All articles tagged with #industrial policy
The EU faces a daily trade deficit with China of €1 billion, but the impact is concentrated in specific sectors. While protectionist measures are being debated, data suggests Europe remains competitive in high-value industries. Experts argue that focusing on structural reforms and adaptation, rather than just defensive tariffs, is crucial for long-term resilience against Chinese competition.
China’s push for economic self-sufficiency has drastically widened its trade surplus with Europe, creating a 6-to-1 container ratio in Beijing’s favor. This shift is intensifying pressure on European policymakers to address industrial overcapacity and protect domestic industries.
China’s new five-year plan targets large-scale all-solid-state battery use by 2030, while South Korea unveils a massive R&D roadmap to counter Chinese dominance. However, critics argue Korea’s current tax credits fail to support loss-making firms, risking a widening technological gap.
The US cannot match China’s shipbuilding scale, but can restore a 5% global market share through targeted subsidies to secure naval readiness.
A New Yorker piece argues that China, leveraging decades of state-led investment, industrial policy and diplomacy, is racing to own the industries of the future—biotech, AI, robotics, EVs and drones—outpacing the U.S. in key areas like clinical trials, batteries and solar cells, while expanding a data-driven surveillance ecosystem that aids innovation; experts warn the loss of the next tech wave could shift global power toward Beijing.
The US Chamber of Commerce warns governments have a finite window to push back against China’s state-led industrial policies, which deepen dependence on Chinese supply chains and boost Beijing’s global influence. A Rhodium Group report for the chamber highlights China’s shift from low-cost manufacturing to high-tech production (including robotics) and a broader industrial-policy push, signaling a potential reordering of global trade that policymakers must address soon to protect advanced economies’ competitive edge.
With the FCC excluding foreign-made routers and drones from new equipment authorizations, experts say the policy could extend to more consumer electronics (phones, laptops) and amount to a broader industrial policy to reshape US manufacturing. Critics warn it may raise prices, chill innovation, and take years to rebuild domestic production, even as the White House cites national security concerns. The FCC has granted limited exemptions (Netgear, Adtran) and set an 18-month timeline for new router models, plus a 2027 deadline to allow updates on currently approved foreign-made devices.
Germany launches a new Industrial Ramstein framework to reboot Ukraine’s war-damaged industry, pledging €233 million (including an initial €30 million from KfW) to finance modernization and integration into European value chains through grants, loans, and guarantees, extending support beyond rebuilding to creating new production and upgrading facilities in collaboration with European partners.
Europe's upcoming Buy European policy aims to steer public funding and procurement toward EU-made goods in strategic sectors as part of the Commission's One Europe, One Market plan for 2027. While defence is broadly supported to boost strategic autonomy, experts warn the policy risks becoming protectionist, raising costs and dampening innovation if not carefully designed. Deep divisions among 27 member states over strict local-content rules versus flexible, Europe-wide rules underscore potential costs for downstream industries and fragile supply chains. A mid-March proposal is expected with sector-specific thresholds and trusted-partner carve-outs, but many technical details remain unresolved and the policy could invite retaliation from trading partners if not carefully calibrated.
FT Alphaville explains China’s “involution”—fierce domestic price competition backed by local subsidies and procurement rules—that drives prices lower and keeps unprofitable firms afloat, with political incentives to preserve jobs and GDP. The pattern has already hit sectors like chips, EVs, and batteries, and now AI startups are flooding the scene to access government funding. Looking ahead, there are warnings of overcapacity in strategic areas such as humanoid robotics and satellites. The piece questions whether the Chinese state can unwind involution and what the West should do as China continues to export cheap goods and potentially shape the future of AI and robotics.
The piece argues that the nostalgia for reviving U.S. manufacturing through “Make America Great Again” is politically appealing but economically ineffective: manufacturing employs less than 8% of jobs and has not rebounded to pre-COVID output despite large policy spending; tariffs raise input costs since most imports are components used by domestic firms, diminishing competitiveness; the economy has shifted toward services, with manufacturing productivity growth slowing, and only a few strategic sectors merit targeted support rather than broad protectionist policies that harm consumers and fail to deliver durable jobs.
Former Italian PM Mario Draghi argues in a Leuven University speech that the EU must move from a loose confederation to a genuine federation to prevent subordination, division and deindustrialisation as the US and China reshape global order. He promotes a pragmatic federalism where member states opt in but Europe acts cohesively on trade, competition and monetary policy, highlighting the euro as a success and warning that a divided bloc risks losing its values and strategic influence.
The article discusses how the Trump administration has shifted towards a more interventionist form of capitalism by taking equity stakes in key industries, marking a departure from traditional free-market principles and signaling a new era of American state capitalism that could reshape the economy and influence future policies.
Germany, which thrived during the first China Shock due to its specialized manufacturing exports and strategic trade relationships, now faces a potentially catastrophic second China Shock as China rapidly advances in high-tech manufacturing and becomes a direct competitor, threatening Germany's export-led economy and prompting calls for policy reforms and increased domestic demand.
President Trump has used his 'golden share' authority to block U.S. Steel's plans to shut down a plant in Illinois, overriding the company's decision and demonstrating increased government influence over private industry decisions, especially in strategic sectors like steel.