Re-shoring Industry: A National Security Priority | Dominic Lawson

Ideology And National Security

Recent events have shown us how national manufacturing and economic sovereignty is fundamental to our national security. 

The past weeks have featured a brewing row between the UK and EU as we have continued to outpace the continent in the mass rollout campaign. Now, European elites, fearful that this could cause rising public anger, have threatened to impose restrictions on exporting vaccines manufactured in the bloc. 

Thus far, the Prime Minister has continually waved off the concern about potential disruption to the supply chain, dismissing this question at a recent press conference. His argument seems to be that contractual agreements and generally friendly relations between London and Brussels will ensure that the importing of the vaccine is unmolested. 

Unfortunately, the Prime Minister seems to have forgotten the immutable words of his legendary predecessor that “countries do not have permanent friends, merely permanent interests.” The truth is that if European elites believe that it is in their self-interest to halt export of the vaccine then they will do it. 

This is only the most recent and symbolic example of how Britain is now far too reliant upon other countries for our vital industry and economic security. This is a truth which the pandemic has thrown into a stark light. We saw it at the beginning of the outbreak, when the UK found herself scrambling to secure medical equipment in a sellers market as demand outstripped supply, and China halted the export of medical supplies. 

It would be easy to blame Beijing for this action, but instead we should be blaming the people who made us dependent on a hostile military regime in the first place. State elites will naturally look after their own citizens first. The fact that our own policy makers were not cognizant of this fact shows very real naivety which cannot be allowed to manifest again.  

Instead, we should take advantage of this crisis and the fragility of supply chains it has demonstrated to prioritise the re-shoring of British industry and manufacturing. 

Many would argue that this situation is the natural result of globalisation and the flight of capital to cheaper production bases. But all ideologues believe their worldview to be inevitable. In reality, this was a policy which was consistently applied by different governments for years who were led by misguided neo-liberals from both parties. Over decades, we have gone from one of the world’s premier manufacturing centres to making less than 2% of the world’s goods. 

This did not have to happen and it is the result of both a lack of foresight from our policymakers, and a heavy focus on the finance industry which has monopolised the focus of our political elite, to the detriment of a diverse and multifaceted economy. 

Of course, the same story has played out across much of the West. The wave of de-industrialisation which hit the American “Rust Belt” or France’s former industrial zones, for instances, has hollowed out local communities and increased political alienation for the people within them. Of course, are there local variables for each of these areas (NAFTA and the EU particularly) but they are part of the grand story of Western decline. And their loss has proved the gain of another country, those leaders have a far more long term vision of their place within the global economy.

China

The story of the West’s de-industrialisation is also that of China’s rise. Following the Cold War, Western liberals, heady with triumphalist ideas of a coming end of history encouraged China’s ascent into the WTO.  The hopes that wealth would create a liberalisation and the middle kingdom would become some glorious democracy of “uber using freedom fighters,” while an obvious naivety now, was a core motivation for Western leaders desire to see China plugged into the global system. 

At the risk of sounding like an academic lefty, there was also more than a touch of orientalism to this. Chinese elites have always viewed themselves as a distinct civilisation, apart from the supposedly ‘universal’ norms of the West. While it may be ruled by an elite called the ‘Communist Party,’ this organisation has more in common with the imperial mandarins who have ruled the country, in some form, for centuries than they do with the Marxism of the West. A strong thread of conservative confucianism, which encourages hierarchy and collective self interest runs through the cultural DNA of the country and to expect them to abandon this just to be like the modern West was always unrealistic. 

Since joining the WTO in 2001, they have grown to become the world’s manufacturing base, with all of the world’s major powers (including the UK) being dependent on China imports to sustain our economic activity. 

This shouldn’t be understood merely as economic but as a fundamental part of Chinese grand strategy. 

Beijing realises that dependence is a great source of power and they have used this strategy to increase the leverage they hold over the rest of the world. Much of this is being done by the recycling of American dollars, which China has used to finance their vast Belt and Road initiative across Eurasia.

In doing so, China has achieved two objectives. They have gained the central position in the global economy and have created an internal hemorrhaging of jobs which has devastated our native working classes and hollowed out middle class living standards, thus increasing disorder and political malfunction in Western democracies. 

