this post was submitted on 13 May 2024
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It's very unlikely that Chinese cars are sold at a loss. There is no reason for that to happen when they can be sold at a profit, and quite easily.
But even if they are, that's not necessarily a bad thing. It means Americans can buy cars at far cheaper prices since the price is subsidised by the Chinese government. As the article states, that's equivalent to a wealth transfer from the Chinese taxpayer to the American taxpayer.
What it does do is change the dynamic of winners and losers. The American car buyer would be a winner while the American car maker would be a loser. Now, there are a lot more car buyers and the total boon to car buyers is higher than the total hurt to car makers, meaning the wealth overall in the American economy has increased; it's just that not everyone comes out ahead.
This essentially means protectionist lobbying is usually nothing more than rent-seeking and will usually reduce the amount of total surplus in the economy. Anyone who's taken an Economics 101 course in university can point to the black triangle and say "deadweight loss!"
Even if we ignore for a moment that Chinese cars are produced at such low costs not in the least because of the use of forced labour and thus by ignoring even the most fundamental human rights, China will subsidize its EV industry at all costs, also offering dumping prices. China's 'industrial policy' isn't focused on financial health but on scale to destroy foreign competition to control the market for economic and political gains.
Believe it or not, the Chinese government does not have infinite money, so we'll see if this plan pans out for them.
Errm.. whos gonna tell them about the economics of being the largest coherent market there is and forcing Joint Ventures in every relevant industry..