Vance on China, Econ, and AI
Hillbilly Industrial Policy
We already got you up to speed on Tim Walz. Today, ChinaTalk editor Nicholas Welch is here to evaluate what JD Vance brings to the ticket.
We cover:
Vance on Economics and Power
Vance on China
Vance the Man
Vance on AI and Big Tech
Economics = Power
Probably more than anything else, Vance wants the United States to be “strong” — economically, militarily, culturally.
What increases strength? Domestic industrialization, mostly. Vance on Face the Nation:
Look, the reason Europe has become weaker is because they’ve de-industrialized. And why have they de-industrialized? Because they’ve pursued a green energy agenda, following the lead of the Biden administration — and that necessarily empowers China and Russia.
Re-industrialization, Vance says, will bring much-needed innovation in the United States:
One of the things I’d like us to do is broaden the aperture a little bit, and think about innovation not just in software, but innovation in transportation and logistics, innovation in energy — the whole suite of things. …
We had this conceit that we could separate the manufacture of things from the design of things. … But if you want to build a high-tech, high-dynamic-growth economy, you have to have some native manufacturing and some self-reliance.
And what about military power? To The New York Times:
The most important lesson of World War II […is…] that military power is downstream of industrial power. We are still, right now, the world’s military superpower, largely because of our industrial might from the ’80s and ’90s. But China is a more powerful country industrially than we are, which means they will have a more powerful military in 20 years.
Vance is absolutely correct that America’s civilian-sector industrial base was indispensable to manufacturing war materiel during WWII. (Pradyumna Prasad and I wrote about that last year for ChinaTalk.) And maybe Tesla Cybertrucks make for better, cheaper Humvees. I wonder, though, if he thinks the complexity of modern military assets has kept pace with that of civilian manufactured goods. I could be totally wrong about this — I know vanishingly little about how cars and planes are made — but it’s my intuition that, since 1950 to the present, the complexity of fighter jets has far outpaced the complexity of cars, and that the Ford factories of the 2010s will have extremely limited impact, if any, in producing sixth-generation fighters.
Moreover, as Pradyu and I noted last year, “AI even more obviously [than manufacturing] has this latent potential to quickly transition non-military applications to military ones.” Maybe historians (and VP candidates) 100 years from now will look back and say, “Military power is downstream of AI development.”
In any case: revitalizing factory work in Youngstown and bolstering hard military assets — to Vance, it’s all part of the same national security bundle. I’m not actually sure where Vance’s limiting principle is: does all manufacturing fall under the national security umbrella? Semis do. Cars probably do. T-shirts?
The Biden administration and a bipartisan Congress believe that the reshoring and subsidizing of critical industries are national security imperatives. Vance, of course, was a huge proponent of the CHIPS Act: “It’s a great piece of legislation,” “the sort of policy you need to break our reliance on China.”
Vance would go further — “much further,” he said in the 2021 senate debate against Tim Ryan, “so we don’t have to defend island countries if it’s not in our core national interest.” In September 2023, for example, Vance introduced the Drive America Act, which would replace EV subsidies with gas-vehicle subsidies: “If we’re subsidizing anything, it ought to be Ohio workers — not the green energy daydreams that are offshoring their jobs to China.”
Beyond subsidies, Vance is a fan of wielding broad tariffs to reshore domestic manufacturing. When Margaret Brennan of CBS noted that tariffs by definition are inflationary, Vance interrupted, “I don’t necessarily buy the premise there.” Vance continued, “If you apply tariffs, really what it is, is you’re saying that we’re gonna penalize you for using slave labor in China and importing that stuff in the United States.” Over time, that penalizing will assist in industrial onshoring, which both fulfills a national security interest and, in the long haul, will bring down prices for Americans.
What about foreign investment, or decoupling? More than Chinese investment in the United States, he seeks to regulate US investment in China — almost like a “reverse CFIUS”:
[I’m specifically concerned about] joint ventures that often take the shape of American company, X, joins with Chinese company, Y, and puts a ton of capital into the Chinese mainland, but then anything that company develops in the future, and even in the past, is controlled by the Chinese. We should basically be trying to prevent those types of arrangements completely. …
[C-suite execs will say that] “if the price of opening those markets to our business is there’s a little theft along the way, well, that makes economic sense.” For the United States as a sovereign nation, it doesn’t make sense at all.
Is another US-China trade war coming? On Face the Nation again, when Brennan asked how he would apply “proper leverage to the Chinese and to the Mexican drug cartels” to stop exporting fentanyl:
SEN. JD VANCE: Well, I think you walk into Beijing, you talk to Xi Jinping, and you say, “Your entire economy is going to collapse unless you get access to American markets. You need to take this fentanyl seriously, or we are going to impose serious tariffs and economic penalties for not following our laws and not helping us stem the flow of this deadly poison.”
