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Rush Doshi testifies to U.S. Senate Committee on Trade, Science and Transportation On the need for a realignment of U.S. economic policies. To strengthen resilience and competitiveness in the face of the Chinese challenge. Read Doshi below, download the full testimonial or watch the live audience webcast.
For top observers, it is transparent that China is making a strong, state-backed effort to move the United States from global technological leadership. This effort is not entirely motivated by advertising considerations, but also by geopolitical considerations. Beijing believes that the festival in generation is not limited to the question of which corporations will dominate specific markets. It is also a consultation of which country will be the most productive to lead the world.
China’s leaders have often seen technology and economic exchange through a political lens, particularly as a way to create or avoid dependency, strengthen China’s “comprehensive power,” and build order. This perspective appears to be rooted in the Party’s Leninist and mercantilist traditions as well as in its nationalist history. China’s “century of humiliation,” which stretches from the Opium Wars to the founding of the People’s Republic of China in 1949, is seen as a product of the country’s failure to achieve “wealth and power” [富强] relative to the industrialized West and Japan.3 Accordingly, technological advancement has long been seen as a means to achieving “wealth and power,” whether during China’s pursuit of strategic weapons during Mao Zedong’s leadership or its push to achieve what his successor Deng Xiaoping labeled as the “fourth modernization” of science and technology progress – both of which were self-consciously styled as efforts to boost China’s power. Now, as China perceives a new period of technological change, the Chinese Communist Party’s writings suggest geopolitics is again at the forefront.
The Chinese Communist Party believes that the world has entered a period of “great changes unseen in a century.” At the core of these changes is a shift in the balance of power between the United States and China, and one key driver of that change is the onset of a new round of technological innovation which Xi Jinping and others have sometimes referred to as the “Fourth Industrial Revolution” [第四次工业革命].
Although the concept of a “fourth trade revolution” first emerged from the World Economic Forum in 2015, the concept continued through the Chinese Communist Party. As Xi Jinping put it in a 2018 speech: “From the mechanization of the first trade revolution in the 18th century, to the electrification of the commercial revolution of the time in the 19th century, to the data of the third trade revolution in the 20th century, “every cycle of” disruptive technological innovation “has shaped history.4
Chinese leaders who in the next decade will largely discover who will lead the next trade revolution. “The next decade will be a key decade,” Xi said, “a new cycle of technological revolution and commercial replacement (synthetic intelligence, big data, quantum data, and biotechnology) is gaining momentum.” They would bring “revolutionary replacements” while providing “a vital opportunity to announce the progression of adventure jumps,” allowing China to avoid legacy systems and outperform its competitors.5
Chinese leaders have long used the term “catch up and overcome” [赶超] to describe their technological ambitions, considering the United States and the West as the critical reference. But revolutionary technological changes, in the eyes of some Chinese commentators, now make this noble purpose possible.6 The fourth trade revolution can create the kind of “great divergence” that has accompanied beyond trade revolutions, where some countries and early rival competition with old implications for global politics. And while Party officials are cautious in describing China’s ambitions in this way, many comments and articles from discussion organizations seem to recommend that overcoming the United States in the higher generation would end its era of global leadership and, presumably, mark the beginning of the era of Chinese leadership.
A wide diversity of Chinese commentators agree that the generation is increasingly at the center of the American-Chinese festival. “Over the next decade, Array … the festival for the fourth trade revolution will begin between China and the United States,” writes Jin Canrong, well-known professor of foreign relations and dean of Renmin University.7 “Scientific and technological functions have a vital indicator of “The general force of a country, and it also has the main battlefield for the festival of primary powers,” argues Zhu Feng Array , another well-known scholar and professor at Nanjing University.8 And countless eminent scholars express similar feelings.
A typical speech on the geopolitical problems of the technology festival comes from an authoritative and supposedly pseudonymous observation published on the Central Party School’s Study Times website, approximately two months after Xi’s 2018 speech on the fourth trade revolution.9 “Britain captured the opportunity of the first trade revolution” that gave it an empire; later, when the trade revolution came, “the United States captured Britain’s dominant productivity force and jumped into the position of the world’s leading trade force, laying a forged basis for the status quo of global hegemony.” Then, “the third trade revolution was born in the United States,” and the United States captured it and strengthened its “global strength,” laying the groundwork for American hegemony. China now sees an opportunity to train what it sees as an incredible formula for following in the footsteps of Britain and the United States, capturing a new trade revolution and becoming the world’s first state.
