Competitiveness

China’s mercantilist strategy to grab market share in the global semiconductor industry is fueling the rise of inferior innovators at the expense of superior firms in the United States and other market-led economies. That siphons away resources that would otherwise be invested in the virtuous cycle of cutting-edge R&D that has driven semiconductor innovation for decades.

But these generous policies so far have not resulted in market dominance. To date, only 148 of COMAC’s planes are confirmed to have been purchased.

When it comes to the economy, the Biden administration will have to focus on three things: COVID, a recovery package, and China. Competing with China will require a robust, sector-focused industrial strategy, writes Rob Atkinson in American Compass. Building political support for this strategy means arduously reprogramming an entire chain of glitchy logic.

For America to remain the global leader in IT, the U.S. government must formulate a grand strategy grounded in a new doctrine of “digital realpolitik.” The first priority should be advancing U.S. interests by spreading the U.S. digital innovation policy system and constraining digital adversaries, especially China. This will entail working with allies when possible—and pressuring them when necessary.