Home
/
RELIGION & LIBERTY ONLINE
/
The bright side of the trade war with China?
The bright side of the trade war with China?
Jan 17, 2026 8:23 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
‘Becoming Europe’ or Coming Full Circle?
America, for the obvious reasons, holds strong ties to Europe. But it is a country that has primarily been associated with a distinctness and separation from the turmoil and practices of the continent. In his farewell address, George Washington famously warned Americans about remaining separate from European influence and declared, “History and experience prove that foreign influence is one of the most baneful foes of republican government.” Class strife, conflict, and instability already long characterized the European fabric at the...
The Superbowl: The New Day of Solidarity
If there is one day where young and old, Republican and Democrat, black and white, the 99% and the 1%, put down their weapons and disputes, it is on Superbowl Sunday. The game, the ads, the food, and so on, turned Superbowl Sunday into a major spectacle. The spectacle has not gone unnoticed among religious leaders. In fact, as Superbowl viewership has increased to over 100 million in recent years so has the fort about the game and the spectacle....
Departing in Peace: Economics and Liturgical Living
In the most recent issue of Theosis (1.6), Fr. Thomas Loya, a Byzantine Catholic priest, iconographer, and columnist, has an interesting contribution on the ing feast of the Presentation of Christ at the Temple (also known as Candlemas or the “Meeting of the Lord”). For many, February 2nd is simply the most bizarre and meaningless American holiday: Groundhog Day. However, for more traditional Christians, this is a major Christian feast day: memoration of the forty day presentation of Christ at...
The Edict of Milan in the History of Liberty
The Emperor Constantine with his mother Helen, both memorated as saints of the Church. This month marks the 1,700th anniversary of the Edict of Milan. While much debate surrounds the relationship of Church and state in Christian Rome, even key figures like the Emperor Constantine (traditionally considered a saint by both East and West), the Edict of Milan is something that anyone who values liberty, religious liberty in particular, ought memorate as a monumental achievement. While a previous edict in...
Rev. Robert Sirico Participates in Debate on Government’s Role in Helping Poor
On Monday, January 28, the Rev. Robert Sirico participated in a debate, hosted by the Aquinas Institute for Catholic Thought, on the role of government in helping the poor. Fr. Sirico debated Michael Sean Winters, a writer with the National Catholic Reporter, on the campus of the University of Colorado in Boulder. The priest said during the debate that with the “overarching ethical orientation” a capitalist economy needs, it can provide for the needs of the poor. No solution, he...
Civil Society and Social Eco-System: Seeking Solutions Beyond Market and State
Over at Fieldnotes Magazine, Matthew Kaemingk offers a good reminder that in our social solutions-seeking we needn’t be limited to thinking only in terms of market and state. By boxing ourselves in as such, Kaemingk argues, Christians risk an overly simplistic, non-Biblicalview of human needs and human destiny: When presented with almost any social problem (education, health care, poverty, family life, and so on), today’s leaders typically point to one of two possible solutions—a freer market or a stronger state....
Obama’s Most Fowl Double Standard
In the 1880s America’s most flighty fad was fowl-bedecked fashion. “Trendy bonnets were piled high with feathers, birds, fruit, flowers, furs, even mice and small reptiles,” writes Jennifer Price, “Birds were by far the most popular accessory: Women sported egret plumes, owl heads, sparrow wings, and whole hummingbirds; a single hat could feature all that, plus four or five warblers.” The result was the killing of millions of birds, including many exotic and rare species. Reporting on the winter hat...
The Plan to Save Catholic Schools
In the Wall Street Journal, Cardinal Timothy Dolan explains how Catholic Schools bat falling enrollment while keeping standards high: I have heard from many leaders in business and finance that when a graduate from Catholic elementary and secondary schools applies for an entry-level position in panies, the employer can be confident that the applicant will have the necessary skills to do the job. Joseph Viteritti, a professor of public policy at Hunter College in New York who specializes in education...
Celebrating Liberty During Black History Month
Since the 1970s, Black History Month has been a time to focus on some of the highlights of the black experience in America. In 2009, Jonathan Bean put together a wonderful book recounting the vital role liberty played in the American black experience. In Race and Liberty In America: The Essential Reader, Bean demonstrates that from the Declaration of Independence to the Civil Rights Act of 1964 to the 2007 U.S. Supreme Court decision banning school assignment by race, classical...
So God Made Paul Harvey
Last night millions of young Super Bowl viewers were introduced to one of the most influential conservatives in modern America. And it was done with mercial. Rush Limbaugh is often credited with the dubious honor of bringing conservative talk radio to the masses. And it is certainly true that Rush paved the way for Hannity, O’Reilly, and other pundits by perfecting the three-hour babblefest. But the true pioneer and undisputed king of conservative radio is Paul Harvey, a man who...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved