The horizon is not so far as we can see, but as far as we can imagine

China Is Winning The Electric Vehicle Race. Why And What Does It Show?

Not precisely a surprise, or it shouldn’t be.

China, already the world’s biggest market for EV, is set to knock Japan from top spot for global car export volume this year after overtaking Germany in 2022

Price on the low end is pretty good, too, though it may only be available in China:

This is the new BYD Seagull and with a price tag starting at just 78,000 yuan ($11,300), it is one of the most compelling new electric vehicles from China launched in quite some time.

Of course, it helps that China is the largest market, though some European countries are hard-charging in terms of buying electric vehicles.

For a long time the US had a huge advantage: it had the consumers. It was rich, it was high population, there were no high population countries with larger markets than the USA. Now China is only a middle income country, but it is a 1.4 billion population middle income country.

Further, China uses industrial policy. It does not have a floating currency, but one that it manages. It provides huge subsidies to important industrial markets and it supplies a domestic market which is huge.

It should be understood, clearly, that with almost no exceptions, every country industrialized under protectionist policies. The only exceptions I am aware of are city states, Finland, and the USSR. Every country which moved to laissez-faire policies then saw a decline in their industrial power. In almost all cases they also had a sponsor: for Japan and the US, for example, the initial sponsor was Britain. That sponsor helped them with the initial technology transfer and provided an external market.

The country which did that for China was the United States.

However, as was the case with Britain aiding the US, this was a clear geopolitical mistake (though in the Chinese case a humanitarian plus). China’s population size and geographical extent meant that they eventually created a large internal market capable of providing a substantial market and, since they were and are the lower cost producer (a large part of why America moved production there in the first place), they have been able to easily take over export markets from the US and its allies: their products are about as good, or good enough, and a lot cheaper. So the West went from being the primary exporter of goods to South America, Africa and most of the rest of Asia to second place.

At this point China has a large internal market and more of the world market than the US does.

This is not to say that the American and European markets aren’t important, they are. But they are no longer determinative: they are no longer the only game in town.

Add to this that China is surging technologically, and the Western lead is evaporating. The speed of that evaporation is accelerating. China now has a domestic passenger jet industry, for example. The jets aren’t as good as Airbus or older Boeing planes (Boeing appears unable to make good new planes) but it’s good enough, and the next generation will be better. Chip manufacturing and design continues to improve and all the serious technological bottlenecks will be broken, I’d guess in ten to fifteen years. Most solar panels are made in China and it is also the world’s largest market for solar.

As I have pointed out before, the tech lead moves to where the manufacturing floor is. There is lag time, in the case of Britain and the US it was about 20 years, but it happens.

There are jokers in the pack, of course: climate change, demographic issues, ecological collapse, the possibility of war and blockade and so on, but the smart money is on China.

China was the world’s largest and most important economy for most of the last 2,000 years and the most technologically advanced (before that it was India.) It will return to that position if climate change or war does not stop it.

All absolute advantages are time-bounded. You can extend them with careful policy, but at some point other people learn how to do what you can do. If a smaller nation wants to dominate it needs an absolute advantage in production or the military. Sometimes that is in production, sometimes it is cultural/technological (think the Mongols or the Macedonian Greeks).

The West’s time is done. This is going to be particularly hard on the Europeans if they keep bungling their decline (they should be disentangling from the US and forming a third pole). The US, if it does not disintegrate into civil war, faces an ugly period as well. The dollar hegemony is collapsing, to the extent that even the Financial Times is writing about it, their tech leads is disintegrating and they are set to be the leader of the lesser bloc in a cold war. That didn’t work out well for the USSR and it isn’t going to work out well for the US.

Now, everyone has problems and I wouldn’t be surprised if in 50 years China breaks up under the hammer blows of climate change and ecological collapse. But then, I wouldn’t be surprises if the US does. For now, the normal dynamics of historical change and the rise and fall of hegemonic powers are in play and the smart money is on China.




Week-end Wrap – Political Economy – April 23, 2023


How Elites Liquidate National Advantage (Fall Of The American Empire)


  1. mago

    In the 90’s i preached teach your spawn Mandarin in preparation for the coming world.
    Now not so sure.
    Cooking, growing and gathering skills more essential in the local now.
    China’s a hard task master.
    Prediction is a fool’s game.
    Más o menos. . .

  2. Carborundum

    The West’s time is not done. The West’s interlude of being the only show in town – even far out of area across many domains simultaneously – is done. The phase transition is to multipolar, not a new unipolar configuration. The story seems likely to me to be the two great powers and a couple of shifting blocs that aren’t as tightly tied to the major powers as was the 20th century norm in a number of meaningful ways – unless the great powers are more able to rattle sabres at each other to make the rest of us fearful and dependent than I think they will be over the long term.

    China is going increasingly to be grappling with the challenges of demographic middle age and a certain amount of economic heartburn. Rather than viewing the world along the well trodden path of China triumphant and the West (really the US) supine, I think our analytical focus should be on the secondary blocs and the periphery rather than the great powers.

