Home
/
RELIGION & LIBERTY ONLINE
/
The bright side of the trade war with China?
The bright side of the trade war with China?
Jan 31, 2026 4:17 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
Come, ye believers!
From the Orthros service (Tone 4) which precedes the Divine Liturgy of St. Basil the Great, celebrated by the Eastern Orthodox churches on December 25, the Nativity of Christ. Come, ye believers, let us see where Christ was born. Let us follow the star whither it goeth with the Magi, kings of the east; for there angels praise him ceaselessly, and shepherds raise their voices in a worthy song of praise, saying, Glory in the highest to the One born...
A Stark contrast
Kishore has helpfully pointed out the discussions going on elsewhere about Rodney Stark’s piece and the related NYT David Brook’s op-ed. He derides some of menters for their lack of economic understanding, but I’d like to applaud menter’s post. He questions, as I do, the fundamental validity of Stark’s thesis (which essentially ignores such an important strand of Christianity as Eastern Orthodoxy). Among other astute observations, Christopher Sarsfield asks: “Was it the principles of Christianity that put the ‘goddess of...
Christmas sacred and secular
“Christians obtain grace from reflecting on the miracle of the Incarnation but they have given the event called Christmas as a glorious gift to the world,” Rev. Sirico writes. “This is why this holiday can be so secular and yet remain so sacred. There is a distinction between the two but not always a battle between the two.” Read the mentary here. ...
Perusing Peru
Fr. Philip De Vous, chaplain of Thomas More College in Crestview Hills, KY and an adjunct scholar of public policy at the Acton Institute, writes of a recent trip to see operations of the Doe Run Company in Lima, Peru. It seems that the Doe Run Company has been accosted by “criticism from certain journalists and certain sectors of the Catholic Church and other Christian denominations” regarding its practice of business ethics. What Fr. De Vous experienced in Peru, however,...
One more reason…
Here’s the best ad hominem (no pun intended) reason to deplore the creation of chimeras: Stalin, the self-proclaimed “Brilliant Genuis of Humanity,” wanted them. The Scotsman reports that “Soviet dictator Josef Stalin ordered the creation of Planet of the Apes-style warriors by crossing humans with apes, according to recently uncovered secret documents.” According to the documents, the order came from Stalin’s wish to create a race of super-soldiers: “I want a new invincible human being, insensitive to pain, resistant and...
Ethics & Economics reviews
The Acton Institute has placed three titles from the Lexington Books Studies in Ethics & Economics series, edited by Acton director of research Samuel Gregg. The first is Within the Market Strife: American Catholic Economic Thought from Rerum Novarum to Vatican II, by Acton research fellow Kevin Schmiesing. The reviews are here. Daddypundit says, “Schmiesing has made his book accessible to persons of all faiths regardless of their own background. He has meticulously researched his book and it shows in...
“Brain Drain” reconsidered
A while back I mentioned a new ing out questioning conventional wisdom on the “brain drain” problem caused by emigration from developing nations. The book will not be out for a while yet, but the author, Michele Pistone, has a long post on Mirror of Justice describing her findings and how they relate to traditional moral concerns raised by Catholic social teaching. ...
The Coventry Carol
The Coventry Carol (Words Attributed to Robert Croo, 1534; English Melody, 1591). Click here for MIDI version (and sing along!) Lully, lulla, thou little tiny child, By by, lully lullay. Lully, lulla, thou little tiny child, By by, lully lullay. O sisters, too, how may we do, For to preserve this day; This poor Youngling for whom we sing, By, by, lully, lullay. Herod the King, in his raging, Charged he hath this day; His men of might, in his...
There’s no such thing as “free” health care
Remember: when you recieve a “free” service from the government, it’s not actually free. You’re paying for that service through your taxes. And when the government sets up a monopoly in an area like health care, it’s probably going to end up being more expensive and cheaper at the same time – more expensive because people are less likely to use a “free” service prudently, and cheaper because the overuse of the service will force officials to impose major restraints...
First Things on the square
First Things has a new blog feature, On the Square: Observations & Contentions. The posts appear on the front page of the website, but there is an archive here and an RSS feed here. HT: The Remedy ...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved