Canada

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Last year’s numbers for China’s electric vehicle industry tell the story: production rose 10 percent and revenues 7 percent, but profit margins fell to their lowest level in a decade. Production incentives lock original equipment manufacturers into a destructive cycle of hypercompetition called “involution” in which they impose even more crushing payment terms on their suppliers. Driven to overproduce beyond what Chinese consumers can buy, they dump excess output in foreign markets where they at least have some hope of making the profits they need to gain an edge on domestic competitors and keep factories humming to please Chinese Communist Party overseers. Add a significantly undervalued yuan that makes their cars artificially cheap in dollar terms, and you have an incubator for global manufacturing titans like battery maker CATL.

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By all means, follow the money. Just understand that with Chinese EVs, it leads to a dead end for Canadian automotive manufacturing and could ultimately trigger a slow death spiral for much of Canadian industry. All too often, I hear Canadians saying we have no choice now. What they really mean is that the easy path is blocked, and they don’t like the harder road. But that’s the one that leads to longer-term prosperity and sovereignty through developing our own supply chains and ecosystems.