, Cambodia, Thailand, Malaysia, Indonesia, Philippines, etc. Labor cost in Southeast Asia is one third of China’s. And there is no tariffs on imports from these countries. All American businesses move out of China and into Southeast Asia, Mexico, South America and India.

I found an error at 16:27. You mislabeled France as Germany and Vice Versa.

This video suggests that China can produce various goods so cheaply, quickly, and on a large scale because of cheap labor (or "low human rights"), massive government subsidies, and disregard for intellectual property rights, among other reasons. I do not wish to comment on these views, but it's necessary to point out: 1. Labor costs in India, Southeast Asia, and South America are even lower than in China, yet they have not become the world's factory; 2. The Chinese government does not subsidize all industries, at least bicycles are not included, and only a very few industries considered to be of strategic value receive subsidies, yet almost everything produced on a large scale in China is the cheapest in the world; 3. While China's emphasis on and protection of intellectual property rights still lag behind developed countries, they are the highest among all developing countries; 4. Over the past 50 years, the income of ordinary Chinese people (adjusted for inflation) has increased 60-fold. As a Chinese, I cannot deny the problems mentioned in the video (they indeed exist). However, China's real success in becoming the "world's factory" and its economic development to this extent truly rely on effective management, hard-working people, and an exceptionally large market (which ensures that almost anything produced is cheaper).This video is more biased and hostile than factual and logical。

Usually great work, but I expect this video may not age well. One of the first problems is to consider is the source of the manufacturing inputs. While not addressed in the video, few are domestic.... and Russia seems busy at the moment to be a significant substitute should it initiate a trade war. Then there is the political element, its leadership seems increasingly "challenged" to put it nicely. Additionally, assuming China's top priority is economic fails to consider the mindset of China's leaders and its past as recent as 60 years ago. What's in place today I believe may be more severe in its viewpoint.

The building you highlighted in Columbus Ohio is a field and stream, the two is in the middle of the mini mall haha

You forgot, probably 1:15 didn't know, to mention those consumption brought about by those various mega projects under BRI. 😊😊😊

I feel one point that needs to be covered. Is that since China’s meteoric manufacturing rise since 2000 and the corresponding tens of millions of lost manufacturing and their support industry jobs in the west, Western politicians now will not allow one of the West’s last jewels of manufacturing, the car industry to be also decimated by cheap Chinese car imports. So I feel that you will see that there will be all sorts of restrictions perhaps even outright bans on Chinese EV vehicle exports in any serious numbers to the west.