TL; DR Here: The US and China used to trust each other in industrial cooperation and trade, despite ideological differences. But now, I think both sides would agree, that kind of trust just isn’t realistic anymore. These orders are intended to move industries that have migrated from the United States backwards. (Could you Read more here on how the epidemic has highlighted this problem.)
Despite the growing mistrust, these new policies follow the same rules of the game that China has used for decades: generous subsidies to industry, government funding for academic institutions, and entry barriers for foreign competitors to protect domestic firms. It just works! After all, it was precisely the Chinese government’s success in growing key technology sectors in short periods of time that drove the United States to act in the first place.
Whether or not the administration admits it, I think these moves to build up local industries are a form of protectionism. It reminds me of the term “economic nationalism” by New York writer E. Tammy Kim used to describe How bipartisan candidates in Ohio’s Senate race promised to bring manufacturing jobs back from China. I don’t think that government intervention to help a local industry is in itself a bad thing. But economic nationalism comes with problems as well: unfair competition, corruption, xenophobia, alienation of trade allies, etc. Biden is sure to be challenged by both sides on these issues.
I find it ironic that after years of criticizing the Chinese approach to developing domestic tech industries, the US – under both Trump and Biden – is also learning from China. But to be fair, the best way to produce technological progress is probably halfway between excessive government intervention and an unregulated free market. It will be interesting to see how the United States deals with this balance compared to its competitor.
Do you have a different idea of the Biden boss’s executive orders on China? I would love to hear from you in firstname.lastname@example.org.
catch up with china
1. A car accident in Guizhou killed 27 people while being transported to a virus quarantine facility. This sparked widespread outrage online over China’s policy of not spreading the virus. (CNN)
2. Although individual Chinese users are banned from Twitter, local governments are paying for tourism ads there – and they have become a fast-growing source of revenue for the platform. (Reuters $)
3. Traditional shopkeepers in Mexico resell Shein clothes they bought online and make a fortune. (Rest of the world)