Introduction
This yr marks the 50th anniversary of the opening of relations between China and the USA. For many of this era, the USA was dedicated to the concept financial engagement with China would serve our mutual pursuits: first, as a counterweight to the Soviet Union, and later as a gateway to a deeper political and financial partnership. Engagement additionally offered U.S. corporations with larger entry to China’s market and helped open China’s financial system. And a few even thought that over time China would take its place alongside the U.S. and different superior economies to turn out to be a pillar of the post-war liberal worldwide order.
However now it’s clear that China took a unique path—and with that has come profound impacts on our bilateral relationship and on China’s habits on the worldwide stage.
Over the previous decade, China’s leaders have made clear that they don’t plan to pursue political and financial reform and are as an alternative pursuing another imaginative and prescient of their nation’s future. They’re dedicated to rising the function of the state in society and the economic system, constraining the free movement of capital and data, and decoupling economically in quite a few areas, together with many expertise sectors of the long run. They’ve firewalled their information economic system from the remainder of the world. And they’re accelerating their efforts to fuse their financial and expertise insurance policies with their army ambitions.
As China’s economic system has grown in measurement and affect, so too has its dedication to utilizing non-market commerce and funding practices in methods which can be forcing us to defend our companies and employees – and people of our allies and companions. China’s reprioritization away from financial progress towards nationwide safety and its assertive army habits implies that now we have to rethink how we defend our nationwide safety pursuits whereas additionally selling our pursuits in commerce and funding.
Within the face of this dramatically remodeled strategic surroundings, our financial priorities are clear: guaranteeing that the U.S. builds the expertise, applied sciences, and manufacturing capabilities essential to guide the worldwide economic system within the 21st century—to be on the forefront of worldwide innovation in an period of unprecedented technological change and competitors; to offer our workforce with the training and coaching essential to compete for the roles of the long run; to safeguard our nationwide safety and democratic values; and develop in ways in which mirror our values of sustainable and inclusive progress, in addition to openness, transparency, and the rule of legislation.
Our technique to comprehend these priorities has 4 elements—
- First, we’re making transformational investments in American innovation.
- Second, we’re bolstering our home capabilities and creating new ones to stop China from undermining our nationwide safety and democratic values.
- Third, we’re partnering with our allies in new methods to advance our shared values and form the strategic surroundings during which China operates.
- And fourth, we’re advocating for U.S. commerce and funding and the advantages that include it, in addition to working along with China to handle transnational points, akin to local weather change and international macroeconomic stability.
However U.S. authorities insurance policies are solely a part of the reply. We want the non-public sector, together with enterprise, labor, and universities, to work with us to make sure America’s long-term prosperity and safety. We’re pushing on all fronts, abruptly. And we have to do all of it collectively.
Our competitors with China is international, however our financial technique begins at residence. Our financial competitiveness and nationwide safety rely on a daring home funding agenda in strategic and important sectors.
In simply the primary twenty months of the administration, we labored with Congress to enact the Bipartisan Infrastructure Act, the CHIPS and Science Act, and the Inflation Discount Act. Taken collectively, it represents over $1 trillion of funding in America. A once-in-a-generation dedication to innovation, expertise, manufacturing, workforce coaching, and the infrastructure, together with broadband, we have to guarantee our future competitiveness and nationwide safety. It’s what President Biden has termed a “trendy industrial technique” – an strategy rooted deeply in America’s historical past—from Alexander Hamilton’s Report on Producers to President Lincoln’s intercontinental railroad—however calibrated to the brand new, forward-looking challenges and alternatives of the 21st century.
With these transformational investments, we’re additionally reimagining our nationwide innovation ecosystem effectively past Silicon Valley and Silicon Alley to create new expertise innovation and manufacturing hubs all through the nation. These hubs will reap the benefits of our nation’s range, foster new collaborations amongst companies, universities, labor, and native communities, and place the USA to guide within the Twenty first-century international economic system.
