Classical Chinese military strategy says the best general wins the war without engaging troops on the battlefield.
This informs Beijing’s economic aggression against the U.S. – bankrupting America’s industries will cripple the U.S. militarily without firing a shot.
As part of that campaign, Beijing subsidizes its state-owned and state-controlled companies to give them an advantage over American competitors that play by profit-and-loss free-market rules.
Favored companies receive free electricity, free land, free money, low- or no-interest loans, free buildings and even free labor, provided by prison inmates.
These subsidies allow China to flood our markets with below-cost steel, aluminum, synthetic fibers and other products so they can steal market share from honest American companies.
Beijing is notorious for using export subsidies to grab the “high ground” of new and emerging technologies, including green technology.
It provides research and development funds for exporters of high technology, which includes green technology products such as wind and hydro turbines, photovoltaic power systems and advanced batteries. A company must export half or more of its production to be eligible for the handout.
The Chinese communist government is the world’s largest provider of export subsidies, and it is using them on a global scale to outmaneuver the U.S. in Latin America, Africa and Asia.
In 2009, it handed out over $174 billion in export subsidies to help its national champions win lucrative contracts to build infrastructure projects across the developing world.
This “free money from the government” allows Chinese companies to beat out American companies in the competition to construct dams, ports and other infrastructure projects around the world.
Due in no small part to Beijing’s rich export subsidies, seven of the top 10 global construction contractors are Chinese. Chinese contractors are now involved in over half of the hydropower projects in the world. Bye bye, Bechtel – Beijing just underbid you.
China is also using export subsidies that take the form of low-interest financing to lock down natural resources in Africa and Latin America. China is expected to invest $1 trillion in Africa alone over the next decade. When China lands a contract to build a dam in Angola or a cement plant in Zambia, Chinese companies, not African and certainly not American companies, get the business.
Its export subsidies also enable China to offer host countries “too good to be true” deals to build or manage ports that give it access to strategic chokepoints and spy on overseas U.S. military bases, as it has in Greece in the Mediterranean and in Djibouti in the Horn of Africa.
China is using its government-subsidized overseas development projects to virtually encircle its chief Asian rival, India, with a “String of Pearls.” It’s built facilities across the Indian Ocean from Myanmar to Bangladesh, Sri Lanka, the Maldives and Kenya. China showers money on Pakistan by building the China-Pakistan Economic Corridor (CPEC) – roads, pipelines, power plants, industrial parks and a port along the Arabian sea.
China is using export subsidies to spread its influence around the world.
They are a crucial part of its Long March to global economic, military and cultural dominance.
The stakes could not be higher.