  3. Ian Welsh

    The question, I think, is whether it falls into a two-bloc system with a cold (or hot) war, or whether there are substantial unaligned, yes.

    But you need an industrial heartland, and I’m not seeing anyone moving to be that outside the West (which includes Japan/South Korea/Taiwan). India, imo, is not going to make it. That suggests to me a substantially bipolar world, albeit with perhaps more wiggle room than during the previous cold war period.

  4. Willy

    Looks like American MBAs might’ve screwed the pooch on this one. Something tells me that giving industrial control to a stable statist nation didn’t figure into Uncle Friedman’s free market equations. But at least the Chinese are buying lots of these little one-kid-family vehicles to get around. And if they reach American shores, we can accuse buyers of being “woke”.

  5. Purple Library Guy

    Incidentally, I had a look for stuff about EV sales in China . . . more recent figures suggest growth has gotten faster again:
    “China’s passenger electric vehicle* (EV) sales almost doubled in 2022, growing 87% YoY, according to the latest research from Counterpoint’s Global Passenger Electric Vehicle Model Sales Tracker. EVs now account for one in four cars sold in China.”

    OK, so 25%, and sales went up 87% from the previous year. At that rate, in 2 years EVs will be a fairly strong MAJORITY of car sales in China. Maybe growth in EV sales won’t continue quite that strong, but clearly in just a few years most cars sold in China will be electric. Now the actual composition of the vehicle fleet lags that by quite a bit, sure, but I would expect that CO2 emissions from transportation in China will be going into decline, and doing so faster than most other places. That will be nice both in itself and because lately I notice the most prominent piece of nonsense from alt-right denialist trolls on conversation under news pieces is “But China!”

    It also means that in much of Asia, the Chinese cars for sale will all be electric . . .
    I’ve been saying for years that, much like the beginning stages of a pandemic, the exponential growth in things like solar and electric vehicles meant that at some point growth would become truly massive and what had looked insignificant and forlorn would become a seismic shift. We are now starting to reach that point–China before most of us, but we’re all on that exponential curve.

    Those sodium batteries seem like an excellent thing, too. Both because they are cheaper, which is important, and because now nobody can plausibly say “The electric revolution will be derailed because we’ll run out of lithium!” I never thought it was likely there was going to be only one kind of usable battery in the world.

  6. Alan Coovert

    “A society that puts cars on a pedestal obviously favors motorist.” – somebody way smarter than me

  7. Feral Finster

    As late as 1830 or so, some 70-80% of world GDP was concentrated in China and India.

    The trade surplus with China was such that it was causing worldwide shortages of silver, as westerners made such few things that any self-respecting Chinese person would want.

    As a result, the British initiated the Opium Wars, as forcing the Chinese to allow import of dope that was the only thing that could reverse those trade deficits.

  8. GrimJim

    The US is toast.

    The question is whether it takes the rest of the world with it in a final apocalyptic snit or if it simply falls apart Yugoslavia-style.

    Collapse and Balkanization is baked in. No way to stop that now. Today’s youth will live to see it, though few will survive it. I’m in my early 50s, and at the rate collapse will accelerate, I’m going to lose the death between on this…

    Nuclear hellfire? I’d call odds of that at this point about 50/50. Chances increase if Republicans take the Senate or Presidency in 2024, and lock in with a dead cert if they take both, as they won’t accept anything less than a unipolar world with everyone else supine at their feet.

    And even then, they’ll nuke some “undesirables” just because they can.

    Barring apocalypse, the new multipolar world (with the US and thanks to contagion, Canada and Mexico, reduced to backwater wastelands) lasts only till the second or third major climate change wave, then all will be reduced to neo-feudal anarchy.

    If civilization survives at all.

  9. Laura

    Mommy, doesn’t this mean China is really bad for the environment?

  10. different clue


    The “undesirables” which the Gilead Christianazi Satanofascist in America would like to nuke hardest , first and most would be the “cultural marxist” cities of New York and San Francisco. That should be your first worry if the Christianazi Satanofascists get full and total control over the H-bombs.

    ( If you say things like that at Naked Capitalism, you get banned, because such language could seem “bigoted” to some potential readers and is therefor bad for business. Don’t believe that? Try it a few times and see how fast the rejection ladder rises from caution to ban).

  11. Joan

    Just chiming in to make the urbanist argument: cramming one auto per adult into a city was always a bad idea, and it doesn’t matter if it’s gas or electric. What you gain in not having a tailpipe emitting exhaust into your toddler’s face as you push him by in a stroller is taken away with the added weight and faster destruction of the roads with EVs. Cars make cycling and walking unsafe and untenable. Destroying and rebuilding one’s city for the sake of cars downgrades anyone not in a car into second-class citizenship by a wide margin.

  12. different clue

    It shows a Protectionist Mercantilist political economy country can meet, beat and defeat a Forcey Free-Trade political economy country.

    Every .

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