In R&D, we’re working throughout the federal government and with main college and trade specialists to establish and spend money on core crucial and rising fields of expertise the place we wish to attain international management, akin to superior computing, biotechnologies and biomanufacturing, and clear power applied sciences.
We’re additionally revitalizing U.S. home manufacturing, notably superior manufacturing. Over the previous many years, communities throughout the nation have seen manufacturing shut down, companies shutter, and the native engines of innovation grind to a halt, as we exported jobs and manufacturing capability to China and the remainder of Asia and lowered funding within the workforce improvement and infrastructure essential to take care of our long-term competitiveness.
I felt the results of this shift firsthand. My father labored his entire profession within the Bulova Watch Manufacturing facility in Windfall. However after 28 years, his job moved to China as the corporate chased low cost labor. And similar to all his mates, my father was pressured into early retirement. What occurred to my father is hardly distinctive. It occurred to tens of millions of Individuals over the past 40 years.
Whereas we watched China turn out to be a world chief in manufacturing and reap the huge advantages of manufacturing-driven innovation, the U.S. economic system turned LESS aggressive and overly depending on China for an rising variety of crucial applied sciences and items. It’s value noting, by the best way, that China achieved its success via large state help of its industries. COVID opened our eyes to the long-term threat for each the non-public sector and the American individuals of this over-dependence on China and the necessity to rebuild home manufacturing and innovation.
Semiconductors are ground-zero on this technological competitors and central to our new funding technique. They drive innovation in almost each rising expertise and help crucial nationwide safety functions. The U.S. invented the semiconductor trade and as soon as led the world in producing essentially the most superior chips. At the moment, we now not manufacture the world’s most superior semiconductors and produce solely 10 p.c of worldwide chip capability. In the meantime, since 2020, almost 75 p.c of the brand new international capability for sure mature chips has been added in China.
The CHIPS and Science Act marks the start of a brand new chapter in U.S. innovation the place we reverse that decline and be certain that the USA retains its management within the applied sciences and industries of the 21st century. Within the coming years, the Commerce Division will make investments $52 billion in home semiconductor manufacturing, together with workforce coaching and R&D, to create a vibrant home trade.
However this public funding is simply a place to begin. It’s designed to spur the enterprise group to crowd in non-public capital and be our accomplice in making the sorts of investments that generate long-term returns for enterprise and advance American competitiveness. Our aim is to put a basis for American enterprise to do what American enterprise does finest – innovate, scale, and compete.
By means of R&D and manufacturing incentives, we’re facilitating new public-private partnerships to allow home manufacturing of essentially the most superior chips and develop the manufacturing of mature chips important to nationwide and financial safety. And we wish to labor and academic establishments to offer the workforce coaching and apprenticeship packages essential to construct and function new manufacturing services.
Now we have adopted an analogous strategy to public funding within the Inflation Discount Act—the IRA. We’re investing $369 billion, which is the most important federal funding ever made to transition the USA to a clear power future and fight the local weather disaster. By one estimate, that $369 billion will catalyze one other $1.7 trillion in private and non-private funding over the subsequent ten years.
The administration additionally just lately launched a Nationwide Biotechnology and Biomanufacturing Initiative to make sure that what occurred to the USA in semiconductors and telecommunications doesn’t occur in biotech—guaranteeing we translate our management in biotech R&D into management in biotech manufacturing and jobs.
I’m proud to say that we’re already seeing our technique repay. Firms akin to Micron Expertise and Intel have introduced important new investments in semiconductor manufacturing in Syracuse and Columbus. And they’re partnering with native universities and group faculties to develop the programs and coaching packages essential to help tens of hundreds of latest, well-paying manufacturing jobs. Already now we have added greater than 700,000 manufacturing jobs to the U.S. economic system—essentially the most in nearly three many years.
Going ahead, we aren’t solely going to invent the applied sciences of the long run in America however we’re going to manufacture them right here too.
