American paranoia – Econlib

Back in the 1970s, I occasionally travelled to Mexico. At the time, the people I met seemed slightly paranoid, seeing CIA conspiracies behind many events in their own country. Now I wonder whether America is becoming similarly suspicious.

In recent years, there has been hysteria over the supposed threat posed by TikTok, a Chinese owned social media app. There has been fear of Chinese purchasing American real estate, and Chinese students attending American universities.  And now there is fear that Chinese cars represent a “national security threat“:

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 administration actually claims that these cars could be used to spy on Americans:

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

I have a hard time believing the administration actually believes this far-fetched theory.  More likely, they are using “national security” as a fig leaf to cover up old fashioned crude protectionism:

US Treasury officials recently told the Financial Times that EVs were one of the areas where the Biden administration was most concerned about the possibility of China flooding the US and other markets.

“This particular inquiry is motivated by the national security risk . . . though it fits into a broader strategy for making sure that we are supporting a strong US auto industry,” said one official.

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

1.  US consumers are hurt because Chinese electric vehicle provide far more value for the dollar.

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

3.  US taxpayers are hurt as the US government has spent large sums in a futile attempt to make the “big three” competitive in electric cars.  This policy is now widely viewed as a failure.

Mathias Miedreich, chief executive of Umicore, said sales of Chinese electric cars were surging in contrast to the US due to better performance and affordability.

“They are simply good cars and people buy them,” he said in an interview, referring to Chinese vehicles. “The American ones [producers] seem to struggle to bring good electric vehicles [to market].”

The current level of anti-Chinese paranoia is something I’d expect in a third world country, not a great power like the US.

PS.  The Economist recently injected a bit of sanity into the debate over the China threat:

Since 1978 foreign owners of agricultural land have been required to declare it to the us Department of Agriculture (usda). The agency’s data show that, at the end of 2022, around 3% of privately held land nationwide was declared foreign-owned. The biggest holders were firms and individuals from Canada, followed by the Netherlands and Britain. Declared Chinese entities held 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 evidently the driver. From 2021 to 2022 the total amount of land owned in full or in part by Chinese firms shrank from 384,000 acres to 347,000. In Iowa, Chinese holdings totalled just 281 acres—an area smaller than the state fairgrounds in Des Moines.

PPS.  While visiting China last year I rode in several BYD cars.  The quality seemed to be very high and they are quite cheap.