Opinion | US needs a techno-industrial plan to beat China’s factories of the future

After the global financial crisis, practically everyone seemed convinced that China’s economy would surpass America’s by 2030. Today, China faces crises that could spell doom for its economic “miracle”. To get back on track – and strengthen its strategic position – China has lately sought to position advanced industries, rather than real estate, as the economy’s main growth engine.

America’s economic dynamism remains robust, as the rapid recovery from the Covid-19 shock showed. One of the many factors underpinning this dynamism is America’s leadership in artificial intelligence (AI), which is creating economic value across industries and shows promising signs of boosting productivity.

With US technology companies investing heavily in cloud infrastructure, the US innovation ecosystem is set to benefit from enterprise-scale AI capabilities. As 2030 approaches, these developments could accelerate innovation in “deep-tech” sectors like robotics and biotechnology.

For all its strengths, however, the US economy has one glaring deficiency: a lack of production capacity in the advanced industries, such as semiconductors and clean energy, that are crucial to America’s economic competitiveness and national security. Since 1980, the share of the world’s hi-tech goods manufactured in the US has fallen from over 40 per cent to just 18 per cent.

While the US has undergone deindustrialisation, China has emerged as the world’s manufacturing superpower, and moved from dominance in textiles and toys to leadership in advanced technologies, such as networking components, electrical equipment and machine tools. China now accounts for more than half of global electric vehicle (EV) production; up to and including 2026, it will possess more than 80 per cent of the world’s solar-cell manufacturing capacity.