We’re additionally investing in America’s large expertise pipeline. The US is blessed with universities that persistently produce world-class scientists, innovators, and entrepreneurs. Right here at MIT, your graduates and professors have contributed to pathbreaking scientific and technological developments for greater than 150 years.
However we would like—and want—extra Individuals to be a part of this thrilling innovation ecosystem. We’re rising the quantity of R&D funding we make out there to universities OUTSIDE our main analysis facilities to make sure that we entry the broadest doable vary of expertise. We’re additionally making important investments in STEM training for underrepresented college students, akin to individuals of shade, ladies, and low-income youth. And we’re constructing new onramps to high-skilled, well-paying manufacturing jobs – a lot of which don’t require a school diploma.
We should additionally proceed to draw essentially the most proficient individuals from all over the world. Our historical past of renewal and reinvention has been powered by immigrants. And let me be clear: there isn’t a room in our path to competitiveness for racism or xenophobia. Chinese language Individuals have been – and can proceed to be – an important a part of this American story of renewal. Proper now, there are roughly 300, 000 college students from China learning in the USA. We are going to proceed to welcome Chinese language college students and immigrants, and we received’t hesitate to face as much as racism towards individuals of Chinese language heritage.
Attracting and retaining the world’s finest STEM expertise is a bonus that’s America’s to lose. And we aren’t going to let that occur. Early this yr, we introduced a sequence of measures to streamline the immigration course of and open new pathways for worldwide STEM college students and researchers. However there may be a lot extra to do. We’re able to work with trade and Congress on a bipartisan foundation to capitalize on what is actually America’s superpower.
Our different nice aggressive benefit is our range. Range fuels innovation. However to unleash all of our abilities, we should give all Individuals the chance to take part within the economic system of the 21st century. With help from the Bipartisan Infrastructure Regulation, the Division of Commerce is connecting tens of tens of millions of Individuals to inexpensive, high-speed web. We could have an economic system the place Individuals can take part from anyplace and compete all over the place.
Our transformative home funding agenda is on the coronary heart of our long-term financial competitiveness. However outcompeting China to form and lead the worldwide economic system of the 21st century additionally calls for that we transfer nimbly and shortly to harden our defenses towards an array of rising and ongoing practices that tilt the enjoying discipline towards American employees and companies and in some circumstances, threaten our nationwide safety.
China right this moment poses a set of rising challenges to our nationwide safety. It’s deploying its army in ways in which undermine the safety of our allies and companions and the free movement of worldwide commerce. It dominates the manufacturing of many crucial supplies and items and has exploited different economies’ dependence on its marketplace for political coercion. It additionally seeks to dominate sure superior expertise sectors, whereas utilizing a lot of these applied sciences to advance its army modernization and undermine basic human rights at residence and overseas.
We consider there are three households of applied sciences that shall be of specific significance over the approaching decade: first, computing-related applied sciences, together with microelectronics, quantum data methods, and synthetic intelligence; second, biotechnologies and biomanufacturing; and third, clear power applied sciences. We are going to proceed to take motion to guard our benefit and preserve as massive a lead as doable in these foundational applied sciences.
We’re transferring aggressively to reform our present capabilities and create new ones to perform this aim. Along with the non-public sector, we’re going to bolster our system of export controls, improve our funding screening regimes, strengthen our provide chain resiliency, and develop modern options to counter China’s financial coercion and human rights abuses.
To start with, we’re redoubling our efforts to safeguard our core applied sciences by strategically and repeatedly updating our export management insurance policies and funding screening frameworks.
In October, we launched a algorithm that impose systematic and technology-specific export controls to restrict China’s capability to buy and manufacture sure very superior computing chips which can be used to coach large-scale synthetic intelligence fashions, and which energy the nation’s superior army and surveillance methods, in addition to the manufacturing tools used to make these cutting-edge chips.
As well as, we restricted Americans from supporting these superior expertise packages.
For too lengthy, America’s export management technique was reactive—centered on stopping China from increasing its technological capabilities after it accessed American mental property. However these new guidelines are strategic, focused, and designed to guard our nationwide safety.
