Chinese Expansion in Global Digital Markets Will Cost U.S. Jobs, Exports, and Economic Growth, Says New ITIF Report

November 23, 2020

WASHINGTON—Chinese digital firms are beginning to capture global market share, while protectionist policies are keeping them safe from foreign competitiors at home. A new report released today by the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, warns that, if not deterred by the United States and like-minded economic allies, Chinese firms’ expansion will come at the cost of American jobs, exports, and economic growth. 

The report urges the governments around the world to contest Chinese firms’ expansion into overseas markets with financing programs for capital-intensive industries, foreign aid for telecom infrastructure, and diplomatic pressure, among other measures.

“Chinese Internet firms are dominating China’s domestic market, and there is little U.S. firms can do to gain marketshare there at this point. The real battleground is in other nations,” says Robert D. Atkinson, ITIF’s president and a coauthor of the report. “If the United States does not act swiftly by engaging like-minded international trade partners, then Chinese firms’ gowth will come at the expense of U.S. jobs, exports, and ultimately GDP.”

According to the ITIF report, the mercantilist ‘China First’ digital strategy has been wildly successful, with China copying foreign technology, limiting access to its domestic market, and showering homegrown champions with a panoply of unfair supports. 

It is now imperative for other governments to reciprocate by refusing Chinese companies access to their digital markets unless China grants foreign companies the same level of access in return. In addition, the report suggests U.S. regulators should take account of how antitrust actions against American Internet firms can undermine their ability to compete successfully against Chinese firms.

“The next administration should work more aggressively in international bodies to defend cross-border data flows and empower industries to forge international standards that ensure a level playing field,” Atkinson adds. “Congress should increase funding for international development aid, with an increasing focus on digital infrastructure, and the United States should continue to support the Global Partnership on Artificial Intelligence and make sure it works to build an alliance of democratic, rule-of-law nations to craft and support an alternative to China’s model of AI governance.”

Read the report.