The techno-economic competition with China is the West’s most pressing challenge. China is rapidly emerging as a leading innovator in advanced industries and has already pulled ahead in some areas. Given the magnitude of this challenge and weaknesses across the U.S. policy and institutional landscape, smart technology policies are essential to maintaining competitiveness across a broad range of advanced industries.
As Robert Atkinson writes in The National Interest, the United States must pursue three critical technology policies to compete effectively with China:
- Supercharge innovation by strengthening R&D incentives. Congress should restore first-year expensing for research and development and double the R&D tax credit, a proven tool that boosts business R&D and influences where companies conduct it. Considering the U.S. credit is anemic, Congress should increase the regular R&D tax credit to 40 percent and the Alternative Simplified Credit to 28 percent to stay competitive.
- Defend market share by combatting China’s predatory trade practices. Congress should reform Section 337 of the 1930 Tariff Act to make it easier for the U.S. International Trade Commission to issue ten-year exclusion orders on Chinese goods and services tied to unfair practices like IP theft, closed markets, or massive subsidies. Without action, China’s mercantilist tactics will erode U.S. market share in key industries and threaten America’s innovation lead.
- Coordinate a national strategy by establishing a National Competitiveness Council. The Trump administration should establish a National Competitiveness Council (NCC) to formulate and coordinate advanced industry competitiveness policy across the federal enterprise. No one in the White House is solely focused on America’s innovation, productivity, and competitiveness challenges. Staffed with firm, industry, and technology dynamics experts, the NCC would assess U.S. advanced industry capabilities and guide policies to ensure the United States wins the techno-economic war with China.
Read the op-ed.
