The TL;DR here: The US and China trusted each other in industrial cooperation and trade despite ideological differences. But now, I think both sides will agree, that kind of trust doesn’t seem realistic anymore. These orders are intended to move industries that have emigrated from the US back to the United States. (You can read more about how the pandemic has highlighted this issue here.)
Despite that growing mistrust, these new policies follow the same roadmap that China has used for decades: generous industry subsidies, government funding for academic institutions, and barriers to entry for foreign competitors to protect domestic companies. And it just might! After all, it is precisely the Chinese government’s success in building out key technology sectors in a short period of time that prompted the US to intervene in the first place.
Whether the government admits it or not, I think these steps to build domestic industries are a form of protectionism. It reminds me of the term “economic nationalism” coined by New York writer E. Tammy Kim used to describe how both sides’ candidates in Ohio’s Senate race have pledged to bring manufacturing jobs back from China. I don’t think the government stepping in to help a domestic industry is bad itself. But economic nationalism also brings problems: unfair competition, corruption, xenophobia, rejecting trade allies, etc. Biden will certainly be challenged from both sides on these issues.
I find it ironic that after years of criticizing China’s approach to developing domestic technology industries, the US is also learning from China. But to be fair, the best way to make technological progress is probably halfway between far-reaching government intervention and an unregulated free market. It will be interesting to see how the US handles that balance compared to its rival.
Do you have a different take on the Biden admin’s executive orders over China? I’d love to hear from you on [email protected].
Catching up with China
1. A car accident in Guizhou killed 27 people who were transported to a covid quarantine facility. It sparked widespread online outrage over China’s ongoing zero-covid policy. (CNN)
2. While individual Chinese users have been blocked from Twitter, local governments there pay for tourism ads – and have become a fast-growing source of revenue for the platform. (Reuters $)
3. Physical store owners in Mexico resell the Shein clothing they bought online and make a fortune. (Rest of the world)