MARGARET BRENNAN: And you wouldn’t be worried about blowback on the US economy?
SEN. JD VANCE: I think that we have a powerful economy, Margaret, with the best workers in the entire world. If we need to fight a trade war with the Chinese, we will fight it, and we will win it.
Lately, both Trump and Vance seem to be expressing a preference for tariffs over sanctions. There are tradeoffs for using each (see Nicholas Mulder’s two ChinaTalk shows on sanctions, and Brad Setser for tariffs). I don’t see the sanctions ratchet getting turned down any time soon, even assuming tariffs become the Trump administration’s preferred economic weapon — so I would predict the use of both in a second Trump term.
Generously deploying tariffs marks a departure from the pro-free-market, non-interventionist economics we’re used to seeing from the GOP. I don’t know how this will all shake out among Republicans. Some support tariffs; others “are hoping that this is just Trump’s bluster — that he’s not actually serious about imposing tariffs, but is rather using tariff threats to bully other nations into becoming more friendly to the United States.” But Vance, from all accounts, is a bona fide tariff supporter — this is no “bluster” from him. Are Republicans ready to start voting for Warren-Sanders–esque economic policies emanating from the Trump administration?
I suppose the short of is that, no matter who wins the election, the federal government is going to keep deficit spending, which is somehow still possible. Joy.
The China-Threat Axiom + Max Realism
It is axiomatic to Vance that China is “the biggest threat” to the United States. Especially given his recent military experience (he’s the first post-9/11 veteran on a presidential ticket), Vance knows that the PLA is the only military that could seriously contend with the United States. He doesn’t like that “China has stolen a lot of American jobs.” The fentanyl crisis is an issue close to home for him: Vance has worried aloud about a “reverse Opium War, where China manufactures fentanyl, sends it into our country, and it devastates American communities, jobs, families.” And he despises censorial regimes, as well as what he describes as collusion between the CCP and Silicon Valley companies (like Google) to suppress the political speech of Americans.
Vance’s #1 concern — more than any economic objective, more than global warming, more than a nuke in Iran — is a Taiwan contingency. Here’s Vance at the Heritage Foundation:
The thing that we need to prevent — more than anything — is a Chinese invasion of Taiwan. It would be catastrophic for this country. It would decimate our entire economy, where the computer chips — so many of those are made in Taiwan … it would throw this country into a Great Depression.
Pretty much every other aspect of Vance’s foreign policy preferences can be directly linked back to that axiom. When Vance asks someone about a policy issue, he uses China as the litmus test.
Take climate change, for instance: “The people who believe that climate change is going to cause an end of planet Earth — they’re not serious about actually making our planet more clean, which is what nuclear and dealing with China would do. … [China] is the dirtiest economy in the world.” (See Brenda Shaffer’s comments to Nikkei Asia, in a story covering a Vance rally: “It is a ‘green myth’ that China is an environmental leader. … While China is credited for the highest penetration of EVs, the environmental gains are canceled out by the country’s reliance on coal to generate the electricity to run the vehicles.”)
And consider Ukraine. If Vance had it his way, he would end the war immediately, “freeze the territorial lines somewhere close to where they are right now,” and provide “some American security assistance over the long term.” That’s not because he hates Ukraine or loves Russia. It’s because he’s an ardent realist — “moralisms about ‘this country is good,’ ‘this country is bad’ are largely useless” — who believes,
China poses the greatest threat to the United States, and
the United States is too deindustrialized today to support a military powerful enough to take on Russia and deter China simultaneously.
Again at Heritage:
And right now, you know that Joe Biden is not sending weapons to Taiwan — weapons that we promised the Taiwanese — because we’re sending those weapons to Ukraine or elsewhere. How does that make any sense? …
It’s hard for a lot of us to accept that the “arsenal of democracy” in World War II is making one-twentieth the artillery shells that Russia is making. But that is the reality.
In his New York Times op-ed:
These weapons [Patriot missile system] are not only needed by Ukraine. If China were to set its sights on Taiwan, the Patriot missile system would be critical to its defense. In fact, the United States has promised to send Taiwan nearly $900 million worth of Patriot missiles, but delivery of those weapons and other essential resources has been severely delayed, partly because of shortages caused by the war in Ukraine.
On Fox:
America is stretched too thin. We do not have the industrial capacity to support a war in Ukraine, a war in Israel, potentially a war in East Asia if the Chinese invade Taiwan, so America has to pick and choose. …
You have to ask yourself, is China going to be more dissuaded by us thumping our chests and acting tough in Europe, or are they going to be more dissuaded by us having the weapons necessary to prevent them from invading Taiwan?
