America Must Focus on Domestic Industrial Policy to Compete with China's Technological Dominance
Source: https://www.nytimes.com/by/steven-rattner. "Opinion | I Just Returned From China. We Are Not Winning. - The New York Times." February 10, 2026. www.nytimes.com
The Gist
The author argues that China is beating America in key technologies like AI and electric cars because China's government actively supports these industries, while America relies on failed strategies like tariffs. Instead, America needs to use government resources to boost its own strategic industries and fix regulatory problems that hold back development.
Conclusion
The United States can only compete with China's growing technological and manufacturing dominance by getting its own economic house in order through improved industrial policy, rather than relying on tariffs or trade negotiations
Premises
- China has achieved stunning progress in AI, electric vehicles, robotics, and pharmaceutical development, often surpassing American capabilities
- China's state-directed capitalism model allows it to rapidly mobilize resources and prioritize strategic industries when the government identifies them as national priorities
- Trump's tariffs have failed to meaningfully impact China's export dominance, as evidenced by China's record $1.2 trillion trade surplus
- China has structural advantages including abundant electrical power generation capacity, lower energy costs for data centers, and highly motivated human capital
- The Trump administration's cuts to science funding and incoherent policies are setting America back in critical areas like basic research
- America has the capability to develop strategic industries through focused government investment, as demonstrated by the CHIPS and Science Act's semiconductor manufacturing initiatives
- Current American regulatory and permitting processes create unnecessary barriers to developing critical capabilities like mineral extraction
Assumptions
- State-directed capitalism can be effectively adapted to democratic governance systems
- Government can successfully identify and support strategically important industries without excessive market distortion
- China's current technological momentum will continue without significant internal constraints
- Traditional trade policy tools (tariffs, negotiations) are insufficient against China's economic model
- American technological and industrial capabilities can be revitalized through policy changes