"The U.S. has been the world's technological leader since the end of the 19th century. This has made the country prosperous and secure. When the U.S. leads the way in a new technology -- as it did with the internet -- Americans benefit economically. But U.S. technological leadership is under assault, and the stakes couldn't be higher.
In 2015, the Chinese Communist Party launched Made in China 2025 -- an aggressive and highly orchestrated industrial campaign to supplant the U.S. as the world's pre-eminent economic power. The goal is to dominate the development and production of next-generation technologies, including electric and autonomous vehicles, information-technology and telecom equipment, advanced robotics and artificial intelligence. Using massive subsidies and an array of predatory and unlawful tactics -- including industrial espionage, dumping, tariffs and quotas -- Beijing has muscled aside American companies in critical industries. The failure of the Biden administration's piecemeal approach in countering China's ambitions has been alarming.
Fortunately, there is a way to combat Beijing's economic thuggery that both parties ought to support. The Inflation Reduction Act failed to stop inflation, but some of its provisions constitute a forceful response to the Made in China 2025 threat. Before the law passed, electric vehicles made in China or containing Chinese batteries were eligible for U.S. tax credits. Now those vehicles must be made in North America and with high levels of North American content to receive a credit.
Soon vehicles with any Chinese battery or critical mineral content will be disqualified entirely.
This will push auto makers and suppliers, including those in allied countries, to produce in North America instead of Asia or Europe and remove China's stranglehold over the battery supply chain.
Most of the developed world is moving inexorably toward electric vehicles, and this will accelerate with increases in scale. The Chinese Communist Party saw this coming years ago and has spent billions to build and control supply chains and mineral processing facilities that are critical to electric-vehicle batteries. If the U.S. auto industry -- which includes some of America's largest employers -- is going to remain relevant, it must find ways not only to compete but to lead in electric vehicles, and do so without relying on China.
Fortunately, the U.S. still has a few horses in this race with a shot at winning -- but only if they are given a level playing field. Otherwise, state-sponsored Chinese auto makers and battery companies will effectively dominate the industry for decades.
Recent semiconductor shortages have made clear that a transition to dependable and localized supply chains is essential for U.S. national and economic security. Creating an incentive to produce chips closer to home, with U.S. workers and reliable allies, is no longer merely desirable, it is an economic and national-security imperative. As China continues to flout international rules, shamelessly pilfer U.S. intellectual property, and move closer to "reunifying" Taiwan, the risk associated with U.S. dependency on China only increases.
The U.S. needs to make its own batteries using a domestic supply of critical minerals. The Inflation Reduction Act will ensure that more of this happens, and faster. Republicans can help usher in this new reality by exerting pressure on the Biden administration to streamline and accelerate the permitting process for mines and battery plants, and to eliminate any loopholes that would deliver tax credits for Chinese batteries. These steps can be taken swiftly through executive action.
Implementing these provisions is a critical first step, but more will need to be done to shore up American competitiveness globally. As China pushes ahead on autonomous-vehicle development and production, U.S. companies continue to be hamstrung by antiquated rules that prevent large-scale deployment -- even when the safety and consumer benefits of autonomous vehicles are clear. At the same time, enormous concentration of power in the hands of a few U.S. tech companies threatens to stifle the innovation and free exchange of ideas on which the American economy was built and on which it must still rely to compete with China over the long term. Congress must act on both fronts.
The Inflation Reduction Act is far from what Democrats hoped (and Republicans worried) it would be, but its clean-vehicle and domestic-production provisions offer a clear path toward securing priorities that should be important to both sides of the aisle. Given a level playing field at home and abroad, I'm confident that U.S. companies, and the American workers who drive their success, will thrive in these next-generation industries. Hopefully our political parties can stop bickering long enough to take a decisive step.
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Mr. Barr is a distinguished fellow at the Hudson Institute. He served as U.S. attorney general, 1991-93 and 2019-20." [1]
1. America Can't Depend on China for Its Cars
Barr, William P.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 22 Nov 2022: A.17.
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