China's Tech Challenge

China has closely followed the proven economic model of the Asian Tigers, only this time with an order of magnitude increase in scale. Acknowledging and addressing this simple business model reality is the key to developing an effective American response.

America’s imports from China look large because China is so large. But proportionally, they’re less than those from the other Asian tigers. America’s large trade deficit stems primarily from its lack of high-value manufacturing exports, not just to China but to the world.

The reality is that if America does not do both—speed itself up, and slow China down—then it will likely lose the techno-economic race in the advanced, traded-sector industries that are most strategically important for the country’s dual-use industrial base and national security.

Huawei—the world’s largest telecommunications firm—is among the most targeted Chinese firms due to concerns that it assists the Chinese Communist Party spy on the United States (and its allies). While sanctions against Huawei are justifiable, the Biden administration needs to ensure that these sanctions don’t inadvertently harm other U.S. technological and economic interests.

China’s economy is best viewed as a giant Asian Tiger. China’s great success stems mostly from its vast size and its use of the proven Asian development model. Claims that it’s mostly the result of exploitive and unfair communist practices distort U.S. priorities and policies.