Industrial Advantage - Addendum

I realised after posting a piece on industrial advantage that I’d left out one crucial element. Not because it weakens the argument, but because it completes it.

China did not become the world’s manufacturing hub by accident. It did so because, for a long time, labour really was cheap, plentiful, and decisive. That part of the story is true. Pretending otherwise only invites easy rebuttal from people who stopped thinking about manufacturing sometime in the Nokia era.

What matters is what happened next.

Automation eats cheap labour for breakfast. Once factories fill up with robots rather than people, wages stop being the advantage they once were. When labour falls from half the cost base to a tenth, the old logic collapses. The very thing that once made China attractive starts to fade as a competitive lever.

China saw this coming. That is the bit most Western commentary misses.

Rising wages did not threaten China’s industrial model. They triggered the next phase of it. Higher wages push automation harder. Automation drives energy demand through the roof. And once energy becomes the dominant input, the country that controls cheap, reliable, long term power wins.

That is where renewables come in. Not as environmental signalling, not as virtue, but as infrastructure. Renewables turn energy into a capital asset rather than a geopolitical gamble. No fuel imports. No price shocks. No dependency on shipping lanes or regimes with leverage. Just machines running flat out on predictable power for decades.

Seen this way, China’s dash into renewables is not a pivot. It is consolidation. Automation erodes the cheap labour advantage, so China replaces it with something far harder to undercut: electricity that is abundant, stable, and increasingly domestic.

This also explains why the renewables build accelerates as wages rise. It is not contradictory. It is sequential. The strategy evolving exactly as intended.

The West is still arguing about whether labour costs matter. China has moved on to securing the input that automation cannot function without. Factories do not care why the power is cheap. They only care that it is.

Yesterday’s post argued that energy policy is industrial policy. The missing sentence is this: automation dissolves yesterday’s advantage, so China is locking in tomorrow’s one.

The arithmetic has not changed. It has simply moved on while we were still talking.