One Hand Tied Behind Our Backs: Why America Must Do Much More to Curb China’s Dangerous Innovation Mercantilism

September 18, 2015

Ahead of Chinese President Xi Jinping’s visit to the United States later this month, ITIF hosted an expert panel discussion exploring the ramifications and potential U.S. responses to China’s aggressive, mercantilist strategy of shutting American technology companies out of Chinese markets. Across a wide range of advanced technology industries, from information technology to biotechnology, China has embarked on a systematic plan to replace American companies with Chinese equivalents, using a range of techniques including forced technology transfer or joint venturing, cybertheft of intellectual property, abuse of competition laws, pressure on state-owned enterprises to buy Chinese, and massive subsidies to Chinese tech companies. For example, China’s “National Guidelines for Development and Promotion of the Integrated Circuit Industry” unabashedly call for a closed-loop semiconductor ecosystem that would reduce Chinese imports of U.S. semiconductors by half in 10 years and eliminate them entirely within 20. Despite the Obama administration expressing concerns to the Chinese government, China has only ramped up its mercantilist policies. For the sustained viability of America’s advanced technology sectors, it’s critical that U.S. policymakers now take a stronger stand against anti-competitive policies that disrupt the global marketplace for innovative industries.