The United States should take a leaf out of Beijing’s industrial playbook and strategically open up specific sectors to Chinese investment while ensuring that technology transfers occur, US industrial policy and supply chain experts said at an event on Thursday.
The assessment comes as Washington mulls new broad restrictions on Chinese technology, including a proposed prohibition on the sale of cars with connected-vehicle technology linked to China and a ban on imports of Chinese humanoid robots and power inverters.
However, merely shutting out Chinese technology from the US without a clear strategy to boost domestic competitiveness would not guarantee that the US catches up in areas where China now has a clear lead, the experts said at an online panel organised by the Quincy Institute, a Washington think tank that advocates for a less militarised American foreign policy.
Instead, Washington should target areas in which cutting-edge Chinese technological know-how could be welcomed, then applied to help the US catch up, possibly through joint ventures and technology licences.
“China is overly paranoid about the US, and I think the US is overly paranoid about China,” said Jake Werner, director of the East Asia programme at the Quincy Institute. “But China has figured out a way to incorporate American business and technology in its advanced sectors ... What is stopping us from doing basically the same thing is my rhetorical question.”
The question of how the US should treat Chinese technology has been the subject of heated debate in Washington in recent years as China has come to dominate cutting-edge areas such as electric vehicles and batteries.
While US national security hawks have advocated strict bans to address risks associated with Chinese technology, including surveillance and supply chain vulnerabilities, some moderate voices are calling for the US to welcome some Chinese involvement in the industry to lower costs for US consumers, promote US innovation, and bolster US competitiveness.
Susan Helper, former chief economist at the US Department of Commerce during Barack Obama’s second presidency, said on Thursday’s panel that Beijing “brilliantly” opened up the Chinese economy in the past to learn from European and American multinational companies, suggesting the US could do the same.
Still, she warned that an “extreme openness” to Chinese technology would also backfire without adequate protections for US workers and arrangements that maximise technology and process-knowledge spillovers while containing security risks.
Such arrangements could include local supplier requirements and regulatory walls that force Chinese firms to build local capacity in the US in sensitive areas such as data storage, preventing them from relying only on suppliers at home, said Jonas Nahm, an associate professor at the Johns Hopkins School of Advanced International Studies.
“All of those things can be done, and what’s interesting to me is when you go to China, and you see how they did it, a lot of it is exactly that,” he said.
A key uncertainty, however, is whether Beijing would allow it to happen, even if Washington moves towards such a strategy. In recent years, Chinese authorities have increasingly erected barriers on outflows of Chinese technology in strategic sectors, such as the recent intervention in Meta Platforms’ acquisition of Chinese-founded AI start-up Manus.
New regulations coming into effect next month also codify exit bans on Chinese citizens suspected of violating export controls and technology transfer rules.
“If the relationship continues to be so acrimonious as it has been, I think that window for learning might be sort of closing at some point,” said Nahm.
“And it’s also really hard in Washington today to have a conversation about where [national security risks] apply, where it does not apply and, where it does apply, what do we do about it?” -- SOUTH CHINA MORNING POST
