If you think about China, you may think about the manufacturing center for the world and that means both taking raw materials from around the world processing them to basic materials such as chemicals and steel and then transforming the materials to products that business and consumers can buy and use. This growth in infrastructure in China needs the steel and chemicals, while the export of finished goods allows the cycle continue. Similar to most countries around the world, the basic materials or commodities will go up and down and when they are down for a number of years, they are used in production. Then the price goes up and suddenly alternatives are needed.

In an article by Patricia Cohen, Keith Bradsher and Jim Tankersley of the New York Times News Service, in the alternative energy production, in 2022 according to International Energy Agency, China accounted for 85% of all clean-energy manufacturing investment in the world. While other countries want to increase manufacturing, they face barriers.

China’s lead is built on earlier cultivation of the chemical, steel, battery and electronics industries, as well as large investments in rail lines, ports and highways.

From 2017-19, China spent 1.7% of its gross domestic product on industrial support, more than twice the percentage of any other country, according to an analysis from the Center for Strategic and International Studies. The spending included low-cost loans from stat-controlled banks and cheap land from provincial governments, with little expectation that companies they were aiding would turn immediate profits.

China has been charged with a willingness to skirt international trade agreements, engage in intellectual property theft and use forced labor.

All the above, China is a position today to flood rival countries with low-cost electric cars, solar cells and lithium batteries. For China controls 80% of the worldwide production of every step of solar panel manufacturing.

Gregory Nemet, a professor of public policy at University of Wisconsin, says there are enormous economies of scale by going big as China did. When the investments resulted in overcapacity. suppressing the profitability of China’s companies, Beijing was willing to ride out the losses.

China also benefited from the West’s lack of industrial policy – the west believed in open markets and minimal government intervention that the US has championed. The view is that an unfettered market always knows best.

Recently under former President Trump tariffs were imposed on goods valued at more than $350 billion a year. President Biden kept the tariffs and increased some of the tariffs.

Linking to dividend paying stocks, in many industries in the world once the dominant players are established it takes a long time before they are not dominate. As an investor, you have to accept what is and watch for signs of why that would change, if it is not changing investing in the dominate players is a very good strategy for long term wealth building. If you review the Fortune 500 of Forbes 400 over the decades companies change which means you need to review your portfolio at least every 6 months.

There are more questions than answers, till the next time – to raising questions.