The so-called ‘elephant graph  demonstrates the confluence of interests between the Chinese state and the Western economic elite, who have been able to profit by the offshoring of jobs to the Global South at the expense of our own middle class.

Instead of the openness that we have exhibited, Beijing has been able to construct an economic great wall around their own economy. The Chinese state makes no attempt to pretend they are an open country to do business in. Indeed, there is a coordinated campaign of IP theft, currency manipulation and state pressure and infiltration of private enterprise with which China steals Western technology and repurposes it for the interests of Beijing.

In recent times, instead of becoming more open, China has redoubled their efforts to reduce their dependence upon the West for strategic assets and buttressing their economy from potential sanctions and economic conflict. In the 90’s, Beijing ordered a ban on the exporting of the majority of her rare earth elements, resources which are vital for the construction of information age technologies and weapon systems.

This was done explicitly to prevent Western firms from gaining a majority share of this strategically vital domestic industry. Since then, China gradually tightened her control over such assets, causing the price to artificially inflate. Beijing is more than willing to use it’s control over them to damage her adversaries.

This demonstrates to us the folly of placing all of our faith in the global free market, when others are simply using that market to exploit our goodwill. Simulations of game theory have found that several self interested parties can find an equitable balance, but if one party is self interested and the others are open to exploitation, the self interested side will win everything single time, this can be in everything from economics to evolutionary theory.

Fortunately, COVID has sparked the first major rise of sino-scepticism from politicians in the UK and the wider West, unfortunately this may have come several decades too late. 

Resilience

In my article about climate change and national security, I wrote that the UK should endeavour to make itself as self reliant as possible to protect ourselves from potential climate related disruption to supply chains. Such policies must also be pursued when we are seeking to wean ourselves from China. 

There are several options that our policy makers have. For one, No. 10 has already proposed the creation of the D10 alliance. This would act as a forum to develop technology and unite the R&D capabilities of companies from allied partners, with a specific focus on 5G. This is an exciting proposals from our current government and should become a key element of any strategy for incoming administrations.

  We could also pursue coordinated development strategies by using CANZUK to secure raw materials which we cannot access in our own territory. Canada, for instance, is rich in materials which are vital for our future economic sovereignty. Freshwater stocks, or rare earth minerals, are abundant in Canada’s northern provinces. Binding such raw materials into a new generation of domestic British manufacturing (and depriving China of them) should be one of our diplomatic goals towards Ottawa. Australia and New Zealand could also be a key source of vital resources.

  This would also allow the West to go on the offensive against Beijing. Recently a diplomatic spat between China and Australia prompted Canberra to halt exports of coal to China, causing widespread power outages in it’s industrial heartland. In doing so, we gained a glimpse into China’s soft underbelly. Securing the resources that China depends on for her industrial strategy will give our governments a means of leverage which can be exploited in a future conflict or trade war.

  A report from the Henry Jackson Society argues that we can use the ‘Five Eyes’ alliance to enhance international industrial resilience by intelligence sharing in the national and corporate domains. Admittedly, the report warns that the five countries within the alliance have allowed themselves to become too dependent so that breaking off from Beijing will be initially painful and time consuming but they are adamant that this is a necessary process to achieve strategic autonomy. 

  National Capital

On the home front, a state-led national development project could have innumerable benefits for the British economy and society. One area which is often ignored when discussing off-shoring is the social ruin it has brought within our communities.

There is a high correlation between the loss of working class jobs and the rise in suicide, divorce and deaths from despair. In fact, a report from MIT finds a near-perfect correlation between offshoring of jobs to China and a rise in male idleness, which leads to increases in family breakdown and rises in crime.  Partly, this is because offshoring has been viewed as a purely economic concern, and we are neglecting the massive social implications and loss of purpose that comes with a working class who cannot work.

In short, re-shoring industrial development will have innumerate benefits for this country. Of course, it will grant us a degree of strategic autonomy from a hostile superpower, but it would also affirm our societal structure and slow down the environmental impact from the trading of cheap goods on global sea and air-lanes.  

This is entirely possible, indeed, we have seen a slow trickle of organisations considering or actively moving their manufacturing bases out of Chinese territory. In the end, it will depend on whether British policy makers and industry leaders can rid themselves of the illusions which caused this crisis in the first place. The lesson of the next decade is likely to be whether they can or not.

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