China is on the march to dominate advanced industries that underpin national power in the 21st century. To protect U.S. economic strength and national security, policymakers must jettison old techno-economic and trade policy doctrines and adopt a new national power industry strategy.

Instead of treating manufacturing as a monolith to be revived, policymakers must focus on national power industries. These industries protect U.S. national defense and economic security, and are eroding at an alarming rate.

There may be no more important question for the West’s competitive position in advanced industries than whether China is becoming a rival innovator. While the evidence suggests it hasn’t yet taken the overall lead, it has pulled ahead in certain areas, and in many others Chinese firms will likely equal or surpass Western firms within a decade or so.

China now dominates the strategically important industries in ITIF’s Hamilton Index, producing more than any other nation in absolute terms and more than all but a few others in relative terms. Its gains are coming at the expense of the United States and other G7 and OECD economies, and time is running short for policymakers to mount an industrial comeback.

The United States is at serious risk of becoming dependent on China for a wide array of key technologies and products, which would significantly shift the global balance of techno-economic power. Only fundamental policy change can potentially keep the United States from defeat.

Innovation-driven production is key to reclaiming U.S. dominance on the international stage. Yet, all but a few U.S. state economies are less concentrated in advanced industries than the world average—and only one is ahead of China.

China’s primary goal is to damage the U.S. economy and become the world’s pre-eminent power. America must respond by expanding its competitiveness in key technologies and industries ranging from AI to aerospace.

The dominant economic model of the post-war era has run its course. It’s time to embrace a new paradigm that focuses on enabling producers to succeed, especially in advanced, traded-sector industries.

Neo-Brandeisians have launched a campaign to discredit the argument that breaking up or shackling America’s large technology multinationals would be a boon for China. But they’re wrong.