China believes it is well-positioned to outcompete the United States in the competition for the Fourth Industrial Revolution and that it has four main advantages: (1) heavy investment in R&D; (2) superior institutions and industrial policies supporting China’s ambitions; (3) manufacturing prowess and centrality to global supply chains; and (4) a more robust operation to set the global technology standards that could determine the future of key industries.
First, China has learned from U.S. history in crafting its own approach to basic science research. Beijing recognizes, as the United States once did, that such research cannot be supported entirely by the market and the private sector and instead must be supported by the public. China’s investments have been enormous. The National Science Foundation estimates that China’s total R&D spending is roughly equivalent to U.S. spending even though China’s economy is smaller.10 By some estimates, China’s government-funded R&D also already exceeds U.S. federal R&D spending. And in the technologies central to the Fourth Industrial Revolution, the differences are significant. China spends roughly $2.5 billion annually, a modest sum that is nonetheless estimated to be more than ten times what the U.S. spends in a sector with critical economic and strategic potential.11 In addition to that annual spending, Beijing also plans to spend some $10 billion to build the National Laboratory for Quantum Information Sciences.12 Similarly, in artificial intelligence, China spends at least as much as the United States and likely more, according to estimates from Georgetown’s Center for Security and Emerging Technology.13
Second, China believes that its establishments are better designed to mobilize the state, society and market to implement a trade policy to achieve the country’s technological ambitions. For example, study Times’ above observation noted that establishments are essential to assume technological leadership, which in turn supports hegemonic ambitions, which is why, in its view, Britain replaced Spain, the United States replaced Britain, and why China can only supplant the United States. States The comment followed countless similar comments in China, stating that the US polarized political formula performed lower than the Chinese formula.14 As a result, he argued, “the emergence of a new cycle of clinical and technological revolution and commercial transformation are beneficial and to achieve a “turn” reference to the board forward when a competitor brakes or tricks in a turn around a race track.
How do these closed institutional benefits manifest in practical terms? Chinese leaders have been particularly involved in the superiority of their trade policy systems that aim to China taking the heights of the fourth trade revolution.15 For example, after COVID-19, China’s National People’s Congress approved a final plan. $1.4 billion in five to six years to build fifth-generation wireless networks, install cameras and sensors to create smart cities, and integrate this network into the industry to drive advances in smart manufacturing. Earlier this year, China had about 200,000 fiveG towers in service; until the end of the year, you will have more than a million with a final goal of five million16.
In addition, China has released more than 100 science and technology plans, including detailed plans for leadership in AI by 2030 and in standard-setting by 2035.17 It has several special purpose funds allocating tens of billions towards specific research areas. And it has developed its flagship industrial policy initiative, Made in China 2025, which targets ten high-tech industries: information technology; smart manufacturing; aerospace; maritime engineering; advanced rail; electric vehicles; electrical equipment; new materials; biomedicine; and agricultural machinery and equipment. Made in China 2025 seeks to indigenize these key technologies, gain favorable positions in global supply chains, win market share within China, and ultimately capture global market share from foreign markets. To do so, it wields the full power of the state and the market power of the Chinese economy to elevate local champions over their high-tech foreign competitors globally, with specific quotas set in each industry for China’s anticipated share.18 The initiative relies on technology transfer, market access restrictions, state-backed foreign acquisitions, and subsidies. While Beijing has formally deemphasized it in its official discourses following backlash from the United States and Europe, the core of the initiative remains very much alive.
Third, Chinese sources suggest an understanding even though the United States may have superior innovation capabilities relative to China, in many industries, that advantage matters little without manufacturing capabilities and will almost certainly evaporate unless they return. Chinese scholars see the country’s centrality to global manufacturing and supply chains as an enormous strategic advantage; in contrast, they argue that the United States has allowed “the hollowing out of its industrial base” which means it cannot convert its innovations into products without China’s factories. This dependence on China’s manufacturing capability – when combined with China’s large numbers of engineers, its penchant for reverse-engineering, and robust state support – gives it long-term advantages in the competition with the United States.19 As the researcher Dan Wang notes, “China remains unmatched as a manufacturing site given its numbers of skilled workers, deep supplier networks and the government’s credible public support for manufacturers and provision of reliable infrastructure.”20 Even amid the pandemic, companies like Tesla are deeply invested in China while others like Honeywell have announced new investments in Wuhan, China.
