China’s “Made in China 2025” policy to upgrade its industry plays a central role in the ongoing U.S.-China trade tensions. Paul Haenle sat down with Paul Triolo, practice head of Geo-technology at the Eurasia Group, to discuss how the Chinese government initiative impacts and challenges the U.S. and global economies, and how best to formulate policies in response.
Triolo acknowledges the Chinese government’s ambitions to make its economy more competitive by upgrading its manufacturing base and achieving self-sufficiency in key high-tech industries. Yet, he notes concerns that China’s state-backed policies are non-compliant with its WTO obligations and advocate for unfairly acquiring U.S. and Western technology in order to dominate key technology sectors. These policies also pose the risks of fostering domestic overcapacities and distortions in global markets. Triolo recommends U.S. policymakers not attempt to suppress innovation by restricting Chinese investment in U.S. fields like artificial intelligence, where there is extensive collaboration between the U.S. and China. Instead, it is important not to overreact to Made in China 2025, Triolo says, as it is unclear how successful the industrial policy will be.
Conversation
06.26.18