Stop fighting China on electric vehicles
Much of the banter surrounding the rise of China’s electric vehicle (EV) industry and the implication for the global economy is misleadingly alarmist. When our government gets involved in such narratives, it calls into question the sincerity of its insistence that EVs are essential to an existential battle against climate change. If China’s foray succeeds, the world gets cleaner cars and non-Chinese automakers are obliged to improve their own products.
A common concern among government officials is that while China faces strong headwinds, the country still might have what it takes to firm up its position and maintain dominance as an EV producer and exporter.
I find it bizarre. We are constantly reminded of the importance of investing in green technology as the world faces a pressing need to reduce carbon emissions and combat climate change. By dispensing gargantuan subsidies to support both U.S. electric car production and purchases, the Biden administration clearly wants American voters to believe that it’s taking climate change seriously and that more EVs are part of the answer.
We should rejoice in China’s increased focus on electric cars, which reflects the global shift toward cleaner and more sustainable transportation. Better yet, Chinese EV manufacturers seem to have moved beyond merely imitating American and European automakers. Chinese automakers are now producing vehicles that can compete with top-tier Western competitors in large part because their cars are so much cheaper.
Of course, there are questions about whether China will be able to maintain its dominance in EV production. For one thing, its heavy-handed approach, known as industrial policy, has never improved the overall economy of any country. A myriad of subsidies and support to the Chinese EV industry could end up hurting it by making it less flexible and subject to mal- or overinvestment.
Yet the question remains: Does China’s current dominance in the EV market truly hurt us? After all, China is now producing lower-priced, decent-quality cars for consumers who, unlike Chinese citizens, aren’t shouldering the costs of the subsidies propping up the industry.
Americans should be upset that their access to these EVs is obstructed by a 27.5% tariff on Chinese-made cars imposed by the Trump administration and maintained by President Joe Biden.
