America Needs a Strategy Against China’s Manufacturing Dominance
As it attempts to strengthen its industrial capacity against China, the United States must reassess the fundamentals of its economic policies and take a long view of its national interests.
The Trump administration’s pending executive order to bolster U.S. shipbuilding is well past due. While noting China’s unfair trade practices in the maritime and logistics sectors, the executive order also bluntly and accurately attributes our diminished maritime standing to decades of neglect.
Some of the order’s measures—intended to restore our maritime capacity and erode China’s maritime and logistic dominance—have already raised concerns about potentially disrupting global trade and supply chains. That may ultimately be the case. But it is critical that the United States mitigate those concerns and prevent China from continuing to expand its footprint in the many sectors vital to U.S. interests.
How China Overtook the United States
China is the world’s second-largest economy and America’s primary economic competitor. We can cry foul, but we enabled China’s rapid and extraordinary transformation.
Over the years, American policies and policymakers envisioned a different China on the horizon: a more open, freer, and cooperative player on the global stage. American corporations saw China as a lucrative opportunity, advocating for measures that opened Chinese markets and expanded its manufacturing base. They lobbied intensively for their enactment. The lure of more than one billion new customers for American goods, and lower labor costs achieved by moving manufacturing to China, were too good to pass up.
Just as countering China is a bipartisan cause—perhaps the only bipartisan cause—today, “opening China” to American goods and investment was just as bipartisan then. The Clinton administration took significant steps to integrate China into the global trading system by granting it Permanent Normal Trade Relations (PNTR) in 2000. In 2001, President George W. Bush ushered China into the World Trade Organization in 2001—a move designed to open China’s vast market to global competition and stimulate economic reforms. At the time, China was expected to become a wealthy, cooperative member of the global economy and trading community. The huge Chinese market was intoxicating, and no one seemed to anticipate the vast negative consequences for America’s manufacturing base. Indeed, as China was on the move, the United States and the Western world quickly became distracted by two decades of war in the Middle East.
When the “China shock” arrived, its consequences were devastating for Middle America. In cities and towns across the Rust Belt, factories that employed thousands and were the lifeblood of their communities for decades abruptly shuttered. Corporate bosses relocating to China to seize the opportunity to lower labor costs was simply the way it was.
When coast-based politicians and elites flew over those communities, they appeared unchanged. When driving through them, a different picture emerged—one of blighted towns where drugs, despair, and disillusion ran rampant. If industry remained or new companies moved in, they were technologically transformed needing fewer workers or reliant on skills that did not carry over from an earlier time. Rather than changing course, many policymakers doubled down.
America’s myopic energy policies further enriched Beijing. The U.S. energy industry supports an estimated 10 million people and contributes roughly $500 billion to the U.S. economy. Yet China moved quickly to dominate solar energy, where it now produces 80% of the world’s solar panels. China also dominates the market for rare-earth and critical minerals, key to transformational technologies such as solar power and electric cars. Encouraging a seismic shift to green energy without building the necessary infrastructure in the United States could make us entirely dependent on China to fuel the nation’s energy and transformational technology needs.
How to Fight Back
China is renowned for its long view—a view that envisions an expansive digital world. Here, as elsewhere, America is playing catch-up. For years, the federal government has rightly complained about the threat posed by Huawei, the Chinese telecommunications juggernaut and global leader in telecom equipment. Concerns range from facilitating espionage by installing backdoors in its telecommunications equipment to enabling unauthorized surveillance that could advantage China. It is clear that stronger American companies are needed to take on Huawei. Yet when Hewlett Packard Enterprise (HPE) and Juniper announced a merger to take on this Chinese corporate and telecom behemoth, the Department of Justice filed suit to block the merger on antitrust grounds. Preventing this merger from advancing does nothing to help American consumers. It only helps China strengthen Huawei’s monopolistic potential.
By embracing policies that opened U.S. markets to Chinese investments—from integrating China into the global trading system to awarding contracts like New Jersey’s EZ-PASS project to a Chinese firm—the United States has spurred and enriched Beijing’s rapid industrial and technological expansion. While groups like CFIUS rightly target Chinese companies over security threats, successive administrations have stifled domestic strategies that could enhance American competitiveness and security. This must stop. We must learn from our mistakes, be clear eyed, and play offense. We are in a hard-fought competition with China — economically, diplomatically, and strategically.
Crucially, this struggle cannot be a partisan fight. We must reassess the fundamentals of our economic policies and take a long view of American national interests—restoring our foundation as a maritime nation, securing our energy independence, and leading the way in applying transformational technology. All of these achievements will reinvigorate and restore manufacturing jobs. Above all, we must reignite the competitive drive and edge that long defined America.
In the near term, strengthening the U.S. shipbuilding industry is imperative. It will protect America’s maritime infrastructure and ensure that the United States controls its maritime interests and critical supply chains. But this is only one step of many. It must serve as a blueprint for broader economic action and realignment that prioritizes both our national security and American industry and workers.
Gary Roughead is a former United States Navy officer who served as the 29th Chief of Naval Operations from 2007 to 2011. He previously served as Commander of the United States Fleet Forces Command from May 17 to September 29, 2007.
Image: Shutterstock.