> China is winning because they are intensely, directly investing in tech regardless of the financial circumstances.
Investment can (and often is) different from protectionism. Typically, investment provides time-limited grants or other forms of support. If a company misuses them, a global (or local) competitor will outpace it.
Protectionism ensures that companies are indefinitely protected from global competition, so they don't feel as pressed to improve.
The developed world is unable to compete on a level playing field against other countries when taking into consideration potentially enormous subsidies or developing world labor costs. Protectionism, when implemented strategically, can reduce these counterparty advantages. Investment is also a component, but they both work in concert to arrive at a desired outcome. And I think that’s really where this problem lies, that we’re arguing about protectionism versus investment, when we should be identifying what the desired outcome is and then, based on an inventory of all of the policy and capital allocation tools that we have available to us, implement what is needed to arrive at the desired outcome. We don’t want to sacrifice innovation (which calls for mechanisms to prevent companies from leaning too far towards entrenched interests vs innovators), but we also don’t want to run a race we cannot win because we unnecessarily handicap ourselves in an inherently unfair and unequal global market.
I am not a terribly smart person, and I don’t have all the answers, but I would argue it’s clear what we’ve done so far isn’t working, based on all available evidence.
> The developed world is unable to compete on a level playing field against other countries when taking into consideration potentially enormous subsidies or developing world labor costs.
Cheap labor cost typically is only a fraction of a high-tech product. If anything, China was not the world's biggest factory, but the world's biggest assembler. It's changing right now, and China is producing more of its own high-tech components.
So a small amount of protectionism (like a 10-15% tariff) might be OK, and it will compensate for this labor cost discrepancy. But not tariffs that simply make the local industry complacent.
Investment can (and often is) different from protectionism. Typically, investment provides time-limited grants or other forms of support. If a company misuses them, a global (or local) competitor will outpace it.
Protectionism ensures that companies are indefinitely protected from global competition, so they don't feel as pressed to improve.