Home
/
RELIGION & LIBERTY ONLINE
/
The bright side of the trade war with China?
The bright side of the trade war with China?
Jan 9, 2026 9:06 PM

This year marks the 40th anniversary of one of the most consequential anti-poverty programs in human history. Now, there is evidence that its spillover effects may lift millions more out of dire need.

In 1978, 18 farmers from the Chinese village of Xiaogang secretly signed “the document that changed the world.” Madsen Pirie of the Adam Smith Institute writes:

A few years earlier they had seen 67 of their 120 population starve to death in the “Great Leap Forward” Now they took matters into their own hands. By flickering lights (none had seen electricity), they came forward in turn to sign a document dividing up the collective farm into individual family plots, whose owners could keep most of the proceeds of their labours.

They knew the dangers, and added a clause to the contract pledging that if any were betrayed and executed, the others would raise their children until aged 18. Following that historic contract, the village produced more food next harvest than it had in the previous 5 bined. … China leapt from being a net importer of food into being a net exporter, and the Chinese economic miracle was launched.

The new openness to enterprise, private property, and investment led to China’s meteoric economic rise. Now, Donald Trump’s tariffs are encouraging manufacturers to take their factories elsewhere.

Ian Chen, CEO of a Chinese technological exporter, said that Trump’s tariffs have his fellow manufacturers “seriously considering setting up a backup production line in Malaysia or Vietnam to prepare for the worst.”

This exodus did not begin with the trade war. As with the EU’s purchase of U.S. soybeans, the tariffs expedited a natural market process that was already well underway. “The recent escalation of costs in China is making us relocate in order to petitive,” said S. Kesavan, the Vietnam head of Jabil Circuit, a U.S. electronics manufacturer – in 2012. “Companies have been slowly moving their production lines to Malaysia, Vietnam, and elsewhere in Southeast Asia to avoid rising wages and land costs,” Forbes reported.

Chinese workers have followed the same evolution as their counterparts around the world. Desperate for jobs, they ed low wages, dangerous conditions, and menial tasks. As they became more productive, they could demand higher wages and shift to other lines of work. Chinese manufacturing workers saw their hourly wage rise 60 percent between 2011 and last year.

Now, China’s blue-collar workers make about three-times as much a month as those in Vietnam, and investors have taken note. The search for lower production costs has moved opportunity farther to the Global South.

Critics might see the process of investors moving to lower-wage nations as evidence of unbridled greed and cupidity. But there are at least two factors worth bearing in mind.

First, if even the state-owned industries of the world’s largest socialist regime engage in outsourcing to pay “exploitative” wages, perhaps socialism is not mitted to workers’ well-being as its followers believe.

More importantly, this kind of investment has undeniably benefited the world’s most marginal populations. At the same time as jobs have crossed borders, poverty in Vietnam has fallen – from 60 percent in the 1990s, to 21 percent in 2013, and just 10 percent in 2016. As Adam Smith wrote in his famous “invisible hand” passage, “By pursuing his own interest, [a person] frequently promotes that of the society more effectually than when he really intends to promote it.”

Much of this is natural and organic. But job creation due entirely to trade tariffs may eventually revert to the norm, costing displaced workers both the jobs artificially produced and the time they could have used to develop parative advantage in another industry.

But low wages don’t explain everything: After all, laborers in Malaysia earn more than their petitors. Why would investors move there? Malaysia is the 22nd freest country in the world, according to the Heritage Foundation. The nation has one of the world’s most business-friendly environments, including offering manufacturers tax incentives that shelter 70 percent of their e.

“Malaysia is one of the most open economies in the world,” the World Bank adds. “Openness to trade and investment have been instrumental in employment creation and e growth.”

As a result, Malaysia has virtually wiped out poverty. While 17 percent of its population lived in poverty in 1990, that number crashed to 0.4 percent in 2016. The bottom 40 percent of the population saw its e rise more than the rest of society, according to the anti-poverty Borgen Project. Now Prime Minister Mahathir Mohamad is focusing on improving the lot of his less affluent citizens by offering long-term tax credits to attract white-collar jobs “from China or any other country.”

The candlelight signing of a furtive pact in Xiaogang four decades ago lit the way to China’s economic prosperity. Its beams shone beyond its borders, as the investment it generated has spilled over to raise the living standards of its neighbors. People of faith should take solace in the growing security of once-starving people, hope that the light shines into the darkest corner of the earth.

We must realize that candle is held in the invisible hand, not clutched in the iron fist of the state.

Jans. This photo has been cropped. CC BY-SA 2.0.)