And as a part of the CHIPS and Science Act, we labored in a bipartisan approach with Senators Cornyn and Casey and Representatives McCaul, Lucas, and DeLauro to implement traditionally strict guardrails to make sure the investments we make in analysis and innovation are by no means used to learn China’s army efforts.
We’re additionally modernizing our evaluation of inbound funding. Just a few months in the past, we issued Presidential steerage—the primary of its type for the reason that Committee on International Funding in the USA was established many years in the past—to direct a give attention to sure crucial new threat elements when evaluating potential inbound funding, akin to technological management, provide chain dependency, and overseas firm entry to our private information.
And along with Congress and the non-public sector, we’re working to establish and mitigate the dangers to our nationwide safety from outbound capital investments in crucial expertise sectors. As one instance, now we have prohibited corporations receiving CHIPS funding from investing in modern or superior expertise services in China for ten years.
Our technique additionally consists of the safety of our crucial provide chains.
Through the COVID pandemic, we witnessed how the focus of private protecting tools manufacturing in China put Individuals in danger.
I keep in mind this time vividly. I used to be Governor when the pandemic hit. Like so many different states, Rhode Island desperately wanted ventilators and PPE. I spent night time after night time calling international locations all over the world, almost all the time in Asia, asking them to assist us get the provides we would have liked.
Now, as Commerce Secretary, I’m decided that we are going to by no means let ourselves turn out to be depending on one nation for the products we have to hold our individuals secure.
Now we have mounted a whole-of-government effort to establish the commodities and applied sciences the place our incapacity to supply, course of, or manufacture domestically might trigger nice injury to our safety.
In these areas, we’re working with the non-public sector to re-shore or friend-shore core elements of our provide chains. And we’re creating a close to real-time “frequent working image” of worldwide provide chains for crucial industries in order that we are able to deal with vulnerabilities as shortly as doable.
Associated to this, we’re exploring new avenues to defend ourselves and others from China’s financial coercion. Decreasing our corporations’ dependence on China for core elements of our crucial provide chains is one a part of the reply, however not the whole reply.
For instance, when China lower off commerce with Lithuania, we opened our markets to Lithuanian agricultural merchandise and offered a $600 million export credit score settlement centered on manufacturing, enterprise providers, and renewable power.
Creating an efficient deterrent towards this type of financial coercion is a precedence for the Biden Administration, in addition to for our companions and allies.
I additionally wish to underscore the precedence that we’re putting on guaranteeing that our corporations will not be complicit in China’s gross human rights abuses. Our commerce and funding with China ought to mirror our core democratic values. That’s the reason, President Biden signed the bipartisan Uyghur Pressured Labor Prevention Act into legislation – requiring corporations to certify that they aren’t sourcing items that relied upon pressured labor of their manufacturing.
Lastly, I hear typically from U.S. enterprise leaders concerning the challenges this quickly altering coverage surroundings poses to their capability to make sensible, long-term funding selections. And whereas I definitely perceive this problem, our insurance policies can’t be static. They should adapt repeatedly to the dynamic interplay between technological change and nationwide safety. However in such a fancy surroundings, it’s on us within the authorities to offer clear and constant steerage that the enterprise group must succeed; to be as consultative and clear as doable, to reduce disruptive change, and to undertake measures multilaterally. We’re dedicated to a robust and vibrant partnership with our non-public sector.
On the similar time, it’s on the non-public sector to acknowledge that we’re working in a essentially completely different strategic surroundings from a decade in the past and to work with us to comprehend our financial and nationwide safety targets. The selections our universities and corporations make right this moment on the place and the way they undertake analysis, have interaction in commerce, and make funding selections will profoundly form our financial and nationwide safety for many years to come back. And I’d notice that MIT’s just lately launched China technique report on analysis integrity and collaboration with PRC companions is an instance of the kind of initiative we have to assist inform our coverage and chart a smart path ahead.
