America’s Postpandemic Pivot
If the American people have learned anything from the COVID-19 tribulations, it’s that China holds too many cards, China can’t be trusted and China plays to win at all costs. And the United States must prudently pivot for life after pandemic. We must be smart about it.
Witness America’s dangerous reliance on China for industrial and consumer necessities, from raw materials such as rare-earth minerals to manufactured goods of all sorts.
Official coronavirus case, death and recovery figures from China have raised the eyebrows of epidemiologists and other experts, including Dr. Anthony Fauci. Numbers from point-of-origin Wuhan and other parts of China remain too low to be credible. A modest Chinese concession, increasing Wuhan death numbers by 50 percent to still fewer than 4,000, and national COVID figures under 100,000 fall well below an American Enterprise Institute estimate closer to 3 million.
China is earning ire over its holding up shipments of desperately needed medical goods. It’s shipping poor quality N95 masks and other COVID-related medical equipment as well as outright fakes. It’s running a propaganda campaign, sending Chinese doctors, medical supplies and PR operatives to selected countries.
China’s shirking its responsibility and lack of accountability have prompted calls for sanctions. And the bloom has fallen off internationalist bodies such as the World Health Organization that foster corruption and cronyism.
Command and Control?
Before the pandemic put Americans in long-term “staycation,” policymakers and strategic innovators debated how best to ensure America’s leadership in cutting-edge technologies. We want to and must lead, technologically and economically, in such areas as 5G wireless and artificial intelligence as a matter of national security.
Some argue for cutting the United States’ economic ties with China cold turkey. This approach could see adoption of aspects of China’s model, including government subsidies for “national champions.” Such a top-down, command-and-control industrial system would be a radical departure from the strengths of the U.S. model.
America became the global innovation leader by enabling its citizens to realize their potential, powered by secure and reliable property rights, strong and enforceable intellectual property, a free enterprise economic system and the rule of law. Uncle Sam picking winners and losers could very well backfire while undermining our foundation.
This route risks America ending up the only nation that decouples from China. We’d leave ourselves alone, while our close allies remain economically engaged with China. For example, in 5G, Huawei would win by default and cement its security-risky base stations, antenna towers and equipment throughout the world’s 5G implementers’ infrastructure.
Nor can the United States snap its fingers and shift to domestic manufacturing. Reciprocity in trade and bolstering our industrial base for national and economic security are appropriate goals. But between the utopian globalists and stateless corporate sellouts and the foreign competitor nations with state-run economies and zero hesitation about stealing American intellectual property, China and others have vacuumed up whole industry sectors originally made in the U.S.A. We no longer have the manufacturing capacity, the domestic supply chain or enough skilled workers in these fields to switch to domestic overnight. We do have an imbalanced regulatory regime that artificially raises costs of U.S. production.
Getting the Pivot Right
Others counsel advancing U.S. leadership by bringing along allies and persuadable countries that China holds over the barrel of “Belt and Road” indebtedness. In this approach, economic engagement continues, with Chinese, Indian, South Korean and other foreign companies paying U.S. industrial leaders royalties, licensing fees, etc. Those revenues fund U.S. R&D and buy us time to develop alternative systems and alliances, new domestic manufacturing capacity and new supply chains. For example, the promising alternative to Huawei-controlled 5G of virtualized wireless networks is underway in Japan and among U.S. and other innovators.
Relying on and reinforcing America’s core assets — especially reintegrating strong private property rights in patents and IP — would put an R&D- and IP-based tiger back in our tank. It would be Reaganesque industrial competitiveness for the 21st century. As Conservatives for Property Rights and other conservatives expressed in a letter to the White House, “Our U.S. national security thus depends on U.S. innovators competing with — and beating — China in these critical technologies.”
We’re too far down the road of globalization to be able to make a U-turn on a dime. It will take time to boost domestic industrial production to firm up national and economic security. No doubt the United States has suffered under the kum-ba-yah promises of a “harmonized” regime of the “new world order.” But we mustn’t weaken sectors that already are America’s competitive assets and that provide a base on which to build.
Wisdom dictates that we start this turnaround job from where we are at present. Our conservatives’ letter counseled: “We’re concerned that the risks to our national security of decoupling from China far outweigh any benefit. Thus, we urge the Trump administration to consider the impact on U.S. innovation leadership when imposing restrictions on the ability of U.S. companies to sell non-national security technologies in China. Innovative U.S. businesses depend heavily on the licensing of U.S. patented technology and the sale of American products, technologies and services in the China market to generate revenue that they can spend on R&D, largely here in the United States. Dividing wireless technology into two spheres of influence would damage our national security, both by preventing China from adopting — and paying U.S. innovators for — U.S.-made wireless technology, and by restricting the ability of U.S. innovators to participate in the development of global wireless standards.”
It’s extremely important to be smart about how we unwind the “globaldygook” that’s led to our vulnerability to China and wisely strengthen our domestic economy. This requires the long view. It took years to displace U.S. industrial assets; we should commit to restoring them over time. This prudent approach will win us a revived industrial base, the good jobs they create, enhanced national security, the confidence of our allies and freedom from Chinese leverage over America and the world. And we must remember the hard lessons that put us in an unenviable spot.
Otherwise, we could end up with America shuffled to the side, China with the premier economy and the United States weakened.