Here’s a letter to the Wall Street Journal:
Editor:
William Galston argues that Beijing’s subsidization of certain Chinese producers is dangerously undermining the American economy (“China’s Subsidized Conquest of Trade,” April 24). Readers cast into fear by his argument can calm themselves by recognizing two facts.
First, data from the St. Louis Fed, reveal that Mr. Galston is mistaken to assert that there is in America a “retreat of manufacturing.” Not only has U.S. manufacturing output grown steadily since the end of the Great Recession, in the fourth quarter of 2018 this output hit an all-time high. Moreover, U.S. industrial capacity also is today at an all-time high.
Second, resources diverted by Beijing’s subsidies to some Chinese producers are resources diverted by those same subsidies away from other Chinese producers. Mr. Galston’s dread of Beijing’s industrial policy is thus unwarranted, for this policy causes favored Chinese industries to bloat to sizes inefficiently large while causing less-favored Chinese industries to shrink to sizes inefficiently small.
Rather than fear such Chinese subsidies, Americans should take pity on the Chinese people, whose economic well-being is thereby worsened.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