Now, all the measures I’ve outlined—from export controls to new funding parameters to produce chains—require not an solely partnership between the U.S. authorities and personal sector but in addition between the U.S. and our allies and companions.
In our competitors with China to form the Twenty first-century international economic system, we can’t go at it alone. As Secretary Blinken articulated earlier this yr, the Biden administration’s strategy to China is centered not solely on funding at residence but in addition on alignment with our allies and companions overseas. Once I meet with my counterparts from different international locations, they voice comparable issues about China’s habits and a shared need to cooperate and coordinate our insurance policies across the guidelines, requirements, and values that advance our collective nationwide safety and financial well-being. They, too, see how China’s route has modified and are adjusting their methods accordingly.
For instance, now we have established the Quad Vital and Rising Applied sciences working group with Japan, Australia, and India, in addition to the U.S.-EU Commerce and Expertise Council, or TTC, which shall be assembly subsequent week in DC, to align our approaches safe provide chains, export controls, information governance, and funding screening.
We’re witnessing the power of this partnership proper now within the extraordinary diploma of coordination now we have achieved across the implementation of sanctions towards Russia in response to its invasion of Ukraine.
We’re additionally reasserting U.S. financial management and partnership in essentially the most economically dynamic area of the world. Final Could, in Tokyo, President Biden launched the Indo-Pacific Financial Framework or IPEF, with 13 accomplice international locations that along with the U.S. signify over 40 p.c of worldwide GDP.
This modern financial framework represents a proactive financial technique, designed to help a regional economic system that’s linked, resilient, clear, and honest and can present a aggressive and engaging new marketplace for U.S. exports and funding.
It’s going to even be a kind-of-a “provide chain range accelerator” by facilitating U.S. corporations with extra aggressive sources of manufacturing and suppliers.
And American employees will profit too. For instance, final summer season we noticed how COVID-related chip manufacturing slowdowns in Asia contributed to layoffs for auto employees in Detroit. IPEF’s provide chain disaster response mechanism will assist us keep away from an analogous scenario sooner or later.
Lengthy-term U.S. competitiveness additionally will depend on our continued and energetic participation in worldwide establishments that set information and expertise requirements.
In recent times, China has assumed management positions in a number of necessary worldwide normal setting our bodies. Now we have heard from our corporations, in addition to these from different international locations, that China typically packs these organizations with authorities and enterprise representatives who work collectively to push the nation’s authoritarian requirements and values.
These efforts “to recreation the system” undermine good governance, place our corporations at an obstacle within the international expertise competitors, and put in danger a lot of our basic values, such because the free movement of data and information privateness. We’re taking steps to raise U.S. management and presence in these our bodies and to coordinate our efforts with our companions.
It’s not sufficient, nevertheless, to work with our conventional allies and companions to set the requirements for the worldwide economic system of the Twenty first century. We’re additionally participating extra deeply with the colourful rising economies of the worldwide south to satisfy their need for progress that’s sustainable, broad-based, inclusive, and clear.
As an necessary first step, President Biden, along with our G7 companions, launched the $600 billion Partnership for International Infrastructure and Funding, or PGII, to help climate-resilient infrastructure, higher healthcare, and sustainable power. On the Division of Commerce, for instance, we’re partnering with U.S. Exim-Financial institution, U.S. companies, and the federal government of Angola to develop a $2 billion photo voltaic undertaking. This funding is not going to solely assist Angola energy its economic system with clear power but in addition help as much as $1.3 billion in U.S. exports.
Taken collectively, these new multilateral preparations mirror the shared values of the U.S. and its companions and allies. They amplify the ability of U.S. they usually present the premise for future international progress that’s sustainable and inclusive.
Now, whereas a lot of our China financial technique is essentially centered on what we are able to do at residence and with our allies to make sure our personal competitiveness, we additionally have to get the bilateral financial relationship with China proper by defending and likewise actively selling our financial pursuits.