Fourth, China is increasingly focusing on establishing criteria in technical bodies compared to the United States. China’s goals are to advertise its industries, obtain lucrative royalties when its patents are used, and integrate its governance values and techniques into generation architecture. This year, China launched its China Standard 2035 plan as a component of an effort to advance its criteria globally. However, even before the plan was announced, China had already gained influence in key organizations such as the Third Generation Partnership Project (3GPP) and the International Telecommunication Union (ITU) and, in some cases, sought to change policy discussions to agencies where Influence was greatest. Chinese corporations are expected to earn massive royalties after the good fortunately competes on 5G criteria. In addition, with respect to governance, Chinese corporations such as ZTE have proposed criteria for the street lighting architecture that would integrate video surveillance capabilities; facial popularity that would require the garage of express and foreign demographic and biometric data; and for a new Internet architecture that would gain advantages of surveillance, censorship and control.21 Beijing’s good fortune in these agencies is partly the product of its good fortuitous investments in next-generation technologies such as 5G, but also of the Party’s most “practical” practices. “industry-oriented and non-interventionist technique” “followed across the United States. While many criteria bodies are basically made up of corporations that intend to vote for their own interests, at least in the case of China, corporations like Lenovo that first voted in favor of techniques supported by U.S. corporations have been criticized by nationalists for doing so and putting them under pressure. to approve techniques supported by giant Chinese corporations like Huawei. As Lenovo’s control team pointed out in an apology message posted online: “Everyone unanimously deserves to join and deserve not to allow foreigners to stand up to them.” 22 If China’s efforts continue to bear fruit, Beijing could possibly focus on its efforts and increase its leadership over some key global technologies at the expense of universal values and American interests.
Despite a developing consensus across the political spectrum that erosion of U.S. production and generation leadership. It has weakened U.S. resilience, competitiveness and security, efforts to oppose these trends face a lot of challenges.
Several complex economies are launching efforts to “relocate” production lately in China or to diversify the chains of origin to China’s external markets. Taiwan, one of the first to do so, and in the search for what he called a “non-red source chain,” began to make a vigorous effort to attract Taiwanese brands lately in China to Taiwan.23 Others have followed suit. Japan has subsidized China’s departure for eighty-seven companies, spending $2 billion on efforts to bring production to Japan or diversify it into Southeast Asia.24 Similar discussions are also taking place in the EU, with senior officials discussing the option of relocating or diversifying some critical industries.25 And, of course, Array USA is also considering a variety of tools to announce the relocation and diversification of the origin chain.25 And, of course, Array USA is also considering a variety of tools to announce the relocation and diversification of origin chain.25 And, of course, Array USA is also considering a variety of tools to announce the relocation and diversification of origin chain.25 And, of course, Array USA is also considering a variety of tools to announce the relocation and diversification of origin chain. , adding low-interest loans, corporate tax cuts, a committed fund, and proposals to pay one hundred percent of the company’s relocation costs.26
These efforts were combined success. While some production industries have left China for Vietnam, Bangladesh, India, Mexico and Taiwan, among others, many corporations do not need or cannot move. The European Chamber of Commerce in China found that only about 11% of its members were considering moving from China; Similarly, AmCham China’s president noted that most of the group’s members do not plan to leave China.27 For these corporations, the justification goes beyond office. As Damien Ma, a researcher at the Paulson Institute, says, it’s hard for Americans to leave Amazon because it’s the “store of everything,” and it’s hard for brands to leave China because it’s the “country to do everything.” “Chinese corporations are showing that the maximum is not considering leaving China lately because their access to a variety of suppliers in China is a massive credit that offsets the price of reduced hard labor, subsidies, or tax credits. At the same time, China is running for relocation. Secretary-General Xi Jinping said China’s protective source chains one of the country’s six national priorities after COVID-19.
While some industries hesitate to leave China, others have already withdrawn or are contemplating leaving the U.S. market. For example, Intel has announced that it will likely make the most of its complex chip production due to “process errors” found in 7 nm semiconductor manufacturing, a resolution that occurs at a time when the U.S. government has obviously indicated that semiconductor industry is a priority for relocation to the United States and , despite a new set of tax credits and subsidies.29 Some monetary analysts have advised that it is the correct resolution for Intel, and that it would be effective for it. it sells its factories and concentrates on design. Fixes and allows other production corporations to only manufacture for Intel. But what is effective would be seriously detrimental to the U.S. trade base. And for an industry essential for the protection and competitiveness of the United States, since outsourcing production through the country’s largest chip manufacturer would allow all the existing wisdom about chip production in the United States. States atrophy, whose long-term production in this industry is much less maximum probably in the coming decades. Meanwhile, despite the demanding situations and costs, China remains committed to obtaining those same production functions because it recognizes that power is not the only applicable price and has directly benefited from the way production skill has produced undeclared wisdom and technical expertise that can sow a larger trading ecosystem.