My argument is the Chinese are focused on real power. They’re not focused on how tough people talk on TV or how strong our alleged resolve is. They’re focused on how strong we actually are — and to be strong enough to push back against the Chinese, we’ve got to focus there. And right now, we’re stretched too thin.
On Twitter (Xi and Putin had just signed a declaration on entering “a new era” of Sino-Russia relations):
I’ve heard many people say that the goal of our Ukraine policy is to show China that we are “tough” and can’t be easily pushed around. The Chinese apparently don’t care.
In other words, Vance wants to pull out of Ukraine precisely because he thinks it would increase US credibility in deterring a Taiwan invasion. From a hardcore realist’s perspective, “resolve” or “solidarity” mean nothing unless they’re backed up by sufficient “missile systems, artillery systems, and bullets” — and the United States and its allies, Vance believes, are unprepared to fight or aid more than one war at a time.
At least one Chinese scholar agrees with Vance’s take: Gong Jiong 龚炯 recently argued that “a Harris rather than a Trump presidency would be more beneficial for China”— in large part because, “as long as the war in Ukraine continues or persists in some form or another, it will not be easy for the United States to shift its focus to Asia fully.”
(For an argument on the other side, that supporting Ukraine helps the US military-industrial base prepare for a Taiwan contingency, see Gabriel Scheinmann’s piece in Foreign Policy.)
If China did invade Taiwan, would Vance want the United States to respond?
I think so. Because I don’t think Vance would abandon Ukraine so he could focus on Taiwan — only to then completely abandon Taiwan, too. That’s the weakest of all possible outcomes for the United States.
To be sure, Vance has never explicitly confirmed that a Trump administration would respond with boots on the ground. Vance told NYT that, “the honest answer is, we’ll figure out what we do if they attack.” But in my view, that answer codes as a diplomatic response, not a tacit no. (Biden has been raked over the coals for being too explicit on Taiwan, four times, during his presidency.)
Last year, Vance said in an interview, “Look, we may eventually be forced to fight a war with China. But if we are, God forbid, we need to be more self-sufficient economically.” And in his VP acceptance speech, he said, “Together, we will send our kids to war only when we must” — ie. war is an option on the table — “but as President Trump showed with the elimination of ISIS and so much more, when we punch, we’re going to punch hard.” I don’t see how “punching hard” could refer to anyone else except China. He’s certainly not referring to Russia.
I also don’t think Vance’s comments about US involvement in Iraq indicate less willingness to respond to a Taiwan contingency. Vance reflected in 2020, “I left for Iraq in 2005, a young idealist committed to spreading democracy and liberalism to the backward nations of the world. I returned in 2006, skeptical of the war and the ideology that underpinned it.” That’s not a criticism of war itself. It’s a criticism of the United States seeking unachievable objectives, like democratizing Iraq by force. Vance supports aid to Israel but not Ukraine for exactly the same reason: “Israel has an achievable objective; Ukraine does not.”
So if I were a PLA general, I would advise Xi Jinping that Vance would support a strong American military response to a Taiwan invasion.
Kawasaki was a Japanese company, and in a town full of World War II vets and their families, you’d have thought that General Tojo himself had decided to set up shop in southwest Ohio when the merger was announced. The opposition was mostly a bunch of noise. Even Papaw — who once promised he’d disown his children if they bought a Japanese car — stopped complaining a few days after they announced the merger. “The truth is,” he told me, “that the Japanese are our friends now. If we end up fighting any of those countries, it’ll be the goddamned Chinese.”
~ Hillbilly Elegy, Chapter 4
Vance the Man
JD Vance is a complicated guy. He has changed his name five times. In a very thoughtful essay published in 2020, Vance described how he began as a Protestant Christian; went through a religious skepticism phase, then toward a Christopher Hitchens, Sam Harris–esque atheism in his early adult years; then encountered a brief libertarian spell, which he attributes to overcompensating for the loss of his faith and cultural conservatism; then imbibed in a full-on moral secularism at Yale Law and Sidley Austin; was soon rescued by Peter Thiel and René Girard, and rediscovered Christianity through the works of Saint Augustine; now he’s formally a Catholic.
And that was all before he ran for senate.
The upshot is that, for most of his life, he hasn’t been a politician and seemed to say and write pretty much exactly what he thought. He’s unquestionably intelligent, articulate, and prolific in sharing his views. His wife, Usha, said at the RNC in July, “The JD I knew [at Yale Law, where they met] is the same JD you see today — except for the beard.” I’m inclined to believe her: she has a resume that would make any lawyer drool; she could easily chart her own course without JD if she were unhappy with him.
