28th Parliamentary Intelligence-Security Forum – Changing Security, Changing Policy Tools: Meeting The Challenge of Chinese Authoritarian Mercantilism

Hon. Erik Bethel explained that there are reasons for practicing mercantilism, like aspiring for national strength by creating trade surplus, and other ways of accumulating wealth. He stated that the United States faces a big problem – it has outsourced manufacturing, adding that American companies live on quarterly earnings reports, CEOs make money on very short-term sighted goals, and Members of Congress operate on two-year election cycles. In effect, the country lacks a long-term strategy to make good decisions.

He emphasized how China, with inexpensive labor, enticed American companies although eventually “the noose tightened” on these companies and they became captive. He cited as an illustration of being “captive” the case of Germany where its car companies set up shop in China and ultimately China leveraged its position and pressured Germany to allow Chinese electric vehicles into the country, effectively sabotaging Germany’s car industry. This, Mr. Bethel argued, is not just mercantilist policy but leverage being used to its highest effect.