1) Cheap labor. [ But India and other countries have cheap labor ]
2) A willingness to completely disregard ecological damage.
Its #2 that makes them into a blackhole and since everyone on Earth breathes the same air...yeah.
But this is not like manufacturing phones where labor = O(number of phones produced). Am I wrong? Why is aluminum production not almost purely capital intensive?
If so, it would suggest that the advantage of China isn't cheap labor costs, but either cheap energy, cheap regulations, or cheap currency.
Which really means Chinese aluminum needs to be taxed to price in the full costs of environmental damage. If for example, the aluminum is produced by carbon emissions, or just plain old soot and other pollution, the costs of this should be estimated and other countries which import Chinese aluminum should slap a tariff on it equal to those costs. They should also domestically tax carbon. Actually, I'd argue that you can't really tax carbon domestically unless you tax it internationally.
https://agmetalminer.com/2009/02/27/cost-build-up-model-for-...
I've seen estimates from 7-10% are labor costs.
> But this is not like manufacturing phones where labor = O(number of phones produced). Am I wrong? Why is aluminum production not almost purely capital intensive?
You still need people to handle the machines, repair the machines, perform billing, HR, etc. You don't have giant automated aluminium factories devoid of people.
> If so, it would suggest that the advantage of China isn't cheap labor costs, but either cheap energy, cheap regulations, or cheap currency.
Yes. It is more the cheap energy/regulations but the labor savings isn't 0. Aluminum factories in the west regularly have 7-9 figure environmental problems.
http://www.geelongadvertiser.com.au/news/geelong/epa-orders-...
http://www2.epa.gov/enforcement/case-summary-alcoa-inc-condu...
Besides regulation there is also the fact that China has a government where eminent domain and relocation citizens to other homes is not a problem.
If you're going to get carbon taxation, it needs to happen at consumption, because that's where you're not asking turkeys to vote for Christmas. Tax materials and products at an average rate for that product by default, but at a lower carbon-dependent rate if there is an independently verified audit trail for the environmental impact of its materials and manufacture. Effectively, a VAT or GST rate that depends on environmental impact.