The downside is that Vance is a politician now — so, just like Kamala Harris, we’re supposed to believe that his “values have not changed” when his positions have. A few years ago, Vance viewed Trump as a “moral disaster,” “total fraud,” “reprehensible,” and wondered aloud whether he is “America’s Hitler”; in 2016, Vance and I both voted for the same third-party throwaway, Evan McMullin. Vance used to say things about the GOP like, “When the 2008 election was called for Obama, I remember thinking: maybe this will teach my party some very important lessons. You can’t nominate people, like Sarah Palin, who scare away swing voters.” Today, of course, he is on the ticket of the most polarizing candidate in modern American history.
There are several valid ways to make sense of this — only Vance himself knows which of these is accurate (and maybe not even him):
“…but for Wales?” My former boss, Mitt Romney, told his biographer, “I don’t know that I can disrespect someone more than JD Vance.” “Romney wished he could grab Vance by the shoulders and scream: This is not worth it! ‘It’s not like you’re going to be famous and powerful because you became a United States senator. It’s like, really? You sell yourself so cheap?’”
On the other hand, people can genuinely change their minds. Sometimes that’s a good thing. Elbridge Colby said in a conversation about Vance, “The criticism that he’s evolved his thinking — that’s not a serious critique. Who hasn’t changed his thinking? Is it a crime to change your thinking based on your own growth, and your own observation of the world, and facts? I think that’s good. Is everyone bound to what they believed when they were twenty-two? No!” So perhaps Vance is a true convert to Trump. Vance summed up his thinking this way: “Like a lot of other elite conservatives and elite liberals, I allowed myself to focus so much on the stylistic element of Trump that I completely ignored the way in which he substantively was offering something very different on foreign policy, on trade, on immigration.”
In 2021, Vance told TIME that Trump is “the leader of this movement, and if I actually care about these people [ie. Rust Belt constituents] and the things I say I care about, I need to just suck it up and support him.” So it’s possible that Vance still has no special regard for Trump, but rather views Trump as the best vehicle to achieve his own policy aims. My people are suffering, and the Dems think my constituents are a “basket of deplorables,” so I’ll have to deliver my policy platform with the other guy.
That said, if Trump returns to the White House, I suspect Vance’s greatest contributions to the second Trump administration actually won’t be in the policy sphere. (Many VPs disdained the job. Harry Truman, for instance, said being VP is “about as useful as a cow’s fifth teat.”)
Vance’s greatest contribution will be keeping Trump hinged.
Last year, I was in a room with former Trump national security advisor John Bolton, who was probably grateful for the opportunity to serve but has written critically about Trump’s national security policies, including with respect to China. Bolton described to the audience how Trump would, not infrequently, storm out of vital national security meetings, leaving his staff and advisors to retreat to their offices in defeat. Usually, however, Bolton could count on a knock on his door maybe an hour later: it was Mike Pence, who’d say, “I got the President on board. I got him. We’re good to go.” And America lived another day.
Pence knew how to speak to Trump in a way that none of his advisors or Cabinet officials could figure out. After all, he is just about the only person who survived all four years of Trump (and perhaps only because VPs aren’t fireable at will). The country owes a debt of gratitude to Pence, and not just for his actions on January 6. Everything could have been so much worse than it already was.
A second Trump administration would feature massive discontinuity, impulsivity, and a revolving door of advisors and Cabinet officials. If all Vance can do, then, is consistently talk some sense into Trump until January 20, 2029 (and no longer), that’s a success in my book.
Vance on AI and Big Tech
The mainstream media has struggled to make sense of Vance’s AI policies.
On the one hand, Vance wants “looser regulations.” Tech policy experts who spoke to NYT “expect that Mr. Vance would take a more laissez-faire approach to AI regulations compared with the Biden administration’s.” Vance has “vocally supported open-source AI.” And in a senate hearing four days before Trump announced his VP pick, Vance rhetorically asked,
Very often, CEOs — especially of larger technology companies that I think already have advantageous positions in AI — will come and talk about the terrible safety dangers of this new technology and how Congress needs to jump up and regulate as quickly as possible. And I can’t help but worry that, if we do something under duress from the current incumbents, it’s going to be to the advantage of those incumbents and not to the advantage of the American consumer.
In other words: AI companies are talking up “catastrophic risks” (while developing at breakneck speed) so they can have first-mover advantage in securing cushy regulations for themselves — which, Vance says, actually will just “entrench the tech incumbents that we already have.”
On the other hand, Vance at times seems eager to intervene in AI development and regulating Big Tech companies. He has “called for the breakup of Google,” and has “urged more investment in US companies to help them compete against China.”
“Mr. Vance did not respond to a request for comment. He hasn’t previously directly addressed the apparent contradiction in his regulatory views,” signs off NYT.
The only reason the mainstream media are confused is because they live in a leftist bubble, and have never asked anyone who’s politically right-of-center what they think of LLMs.
To Vance, the CCP and Big Tech are, in many ways, essentially the same: