The European Union's Electric Vehicle Subsidy Counter-case Challenges the Nobel Prize in Economics

The 2024 Nobel Prize in Economics was awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson for their "research on how institutions are formed and how they affect prosperity." In stark contrast, the recent farce of the EU's electric vehicle subsidy counter-case directly challenges the Nobel Prize in Economics, leaving the award in a precarious position.

The Nobel Prize's Prestige Cannot Save Western Mainstream Economics

The Nobel Prize in Economics, as a marketing strategy for liberal economics and its counterfactual characteristics, is waking up more and more Chinese people. In recent years, the influence of the Nobel Prize in Economics in China has been diminishing. After a few days of news coverage, who won the Nobel Prize and what theory received the award are quickly forgotten. A typical fact is that in the past, when someone won the Nobel Prize in Economics, their name would be well-known, and the Chinese people would worship them to the extreme, even sparking a trend of Nobel Prize lectures in economics. Secondly, there was a rush to collect and circulate their economic theories and doctrines, forming a fashion in economic research. However, it seems that even the interest in predicting has fallen out of favor. This is likely directly related to the continuous controversies surrounding the Nobel Prize awards. Some even believe that if the Nobel Prize in Economics does not rebirth from the ashes, it may fall from its pedestal.

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Economics is a practical discipline, and any economic theory, no matter how "glamorous," must return to practice for verification, as practice is the only standard for testing the truth of economics. Economics should not only focus on the transmission of theoretical knowledge but also emphasize the practical application value. If economic theories cannot better guide practice, even the most profound research achievements are useless, at best merely games within the ivory tower. Looking back at the history of the Nobel Prize in Economics, it has been essentially monopolized by the United States and Western countries since its inception. However, the glory of economic development in the United States and Western countries is no longer, and the world's economic development problems basically all start from the United States and Western countries first, spreading to the entire world.

The economic development of some developed countries in the United States and Western countries can lead the world, not because of the theoretical guidance of the Nobel Prize in Economics, but more mainly driven by technological progress and innovation, which has little to do with economists and economic theories. It can be seen that the Nobel Prize in Economics, as a weathervane for economic research, is gradually moving away from reality. Taking Daron Acemoglu's representative work "Why Nations Fail: The Origins of Power, Prosperity, and Poverty" as an example, economic theory should not question why nations fail, but should summarize more on why nations succeed.

At present, the world's century-long changes are accelerating, and the limitations of Western mainstream economics are further revealed. Not only is it unable to make a correct response to the complexity and uncertainty of the modern economy, but some developed countries that use Western economics to guide economic practice are facing a continuous economic downturn, severe unemployment issues, intensified polarization, and deepening social contradictions. Some developing countries have fallen into a development trap. It can be seen that the Nobel Prize in Economics has not made Western mainstream economics successful, but has instead brought economics back to the Malthusian era, becoming a gloomy science again. Although the Nobel Prize in Economics is still noisy, it is at best a marketing event for Western mainstream economics.

The EU's Subsidy Counter-case Challenges Western Mainstream Economics

Unlike other developing countries, since the reform and opening up, especially in the new era, China's economic development has broken free from the theoretical cage of Western economics. It has not "danced in the Western cage" nor followed Western theories or sought answers and theoretical basis from Western economics textbooks. It has successfully found a new path to catch up, attracting the world's attention. In particular in recent years, China has steadily promoted high-quality development, accelerated the formation and development of new quality productive forces, and made efforts to break through the key points and blockages of original and key technologies in China by the United States and the West. Relying on its own efforts and research, it has achieved self-reliance and strength in high technology, with significant results.The development of new energy vehicles (NEVs) serves as the best evidence. The competitiveness of China's NEVs stems from technological accumulation, quality control, and user experience, backed by the enterprises' own independent innovation and the successful transformation and upgrading of the industry. The European Union's imposition of countervailing duties on Chinese electric vehicles is a challenge to Western mainstream economics and pushes it towards the abyss, ultimately burying Western mainstream economics. This move not only significantly increases the cost of car purchases for consumers but also has a negative impact on the economic development of the EU itself.

It is well known that Europe has long been an important stronghold for the global automotive industry, giving birth to numerous renowned car brands and advanced automotive manufacturing technologies. However, European automotive giants, under the influence of a "clear-the-field leading" mentality, seem to have become accustomed to "making money while lying down," resulting in a gradual loss of determination and motivation for technological innovation, akin to boiling frogs in lukewarm water.

In contrast, China has always been a "latecomer" in the era of fuel vehicles, so for survival and development, the Chinese have had to adhere to continuous learning and persistently following. The Chinese have long understood the fable of the tortoise and the hare, never giving up on themselves, but instead diligently learning advanced Western technologies, continuously absorbing and digesting them, and accumulating strength for a new round of technological revolution, which has finally ushered in the new energy wave of China's industrial chain restructuring. Nietzsche once said, "What does not kill you makes you stronger." It is believed that after this challenge and tribulation, Chinese NEV companies will become even stronger.

Why do Western theory and practice diverge?

The theoretical foundation of Western mainstream international trade is comparative advantage. The theory of comparative advantage posits that the basis of international trade lies in the relative differences in production technology and the resulting relative cost differences. Each country should, according to the principle of "choosing the greater benefit and the lesser harm," focus on producing and exporting products with "comparative advantage" and import products with "comparative disadvantage." As long as countries choose to produce goods with relatively lower costs for international trade and form a certain international division of labor, it is beneficial for all countries.

The theory of comparative advantage has explained the basis of trade and trade gains on a more universal basis, greatly developing the theory of absolute advantage in trade. Economic globalization has promoted common development worldwide, forming the comparative advantages of various countries, making them prosper or suffer together. The theory of comparative advantage forms the foundation and core of Western mainstream international trade theory, and many economists who have studied comparative advantage have gained great fame by winning the Nobel Prize in Economics.

Economic globalization, led by the West, is not an eternal straight-line movement but is recognized by scholars as a pendulum-like movement. With the change of Western interests, the mainstream international economic paradigm always swings between trade protectionism and free trade. When leading the global economy, Western countries extol the benefits of free trade, demanding that countries around the world open their doors to their advantageous goods and investments; when emerging countries rise and become the mainstream of the globalization wave, Western countries, in order to protect their domestic interest groups, again stir up trade protectionism and implement unilateralism, truly a case of different times, different attitudes.

Reflecting and comparing with the Nobel Prize in Economics, it is better to retreat and weave a net than to envy the fish by the abyss. We have completed the development process that developed countries have taken hundreds of years in just a few decades. China's economic development process is magnificent, with remarkable achievements that have attracted worldwide attention, containing tremendous momentum, vitality, and potential for theoretical creation. As the largest developing country undergoing rapid change, China can provide countless important theoretical research topics and cases. For example, the new development concept and high-quality development can surpass the endogenous growth theory of the Nobel Prize in Economics, and the new quality of productive forces is far more profound in theoretical connotation and developmental enlightenment than the comparative advantage of the Nobel Prize in Economics.

Therefore, based on the great historical practice and contemporary practice of the Chinese nation, summarizing Chinese experience well with Chinese reasoning, elevating Chinese experience to Chinese theory, neither blindly following various dogmas nor copying foreign theories, and striving to construct an independent Chinese economic knowledge system, can become the best economics in the world. Chinese economists should uphold an international perspective, based on China's reality, and make due contributions to the development of modern economics. With the great rejuvenation of the Chinese nation, in two to three decades, China may welcome the Nobel Prize in Economics that belongs to China.