I don’t know who sold Washington politicians and policymakers on the idea that the best way to bring back jobs from China is for the United States to adopt strongly protectionist policies and try to browbeat Chinese companies. A much better approach is what Sen Marco Rubio (R-FL) calls a “21st-century pro-American industrial policy.”
For the past year, Rubio has been saying that the government must identify the industries most critical to national security and economic growth, and spur investment in them. Among the industries facing intense challenges from China are the semiconductor sector, telecommunications, robotics, advanced aircraft and electric transportation.
Yes, conservatives have often criticized government intervention in the economy. Since the Reagan years, conservatives have advocated that government stay small and out of the way and not engage in picking winners and losers. But times change, and China’s exponential rise is forcing them to rethink that. One way or another, changes will be needed to help U.S. industries compete with a country that has spent years using subsidies and other support to build Chinese companies into the world’s leading exporters of high-tech goods.
Today, the mission needs to be to strengthen US manufacturing. President Trump has proposed tax credits to companies that bring jobs back from China and a ban on federal contracts for companies that outsource to China. Joe Biden has pledged to spend $400 billion during his first term on additional federal purchases of American-made goods, in what he calls the “largest mobilization of public investment in procurement, infrastructure and R&D since World War II.”
When the Senate voted this summer on legislation that would direct billions of dollars to semiconductor manufacturers, nearly every senator supported it. Maintaining domestic production of semiconductor chips is important because chips are at the heart of most high-tech equipment, including weapons systems. The U.S. has lost too much chip manufacturing to other countries that offer big subsidies to attract the factories.
In the past two decades, however, the U.S. has failed to mitigate the negative effects of its heavy reliance on imported minerals and metals. Today, China is a major supplier of some of the most critically important materials, including rare earth elements and battery metals such as lithium and nickel used in the production of EV batteries. As a result, the United States imports more than $100 billion in minerals and metals annually, adding to our nation’s trade deficit and at a cost of thousands of jobs.
Yet, the United States has an abundance of mineral resources. But we also have one of the world’s most complex, time-consuming mine-permitting systems, marked by delays and redundancies. Legislation to streamline the permitting process is pending in Congress.
The benefits of an industrial policy would be far-reaching. Changes would ease the flow of capital into U.S. manufacturing industries and mining. One of the biggest sources of the national debt would shrink. The United States would build its own supply chain for high-tech goods instead of outsourcing them to China. Millions of American jobs would be created.
If that’s not enough to generate political will, what is?
Dr. Robert W. Chase holds B.S., M.S., and Ph.D. degrees in Petroleum and Natural Gas Engineering from Penn State. He served as professor and chair of the Department of Petroleum Engineering and Geology at Marietta College from 1978 to 2015. He worked previously for Halliburton Services, Gulf Research and Development Company, and the Department of Energy and has consulted for numerous companies. You can reach him at firstname.lastname@example.org