That is an argument against having most non-service industries. Indeed, a similar argument would have been used for off-shoring huge amounts of manufacturing from Western societies to China (why put up with the pollution externalities when the Chinese could pick those up for us?).

The upshot is lots of the know-how now lives in China, the wealth is being generated in Shenzhen instead of the west. The argument was correct, but in hindsight it does look like the positive externalities were greater than the negative. China's growth has been much more impressive than the EUs.