It’s easy to understand the motivations behind “Made in China 2025.” Communist states were practically designed for mercantilism. There are no ideological issues with the government picking winners and losers; for the Chinese, it is the nation as a whole that matters, not any individual company. The Chinese will not feel truly sovereign until they are self-sufficient in tech. Finally, the future, if China is to continue to progress economically, is not in low wage work, for which there are plenty of potential competitors. If the “Chinese dream” is to be realized, tech will have to be a big part of it.
As I noted long ago, Trump has legitimate concerns about “Made in China 2025,” but his chances of persuading the government to give it up are slim and none. The question, then, is how should America respond? What would “Made in America 2025” look like?
It would certainly involve significant restrictions on Chinese purchases of American tech companies. That is already happening. The biggest change would be to increase the amount of money spent on basic research, and to subsidize, as necessary, American tech champions, just as the Chinese do.
The problem with this, of course, is that a program of tech financial support would look exactly like the clean energy subsidies in the Obama stimulus package that drove the Republicans crazy. If you’re going to invest public money in the private sector, you’re going to have to pick winners and losers, and you’re going to have some Solyndras. That’s just the way it is.
The Chinese accept that, but we don’t, which is why it won’t happen. The best you can hope for is an increase in the money spent on basic research, but the GOP’s hostility to government spending on anything but the military is such that even that would be difficult. Our ability to compete with the Chinese, with all of the national security implications that come with it, will continue to depend on the barons of Silicon Valley, not the government, barring a major change of attitude about intervening in the free market.