We Are in an Industrial War. China Is Starting to Win.

Credit goes to Donald Trump for alerting the world to the dangers posed by China, particularly its efforts to overtake the United States as the world’s most advanced economy. But neither his first administration nor President Biden’s has done enough to combat China’s incursions, which have cost America millions of manufacturing jobs and the closure of tens of thousands of factories, according to data compiled by the Information Technology and Innovation Foundation, the nonpartisan technology policy think tank I lead. That’s because policymakers on both sides of the aisle are only slowly waking up to the reality: We are already in the middle of an industrial war.

Lawmakers need to understand that for China, a desire to make money — the fundamental driver of trade and of capitalism — is secondary. Its primary goal is to damage America’s economy and pave the way for China to become the world’s pre-eminent power. Countries like China are power traders, called such because their policies and programs are designed not only to advance their power but also to degrade their adversaries’, even at a financial cost to their own economies.

China’s rate of progress in production and innovation across a wide range of industries is striking. If our policymakers don’t work fast and smart enough, they will put at risk America’s workers, economy and place in the world.

History has seen other campaigns like this. From the late 1800s to World War II, Germany illustrated how trade could be weaponized into “an instrument of power, of pressure and even of conquest,” wrote the development economist Albert O. Hirschman.

Like China, Germany mostly focused on importing goods needed for its war machine, redirected trade to friendly or subject nations and sought to control oceanic trade routes, all in an effort to limit development of its adversaries. Like China, the German government kept its currency undervalued (making its goods relatively cheaper for consumers in other countries), leveraged the use of tariffs and subsidized its exports to bolster its position in industry goods such as steel, chemicals and machinery.

Like China, German companies sold goods for less than the cost of manufacture to wrest market share from overseas rivals. Like China, Germans engaged in systemic industrial espionage. Engineers were sent overseas with the explicit order to return with trade secrets for German companies.