Taiwan and South Korea have made massive investments in an ecosystem of physical and human capital within this industry and have some resilience: if one of their corporations misjudges the next wave of semiconductors as Intel has done, they would possibly have more “primes” because of this larger ecosystem than the industry. On the other hand, the United States does not have a comparable ecosystem of specialized engineering capabilities, undeclared wisdom, and professional networks in chip production. As a result, your industry has little resilience.30 In other words, motion chip manufacturing isn’t just about delivering capital, it requires a broader ecosystem that can build that resilience. This type of ecosystem will not be built overnight, it should be created in components with patience and, in some cases, with greater immigration policies, careful experimentation with the localization of incentives, grants and credits, as appropriate, and several other instruments.
China’s geoeconomic challenge is so wonderful that the United States will have to explore tools that go beyond undeniable tax credits and subsidies if it hopes to relocate or diversify its home chains and position in the Fourth Industrial Revolution.
This type of general strategy is infrequently referred to as “trade policy,” which in turn is mistakenly perceived as a limited effort to decide on winners and losers in an industry. However, the reality is that many worldly government practices can be characterized as “trade policies” and are not designed to decide on winners and losers. Indeed, if trade policy is infrequently understood as “government intervention in an express sector that aims to stimulate the expansion of customers in this sector and announce the progression of the economy in the broadest sense”, especially in cases where the market is considered insufficient, then many practices may fall under the auspices of so-called trade policy. Other. What many really mean when they use the term “trade policy” is a state strategy to strengthen competitiveness and resilience in a specific sector, a much less debatable but indeed similar phraseology in the sense32. The question is not whether the United States deserves to pursue such a strategy; for a long time there has been a bipartisan consensus that it deserves to do so, but how it can do so in a way that avoids waste and capture and instead helps China’s resilience and competitiveness, security and technological leadership.
First, with regard to the relocation and diversification of the source chain, other states have pursued practices in this direction that may be instructive to U.S. policy makers. Despite efforts through a wide variety of governments to relocate or diversify the chains of origin currently founded in China, so far only Taiwan has had a good fortune. As of 2019, Taiwan has established a “non-red source chain” in key complex sectors, adding telecommunications, electronics, smart machinery, biomedicine and green energy.33 To attract China’s brands, Taiwan has used a wide variety of policy instruments. . far beyond tax credits and subsidies, founded, among other things, on measures such as procurement assistance, reasonable financing, land acquisition, and simplified reinvestment provisions. The effort intentionally addressed what Taiwan calls its “five scarcity”: land, water, electricity, labor, and the ability to inspire businesses to return. More importantly, the initiative is in the “InvestTaiwan” workplace of the Ministry of Economic Affairs (MOEA), which the head of the workplace described as “a one-stop shop to help brands return smoothly.” 34 Since its inception in 2019, the workplace has managed to reach $33 billion in relocations in terms of investment, which has stimulated Taiwan’s economic growth. The good fortune of the workplace, no doubt, partly driven by U.S. tariffs, but is also due to the ease with which a workplace can serve as a single point of contact for all corporations contemplating leaving China and the willingness of that workplace to proactively paint with companies to address a wide variety of considerations beyond appropriations and subsidies.
Second, in terms of efforts to competitiveness and resilience in high-tech industries, several states have followed “trade policy” plans. China, as said, has its Made in China 2025 strategy and now has a $1.4 trillion virtual infrastructure plan. For its part, Germany has Industry 4.0, the UK has published a trade strategy and a wide diversity of other states are experimenting with similar efforts.
For the United States, therefore, as shown at Intel, the central question will be how Washington can oppose loss of experience and revel in key and, in some express cases, attract foreign corporations to come to the United States and build undeclared wisdom deposits that can also shape the basis of long-term production recovery capacity. These efforts are likely to require a wide variety of policy tools to stimulate production in the United States or inspire others to manufacture in the United States. They may come with subsidies, tax exemptions, investments in education and training, the use of government procurement policies to inspire local production, state-ordered production (e.g. under the Defence Production Act), conscientiously structured industrial agreements that publicitate domestic production. export controls. Array35 In the past, that is, given the ability to attract the U.S. market, similar efforts have helped attract Japanese automakers to the U.S., with corporations like Toyota generating 70% of the cars they sell to Americans in their U.S. Plants By going beyond undeniable tax subsidies and credits, the United States can also build a broader ecosystem that will attract and attract complex industries.
Some of the policies for this effort are discussed below.
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