Please join ITIF for an event examining the extent of China’s industrial subsidies in high-tech industries and exploring available policy options to curtail these behaviors.
When today’s “useful idiots” compare China’s actions to the United States’ as the same, they are playing directly into Xi Jinping’s hands, weakening opposition to China’s destructive policies.
Global attitudes toward China are hardening, but diverging interests prevent effective allied action to counter its rise. That’s why America should focus on getting its own house in order. The key is better aligning U.S. multinational corporations’ interests with national interests.
Nearly 20 years after joining the World Trade Organization, China remains woefully short of meeting a broad range of commitments and responsibilities, to the detriment of both its trading partners and the international economic system.
China leverages antitrust law to achieve industrial policy objectives—including in the tech sectors that are crucial to its rivalry with the United States—but it does so through an insular bureaucracy that is surprisingly fragmented and therefore difficult for outsiders to understand.
An integrated clean manufacturing strategy will pay dividends for both the economy and the global environment.
The United States needs to shift from an approach to power trade that is based on advancing U.S. foreign policy interests to an approach that focuses on advancing U.S. competitive advantage against China, especially in critical advanced technology sectors.
China’s long-standing and rampant “innovation mercantilist” policies harm global innovation by taking market share and revenues from more-innovative foreign competitors, thereby diminishing the resources they can invest in research and development toward further innovation. ITIF has conducted analysis on this issue, as listed below.
ITIF hosted an expert panel discussion discussing EU-US digital trade relations and what both governments should do to foster closer relations without sacrificing U.S. digital innovation.
Limiting technology deployment based solely on where it is manufactured is an ineffective security countermeasure—not just for drones, but for most technologies—because the country where a product is built has no direct bearing on whether it is secure.
China’s long-standing and rampant “innovation mercantilist” policies harm global innovation by taking market share and revenues from more-innovative foreign competitors, thereby diminishing the resources they can invest in research and development toward further innovation.
The Biden administration needs to renew America’s role as a power trader, but with a new focus of maintaining its relative lead, economically and technologically, over China. It will require changes in the strategy and organization of U.S. trade policy.
Chinese high-speed rail firm CRRC is less innovative than European and Japanese firms, but mercantilist policies help it dominate in China and expand globally. This starves superior firms of revenue, reduces their R&D, and slows the pace of global innovation.
ITIF hosted a robust debate on this question. Professor Michael Klare has written that “Biden’s Tough Stance on China Will Lead to Global Climate Doom.” He argued that cooperation is essential and can be done in parallel without weakening the U.S. negotiating position on other matters. ITIF President Rob Atkinson tackled the opposing position.
U.S. leadership in cloud computing depends on having fair access to global markets. But the Chinese Communist Party has targeted the sector with a suite of protectionist measures that are helping its local champions improve their capabilities, competitive position, and global operations.
The United States has a long and successful history for industrial policies, and as the Biden administration and policymakers consider new policies, some raise concerns with its “similarities” to China.
With the rise of China, the U.S. economic and technology environment has fundamentally and inexorably changed. America needs an advanced technology industrial policy to compete effectively—but that will require modernizing hidebound economic thinking that has long considered “industry policy” to be anathema.
There weren’t many Chinese tech companies that the Trump administration didn’t sanction or at least threaten. What did that achieve in the technological race with China? What was the impact on the American brand writ large? And what should the Biden administration do next?
Passing a time-limited tax incentive for firms that move Chinese production to U.S. Labor Department–designated “labor surplus areas” would weaken China’s economic and technological capabilities by reducing production there while strengthening U.S. capabilities by increasing domestic production, and it would help economically distressed and disadvantaged cities and counties across the nation.
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.
Understanding how Germany manipulated the global trading system to degrade its adversaries’ capabilities, entrap nations as reluctant allies, and build up its own industries for commercial and military advantage—just as China is doing—can shed light and point the way for solutions to the China challenge.
Fearmongers claim the 5G sky is falling: China is way ahead, and drastic measures are needed to catch up. But these claims are often based on poorly understood comparisons of 5G deployment. China’s 5G stats can paint a misleading picture if taken at face value.
Recent years have seen China increase its spending on basic and applied research, which is likely to drive its innovation going forward and could be a large factor behind an eventual Chinese leadership role in global innovation.
With protectionist policies shielding their rear flank domestically, China’s digital firms are out to capture global market share. Their strategy hinges on state-backed innovation mercantilism—and their success will come at the cost of U.S. jobs, exports, and economic growth.