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.

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.

Alone, America cannot stem Beijing’s rise in advanced industries. We need a new pact with Europe. Its objective should be to refuse to surrender to technological domination by the CCP. Being pioneers of the green transition will not be enough.