Macroscope | West should thank China for kick-starting its economic growth

When will the unjust pillorying of China by the United States and Europe end? China’s unstoppable economic advance has brought the people of the two continents up against the inconvenient truth that they are no longer able to compete in many key economic areas.

At the same time, it has prompted them to think in new ways about the need for state-led “industrial policy” rather than relying solely on market-led development, as well as about the need for state capital to supplement private financing.

China’s Belt and Road Initiative has produced a flurry of US and European moves to update their own outdated infrastructure. The US Inflation Reduction Act of 2022 introduced government subsidies for green development – including electric vehicles, where China is a fierce competitor – into the world’s largest economy.

The European Union has now come up with an EU-wide industrial policy backed by muscular state funding. It has joined the US in recognising the clear fact that government subsidies are needed to nurture growth and a more effective and competitive private sector

The West should be grateful to China for administering shock treatment to their “advanced” economies that have grown used to resting on their laurels and which have become sclerotic in their response to change. But instead of being grateful for this generosity, the US and Europe feel more inclined to vent their wrath upon China with tariffs and sanctions, and even talk of revoking China’s permanent normal trade relations status.