Time for the West to Embrace Chinese Industrial Policy, Not Eliminate it

Yves here. We’ve pointed out that the US does have an industrial policy, even if it comes out by default through which groups manage to extract the most subsidies. Favored sectors include housing, the defense-surveillance complex, financial services, higher education, oil and gas, and niche interests like sugar. So the umbrage about China (and Japan and the Asian tigers) being deliberate about it and getting better results is perverse.

By Marshall Auerback, a market analyst and commentator. Originally published at Triple Crisis

Robert Atkinson of the Information Technology and Innovation Foundation has just written a very compelling analysis of China’s national industrial policy, especially in relation to the exponential growth of its telecommunications industry. Some of the key findings of the paper, “How China’s Mercantilist Policies Have Undermined Global Innovation in the Telecom Equipment Industry” are as follows:

Without unfair, mercantilist Chinese government policies and programs for its telecom giants, China would lack a globally competitive telecom equipment industry. Neither Huawei, nor ZTE, would have more than minor market shares, even in China. Chinese market-share gains have come at the expense of innovative telecom equipment providers in other countries. By artificially taking market share from more innovative companies, the latter have had less revenue to invest in cutting-edge R&D. Beijing’s policies dramatically limit foreign access to China’s huge telecom markets, providing them with a guaranteed source of revenue to attack foreign competitors.

The analysis is characterized by an implicit bias against Chinese mercantilism, a bias that many champions of free trade naturally share. While reflecting those preferences to a

Keep reading this article on Naked Capitalism (Yves Smith) - Blog.

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