Old ideas are like old clothes-wait long enough and they will become popular again. Thirty years ago, “industrial policy” was almost as fashionable as a bowler hat.But now, from Washington to Beijing, from New Delhi to London, governments around the world are rediscovering the joy of subsidies and praising Economic independence And “strategic” investments.
The significance of this development goes far beyond economics. International support for free markets and globalization in the 1990s went hand in hand with the decline in geopolitical tensions. The Cold War is over, and governments are vying to attract investment instead of dominating the world.
Now, the revival of geopolitical competition is driving new ways for the state to intervene in the economy. As the trust between China and the United States has declined, each other has begun to see each other’s dependence on any important commodity, whether it is semiconductors or semiconductors. Rare earth minerals -As a dangerous loophole. The safety of domestic production and supply is the new slogan.
As the economic and industrial struggle intensified, the United States has banned Exported key technologies to China and was forced to repatriate supply chain.It is also moving towards direct development State funding Semiconductor manufacturing. As far as China is concerned, it has adopted “Double loop” An economic policy that emphasizes domestic demand and the realization of “major breakthroughs in key technologies”.The Xi Jinping government is also tightening policies State control In the field of technology.
The logic of the arms race is being established, because both sides have proved that their move towards protectionism is a response to the actions of the other side.In Washington, U.S.-China Strategic competition law, It is currently accusing China of pursuing a “state-led mercantilist economic policy” and industrial espionage in Congress. In 2015, Beijing announced “Made in China 2025Industrial strategy is usually considered a turning point. In contrast, in Beijing, the declining United States opposes globalization in order to prevent the rise of China??.President Xi said that the strong opposition to globalization in the West means that China must become stronger Self-reliance.
The new focus on industrial strategy is not limited to the United States and China.In India, the Narendra Modi government is promoting a Atmanirbhar Barat (Self-reliant India), encourage domestic production Key commodity.The EU published an article on Industrial strategy Last year, this was seen as part of achieving strategic autonomy and reducing dependence on the outside world. Ursula von der Leyen, President of the European Commission call Let Europe have “mastery and ownership of key technologies.”
Even a British Conservative government got rid of the laissez-faire economics advocated by the former prime minister, Margaret Thatcher, and sought to protect strategic industries.The government is reviewing whether Blockage Sold British chip maker Arm to American company Nvidia. The British government also bought a controlling stake in a failed satellite business. OneWeb.
Covid-19 has strengthened the way in which industrial policies are formulated. Domestically, vaccine production is increasingly regarded as an important national interest. Even if they condemn “Vaccine nationalismElsewhere, many governments have taken action to restrict exports and establish domestic suppliers. The lessons learned about national resilience from the pandemic can now be applied to other areas from energy to food supply.
In the United States, the national security argument for industrial policy is in line with the broader resistance to globalization and free trade. Frankly speaking, Joe Biden’s remarks are protectionist.President Declare Congress: “All investments in the U.S. employment program will follow one principle: buy Americans.”
in a article Last year, Biden’s national security adviser, Jake Sullivan, urged security agencies to “surpass the neoliberal economic philosophy that has prevailed over the past 40 years” and accept that “industrial policy is deeply owned by the United States”. He believes that “if Washington continues to rely so heavily on private sector research and development, the United States will continue to lose its position in China’s key technologies such as 5G and solar panels.”
Many of these arguments sound like common sense to voters. Protectionism and state intervention often do this. However, free market economists were shocked by this. Swaminathan Aiyar, a famous Indian commentator, sigh The return of past failures: “Nehru and Indira Gandhi tried self-sufficiency in the 1960s and 1970s. This is a terrible and terrible failure.” President Adam Posen Peterson College International Economics in Washington blame “The self-defeating economic recession in the United States” argues that policies aimed at supporting certain industries or regions usually end in costly failures.
As tensions between China, the United States and other major powers intensify, it is understandable that these countries will study the security risks of key technologies. However, politicians claim that industrial policies will also produce higher-paying jobs, and a more productive economy should be deeply doubted. Sometimes, ideas become obsolete for some reason.