American paranoia – Econlib

In the 1970s I traveled to Mexico occasionally. At the time, the people I met seemed somewhat paranoid, seeing CIA conspiracies behind many events in their own countries. Now I wonder if America is becoming that suspicious too.

In recent years, there has been hysteria over the alleged threat posed by TikTok, a Chinese-owned social media app. There have been fears that Chinese would buy American real estate and that Chinese students would attend American universities. And now there are fears that Chinese cars will become a “threat to national security“:

Joe Biden has ordered an investigation into whether Chinese “connected” vehicles, including electric cars, pose a security risk to Americans as he tries to prevent China from flooding the US market.

At first I thought this referred to a risk of job loss. But the government actually claims that these cars could be used to spy on Americans:

Biden said most cars are now “connected,” making them “like smartphones on wheels.” He said he was concerned that Chinese vehicles could collect sensitive data on U.S. citizens and infrastructure, and that the information could be sent back to China so the government could access the vehicles remotely.

I find it hard to believe that the government actually believes this far-fetched theory. More likely, they use “national security” as a fig leaf to cover up old-fashioned, crass protectionism:

U.S. Treasury Department officials recently told the Financial Times that electric vehicles were one of the areas where the Biden administration was most concerned about the possibility of China flooding the U.S. and other markets.

“This specific investigation is motivated by the national security risk. . . although it fits into a broader strategy to ensure we support a strong U.S. auto industry,” the official said.

Today, the US has a large surplus in its auto trade with China, and the Biden administration appears determined to maintain that surplus. Unfortunately, these protectionist actions have three negative consequences:

1. American consumers are being hurt because Chinese electric vehicles offer much better value for the dollar.

2. The global environment is being damaged as this slows down the transition to cleaner electric cars.

3. American taxpayers are being hurt because the US government has spent large sums of money in a vain attempt to make the “big three” competitive in electric cars. This policy is now widely seen as one failure.

Mathias Miedreich, CEO of Umicore, said that unlike the US, sales of Chinese electric cars soared thanks to better performance and affordability.

“They’re just good cars and people buy them,” he said in an interview, referring to Chinese vehicles. ‘The American one [producers] seem to have difficulty bringing good electric vehicles to the market [to market].”

The current level of anti-China paranoia is something I would expect in a third world country, and not in a superpower like the US.

P.S. The economist recently injected a bit of common sense into the debate about the Chinese threat:

Since 1978, foreign owners of agricultural land have been obliged to declare them to the government us Department of Agriculture (usda). The agency’s data shows that by the end of 2022, about 3% of privately owned land nationwide had been declared foreign-owned. The largest owners were companies and private individuals from Canada, followed by the Netherlands and Great Britain. Declared Chinese entities owned less than 1% of all foreign-owned land, or 0.03% of the total. People in Luxembourg own more. Foreign land ownership has grown by 40% since 2016, but China is not clearly the driving force behind this development. From 2021 to 2022, the total amount of land owned in whole or in part by Chinese companies shrank from 384,000 hectares to 347,000. In Iowa, the Chinese holdings covered only 281 acres – an area smaller than the state fairgrounds in Des Moines.

PPP. During my visit to China last year, I drove several BYD cars. The quality seemed very high and they are quite cheap.

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