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Rethinking Capitalism: Biden Making Real Change in U.S./China Tech-Trade Policy

Telling government employees they can’t watch TikTok on government computers is tiny potatoes compared to the actions President Joe Biden is taking to protect America from Chinese tech surveillance and promote America’s own high-tech industries:

The new strategy, which the Biden administration internally calls its “protect agenda,” is being rolled out this fall and winter in a series of executive actions. In October, the Commerce Department issued new rules aimed at cutting off Chinese firms’ ability to manufacture advanced computer chips. They will soon be followed by an executive order creating new federal authority to regulate U.S. investments in China — the first time the federal government will exert such power over American industry – and an executive order to limit the ability of Chinese apps like TikTok to collect data from Americans.

…Those initiatives come on the heels of Biden’s “promote” agenda — using the government to promote American competitiveness. That involved the approval of hundreds of billions of dollars of subsidies for domestic manufacturing in the CHIPS for America Act and Inflation Reduction Act last summer, focused on breaking U.S. reliance on China, and new rules against U.S. companies working with Chinese chipmakers.

Taken together, the “protect” and “promote” agendas represent a fundamental rethinking in the American government’s approach to China’s technological advancement and, ultimately, its economic development. While American policymakers were previously content to manage China’s technological growth and make sure it stayed a few generations behind the U.S., security officials now seek to bring Beijing’s development – particularly in chips and computing, but soon in other sectors — closer to a standstill [Gavin Bade, “‘A Sea Change’: Biden Reverse Decades of Chinese Trade Policy,” Politico, 2022.12.26].

Rethinking requires thinking, and thinking is largely beyond the capacity of South Dakota’s Governor, whose agenda consists mostly of copying other GOP governors, barking for the national conservative media, and doing whatever else Corey Lewandowski tells her will arouse her base.

Biden’s serious rethinking of tech-trade policy further escapes South Dakota’s social-media-stunt administration because it involves rejecting the idea that capitalism can solve all problems:

Since the end of the Cold War, the U.S. had largely treated development — whether technological or economic — largely as a good in itself. As poor nations absorbed investment from the industrialized world, the argument went, they would “move up the value chain,” developing more sophisticated industries. That would boost incomes, build middle-class citizens, and ultimately lead to democratic reforms and peace between trading partners.

Those assumptions meant that the U.S. was content to let the development of many technologies — even some critical to national security, like semiconductors — move to other nations. If most high-end computer chips ended up being manufactured elsewhere, that was acceptable, or even desirable. Such was the logic of comparative advantage and the capitalist peace theory.

But China’s slide back to authoritarianism threw a wrench into that narrative [Bade, 2022.12.26].

Capitalism doesn’t guarantee an end to conflict; it can become just another tool of conflict and conquest (hey, aren’t conflict and conquest built into the DNA of capitalism?). The Biden Administration’s reversal of U.S. tech-trade policy represents a serious departure from the lazy hope that the Invisible Hand would win battles for global power for us.


  1. larry kurtz 2022-12-28 07:59

    South Dakota’s current Republican governor wants to restrict land ownership by “countries that hate us.” Fact is, of the 195 countries on the planet most them probably hate us but many have parts of the trillions stashed in the state’s banks and trusts anyway.

    Kristi Noem’s target is China even after her predecessors sold green cards to Chinese investors through the EB-5 program and the cash funneled into some 90 dairies, a cheese factory, a slaughterhouse and even into the Deadwood Mountain Grand resort. They’re all struggling to find help right now because the crappy pay, the worse weather and the governor’s lackadaisical attitude about pandemic protocols threatening human life. Recall she called Georgia’s two Democratic US Senators, Communists from the state that controls much of the means of production.

    Probing the undercurrent that ties the unsolved death of South Dakota’s Richard Benda in 2013 with his EB-5 past remains a mystery for the political junkies who follow Joop Bollen’s role in the scandal. The late Republican former Governors Frank Farrar and Bill Janklow built the dynasty trust industry.

    China hates South Dakota because the state screwed Chinese job creators out of at least $100 million. Republican former Governor now US Senator Mike Rounds began courting Chinese money in 2004 but escaped a thorough probe of his part in the racket or in Rich Benda’s death.

    Probably not coincidental to Mrs. Noem’s political grandstanding is the flight of talent from the state and calls by its entire congressional delegation to ease immigration rules.

  2. John 2022-12-28 09:26

    China is a paper tiger, albeit a dangerous paper tiger. China’s demographics are the worst in the world. They over-counted their population by hundreds of millions. China has no response to the Omicron Covid variant for their vaccine does not work. China’s economy is imploding, led by their real estate sector. China lacks a blue water navy; rather its navy is coastal. Two US/western/Indian naval destroyers could cut off China’s oil supply which would result in a) shutting down China’s industry, and b) mass starvation – both within 6 months.
    Dangerous paper tigers can and have lashed out when they are threatened via real or imagined threats.
    Biden’s actions, in the long run, are protecting US companies and interests whom foolishly fled the US over the past 50 years. Biden’s actions are facilitating the largest growth of US industrialization.

  3. Jake 2022-12-28 10:44

    Yep, lower gasoline prices are another great example of the Biden admin’s incompetence……

  4. Donald Pay 2022-12-28 12:15

    John provides an interesting list of reasons why Biden’s policies might not be the best stategy. China has never wanted to be the world hegemon. It has preferred to be a regional power, or, at most, to be one of several major world powers in fifty to a hundred years. China recognizes where it has shortcomings. It made a huge mistake in not accepting mRNA covid vaccines, and it will be paying for that mistake for two to six months of covid outbreaks. That means supply chain issues will affect the rest of the world. The US is wise to de-couple a bit from China, but if it goes to far it likely will backfire. China is building a navy that will compete in the East China and South China Seas, which has a lot of implications for our allies in the Pacific, but it will not threaten US world domination of the sea. So, let’s assume China feels the US policies go too far, which I think Biden’s do. They will not be content to be a paper tiger, they will feel they need to rival the US. Then it’s an arms race. We will lose–maybe not in fifty years, but in a hundred years we will expend ourselves just like the Soviet Union did.,

  5. Mark Anderson 2022-12-28 16:47

    I’m not sure Donald, China moved so rapidly because it allowed some freedoms. XI Jinping has taken all that away. He’s just another Autocratic like Putin now, but even stronger. I believe they will be stuck for awhile. At some point both the Chinese and Russian people who have been abroad and tasted freedom, real or imagined, will leave their counties.

  6. Arlo Blundt 2022-12-28 19:16

    It is correct to say that China has not historically been an expansionist power. However, Uncle Xi (as he’s called by the Chinese people) has been making noises about expanding his regional reach. He built an airbase in the South China sea, has been making new noises about retaking Taiwan in his lifetime, prosecutes Muslims in the western provinces, has expanded “re-education camps”, actually concentration camps for dissidents, and his motives are distrusted by his neighbors, including Viet Nam who want nothing to do with China.We “opened up” trade with China on the condition that China take an orderly road to reform and not use newly earned capital to expand militarily. Now he’s building aircraft carriers and nuclear submarines.
    Time to pull the plug until they return to orderly reform.

  7. Donald Pay 2022-12-28 19:27

    Mark, Xi has been popular because he confronted corruption. He also wants policies more like Bernie Sanders—share the wealth, rather than supporting the rich. Very popular. His covid polices were popular until recently. My kid got covid, as has about nearly half of Beijing in December. The Chinese vaccination and the heavy handed approach to positive cases was not effective against Omicron. They saw the rising cases and the protest and decided to move more quickly to the policy of opening they had planned for the spring and summer.

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