Opinion

How the US’ exceptional industrial policy is killing globalisation

Unlike conventional industrial policy, Washington’s version is not only focused on domestic industry and science, but also on suppressing competition

Notably, Washington’s Inflation Reduction Act and Chips and Science Act have raised hackles even among US allies

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US President Joe Biden speaks of rebuilding American manufacturing through the Chips and Science Act at the groundbreaking for a new Intel semiconductor manufacturing facility in New Albany, Ohio, on September 9, 2022. Photo: Reuters

Zhou Xiaoming is a senior fellow at the Centre for China and Globalisation in Beijing and a former deputy representative of China’s Permanent Mission to the United Nations Office in Geneva.

Published: 4:30pm, 26 Nov 2023

Time can make a huge difference. This is certainly true of the US’ stance on industrial policy. Just a few years ago, “industrial policy” was a derogatory term that Washington reserved almost exclusively for China as if it had forgotten that it was a pioneer of the practice.

In the 1980s, the Reagan administration set annual ceilings for Japan’s car exports to the US, and forced Tokyo to accept rules that limited Japanese chip exports while extracting improved US access to the Japanese market.

With the US emerging victorious from the Cold War, Washington saw a reduced need for industrial policy. Meanwhile, it frowned on the countries that adopted the practice, blasting China’s industrial policy as “non-market”.

Some 30 years on, industrial policy is back in fashion in the US. While continuing to censure China, Washington passed the Inflation Reduction Act and the Chips and Science Act in 2022.