1/08/2020

Trump's Surprising Embrace of Industrial Policy to Fight China

"The Trump administration has been asking for deep cuts in science agencies every year through its formal budget requests, but in practice has been bumping up spending on science fairly dramatically. They play act libertarian but spend like they are trying to have the government do something.

This turn isn’t a one-off. There are of course the tariffs, with the goal of moving supply chains out of China. And a few months ago, Congress appropriated $1 billion to help rural telecom providers replace Huawei equipment. Even more interesting is a provision passed last month to have the U.S. government explicitly subsidize exports in areas in which China has staked out a claim to global leadership. This is being done through the Export-Import Bank, which has to set up a “Program on China and Transformational Exports” to neutralize Chinese subsidies by having the government offer competitive American financing subsidies in every hot button industrial area: AI, biotech, 5G, quantum computing, renewable energy and batteries, semiconductors, fintech, and water treatment."