China’s authorities employs a spread of financial practices that drawback overseas corporations making an attempt to compete within the PRC market. China’s authorities additionally offers unfair benefits to its personal industries in ways in which displace American employees and companies – and people of our allies and companions – from the worldwide market. We are going to proceed to press China to handle its non-market financial practices that lead to an uneven enjoying discipline, akin to akin to its large help – monetary, regulatory, or in any other case – to its state-owned and personal companies, pressured expertise switch, and egregious mental property theft. And we’re working with our G7 allies on a shared strategy to those points.
On the similar time, we aren’t searching for the decoupling of our economic system from that of China’s. We wish to promote commerce and funding in areas that don’t threaten our core financial and nationwide safety pursuits or human rights values. Annual commerce between our two international locations has grown exponentially from $4.7 million in 1972 to greater than $750 billion right this moment. This commerce supplies revenues for American corporations, jobs for American employees, and connectivity with the Chinese language individuals.
China is now our third largest export market, and people exports straight help 750,000 American jobs. The advantages from these exports go not solely to our massive multinationals but in addition to greater than 25,000 small and medium-sized enterprises that exported $33 billion to China in 2020. To help these smaller companies, the Commerce Division just lately launched an export promotion initiative round private care merchandise. We intention to spice up exports by serving to SMEs navigate the market, whereas guaranteeing that their IP is protected. China can be the U.S.’s largest agricultural market, and our farmers are on observe to export $36 billion in agricultural items this yr to China.
U.S. tender energy additionally advantages from the recognition of our corporations and types in China’s client tradition. Starbucks has constructed greater than 5,000 shops in China. When Apple launched its iPhone 13, consumers in China stampeded via a mall to be first in line. Our merchandise signify not solely high-quality but in addition our values of openness, innovation, and creativity.
We wish to proceed to advertise commerce and funding in these areas that don’t undermine our pursuits or values, whereas utilizing all of the instruments at our disposal to guard our corporations and counter unfair financial practices. For instance, we preserve a group of mental property specialists in China that helps deal with our corporations’ wants whereas searching for to drive necessary modifications to China’s IP legal guidelines over the long run.
No-one can outcompete the U.S. if we’re enjoying by the identical guidelines.
And as President Biden made clear throughout his current assembly with China’s President Xi Jinping earlier this month, we wish to work with China on points of worldwide financial significance, akin to local weather change, meals safety, well being safety, and debt aid. For that purpose, I met with China’s Minister of Ecology and Atmosphere to advocate for our corporations and to suggest that we work collectively to cut back ocean air pollution and marine plastic particles.
In fact, we would like American employees to learn from exporting and American corporations to thrive in international markets, together with China. However we additionally should be sober about China’s present route of journey.
For nearly forty years, we championed the advantages of a sturdy commerce and funding relationship with China, typically overlooking the long-term prices for the near-term advantages. And above all, we should do not forget that sustaining these advantages over the long run requires that we defend our safety and values within the close to time period.
Conclusion
In recent times, China’s leaders have promoted a story that the East is rising, and the West is declining.
I hope you see one thing completely different. I see one thing completely different.
I see that the U.S. is the world’s largest economic system, that it’s blessed with some of the numerous populations on the earth—and that this range is a supply of unparalleled creativity and power—that our corporations are among the many world’s most modern and worthwhile, that our universities are the envy of all international locations, and that now we have a robust and rising community of highly effective allies and companions.
But, regardless of all of our strengths, competing successfully with China will take exhausting work.
We’re taking the steps essential to handle the total vary of challenges that China now presents. We’re redoubling our dedication to take a position at residence. We’re aligning our insurance policies with our allies round our values of freedom, privateness, the rule of legislation, and honest competitors. And we’re competing by investing in strong public-private partnership and rethinking our instruments of financial statecraft.
All of this leaves me assured that we are able to ship on the readability of function, consistency in execution, and long-term dedication that shall be essential to make sure our continued management in international innovation and defend our financial and nationwide safety.
