Industrial policy has been a frequent subject on Smith's blog, for those who don't follow it. (He's for it, and thinks that Biden's industrial policy was mostly good - it's worth following the links in this post.) This post focuses on defense-related geopolitical industrial policy goals and pros and cons of anticipated changes under the incoming Trump administration and Chinese responses. Particularly, he highlights two major things China can do: Restrict exports of raw materials (recently announced) and use their own industrial policy to hamper the West's peacetime industrial policy (de facto policy of the last 30 years). These are not extraordinary insights, but it's a good primer on the current state of affairs and policies to pay attention to in the near-future.
Noah Smith: Manufacturing is a war now
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Notes -
*proceeds to ignore the 1st/2nd largest population country on earth*
Bruh.
No one can afford to be imperialist in the coercive military sense anymore. Wars take far too long and are far too expensive, even for relatively small fronts (see: Ukraine). We're talking about Taiwan, which is a tiny island very very close to Mainland China. Even taking that would likely push the Chinese economy to the brink ... and they may still try.
What matters is who is at the "center" of the world order - economically, military, politically (in the power projection sense). USA is still number 1 in this but it's easy to identify the likely challengers; look at the places with the most people and largest economies contained within a totally self-governing polity. That's China. For a while in the 1990s-2000s, there was some speculation that the EU might create a new pan-Europa, but this was largely a feels based analysis and any intelligent observer saw that the political architecture of the EU and its member states created all sorts of horrible barriers to collective action that would be necessary to displace the Americans. But, I digress.
The Chinese aren't going to sail to Hawaii and San Diego to murder all of us counterrevolutionaries. But they, starting with Taiwan, can change the balance of power in East/Southeast asia .... an area with about 1/3rd of the global population and disproportionate importance in global shipping and trade ... and really disproportionate importance in the semiconductor industry.
"Letting China have Taiwan" doesn't result in the Taiwanese only having a no-good-very-bad-day, it results in the kind of trade war that can destabilize and, frankly, deflate (in all ways) the economic prosperity of the entire planet. The end state scenario of an ascendant China is a generation or two of global depression.
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