In the 1970s, China became the world’s factory when it started allowing international manufacturers to set up shop and produce goods cheaply within

Breaking down the world’s tariffs against China’s tech industry

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2024-11-28 01:30:03

In the 1970s, China became the world’s factory when it started allowing international manufacturers to set up shop and produce goods cheaply within its borders. Initially, Chinese factories made low-end products like plastic toys, then more sophisticated items like personal computers, smartphones, and automobiles for tech giants like Apple, Tesla, and Volkswagen.

Chinese industries have since matured: They’re making big-ticket tech products at lower costs than Western competitors. Billions in state subsidies have propelled the Chinese economy toward self-reliance in advanced manufacturing. The Chinese government’s industrial spending tallied at an estimated $406 billion, or 2% of its GDP, in 2019 alone, almost five times what the U.S. spent that year on its industries.

Economies that have benefited from China’s cheap manufacturing now fear that imports could flood their markets, widen trade deficits, and sideline their own manufacturers. Before 2018, there were virtually no global tariffs affecting China’s tech industry goods. That year, the U.S. launched a trade war against China, with President Donald Trump challenging China on “unfair” trade practices.