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Edmund Burke on true freedom
In the United States, a growing number of Americans, especially young Americans, are calling for extreme personal autonomy in the guise of “freedom,” while promoting increased government control and coercion. The left, for example, defends radical pro-abortion laws motivated by a desire for personal autonomy. Yet, they look to the government to enforce their radical individualism. Additionally, the left’s praise of democratic socialism has increased dramatically in the past decade. Now, over half of Democrats are in favor of socialism...
Religion in Europe? It’s complicated
It’s not unusual for Europe—especially Western Europe—to be portrayed as a continent in which religion and, more specifically, religious practice is in decline. No doubt there’s much truth to that. When you start looking at the hard information, however, it soon es apparent that the situation is plicated. Take, for example, France. It is often portrayed as a highly secularized society. Again, there is considerable truth to that picture. Yet a recent study of the state of religion in France...
Explainer: What you should know about the federal government’s two-year budget deal
What just happened? Yesterday the House of Representatives passed a passed a two-year budget and an agreement to once again raise the debt limit. The bill, known as the Bipartisan Budget Act of 2019, is expected to be passed by the Senate next week. What does the Bipartisan Budget Act of 2019 do? The legislation amends the Balanced Budget and Emergency Deficit Control Act of 1985 to establish a congressional budget for fiscal years 2020 and 2021. The main actions...
There is no ‘Catholic case for communism’
On Tuesday, the Jesuit-runAmerica magazine published an apology for Communism that would have been embarrassing in Gorbachev-era Pravda. “The Catholic Case for Communism” minimizes Marxism’s intensely anti-Christian views, ignores its oppression and economic decimation of its citizens, distorts the bulk of Catholic social teaching on socialism, and seemingly ends with a call to revolution. While author Dean Dettloff claims to own Marxism’s “real and tragic mistakes,” he downplays these to the point of farce. He admits, without elaboration, that “Communism...
Samuel Gregg on a bishop in France’s public square
Michel Aupetit, the Archbishop of Paris, was rather new to his role when the Cathédrale Notre-Dame de Paris fire pushed him into the spotlight. But Aupetit was more than ready to take his place in the public square, says Samuel Gregg. In a book review for The University Bookman, Gregg considers the archbishop’s role in the representing the Catholic faith: Archbishops of Paris have traditionally been seen as representative of Catholicism in France and setting the tone for how the...
Explainer: What you should know about federal deficits
What just happened? The White House Office of Management and Budget recently released a forecast that the federal deficit would exceed $1 trillion this year. As Fox News points out, this would be the first time since the four years following the Great Recession that the deficit reached that level. What is the federal deficit? The term federal deficit refers to the federal government’s fiscal year budget deficit. Such a deficit occurs when total outgoing expenditures (such as for buying...
China’s recycling ban: Surprisingly helpful for the environment
Off the coast of California floats a Texas-sized island made out of garbage. prised almost entirely of humanity’s plastic waste. Where did this garbage mass in the middle of the Pacific Ocean came from? Plastic dumping. Plastic dumping is the practice of simply throwing away waste into rivers or lakes which eventually lead out into the ocean. Why isn’t this plastic being recycled? Why does this island of garbage continue to grow despite laws that prevent plastic dumping? The answer...
Virtue in a tech economy: Why STEM education isn’t enough
As our global economy has grown more technological, connected, plex, fears continue to loom about an economic future wherein our workers are rendered obsolete—whether by new products and industries, new forms of automation, or petitive labor forces across the globe. Struggling to keep up with the pace, e to embrace technical knowledge and skills-based expertise as the supreme value in many of our educational institutions, crafting a host of STEM education programs and various incentives to prod and prepare our...
French-language readers of transatlantic learn of free-market environmentalism
The Acton Institute continues our outreach to the Francophone world with a new translation of one of our articles on the pivotal issue of environmental stewardship. The latest offering illustrates how the free market cares for creation better than government intervention. Our friend Benoît H. Perringraciously translated Joseph Sunde’s article “Free market environmentalism: Conserving and collaborating with nature”; the resultant “Une écologie de marché pour collaborer avec la nature” may be read at Acton’s Religion & Liberty Transatlantic website. Sunde...
Inadequate: Catholic magazine explains why it published Communist propaganda
If Dean Dettloff’s “The Catholic Case for Communism” were intended to be thought-provoking, it raises only one question: Why did America magazine facilitate this mendacious PR exercise? Editor Fr. Matt Malone, S.J.. felt a need to explain “Why we published an essay sympathetic munism.” (Read our analysis of the original article here.) Fr. Malone likened the article to the magazine bashing Senator Joe McCarthy, which he said took place after America “spent much of the previous 50 years loudly munism.”...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved