Joe Biden’s China strategy is not working
Joe Biden unveiled his latest weapon in America’s economic war with China. New rules will police investments made abroad by the private sector, and those into the most sensitive technologies in China will be banned. The use of such curbs by the world’s strongest champion of capitalism is the latest sign of the profound shift in America’s economic policy as it contends with the rise of an increasingly assertive and threatening rival.
For decades America cheered on the globalisation of trade and capital, which brought vast benefits in terms of enhanced efficiency and lower costs for consumers. But in a dangerous world, efficiency alone is no longer enough. In America, and across the West, China’s rise is bringing other aims to the fore.
Understandably, officials want to protect national security, by limiting China’s access to cutting-edge technology that could enhance its military might, and to build alternative supply chains in areas where China maintains a vice-like grip. The result is a sprawl of tariffs, investment reviews and export controls aimed at China, first under the previous president, Donald Trump, and now Mr Biden. Janet Yellen, America’s treasury secretary, has travelled to Delhi and Hanoi to tout the benefits of “friendshoring", signalling to company bosses that shifting away from China would be wise.
Although such “de-risking" measures would lower efficiency, the thinking goes, sticking to sensitive products would limit the damage. And the extra cost would be worth it, because America would be safer. The consequences of this new thinking are now becoming clear.
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