Washington should focus its industrial policy on strategic, cutting-edge technologies rather than trying to bring back manufacturing wholesale, particularly in areas where the US has little competitive advantage, said members of the former Joe Biden administration.
This comes at a time when US policy circles are debating whether the nation should borrow some of China’s playbook as the bilateral competition intensifies and how far it should go as China’s state-led system makes a big bet on advanced manufacturing and future industries like AI, robotics and biotech in its coming five-year plan.
“Industrial policy is necessary, necessary in instances like with the Chips Act where it is a true matter of national security,” said Gina Raimondo, former commerce secretary in the Biden administration, at an online event this week organised by Harvard Kennedy School.
But the current administration has a very different view, she acknowledged. “Today you have somebody else in the White House who I think would also say he wants to make everything in America. I don’t agree.”
Raimondo was instrumental in the design of the Chips and Science Act of 2022 to consolidate the US dominance in the strategic sector as well as the ban on high-end chip sales to China.
“I don’t see a competitive advantage for us making car seats for babies,” she said.
The world’s top economy is now facing tremendous challenges from China, which not only consolidates its traditional manufacturing advantages – China is the world’s workshop with a share of nearly one-third of global goods production – but is also catching up quickly in hi-tech sectors.
Beijing’s manufacturing power has given it huge leverage in dealing with Washington. Control of rare earth, one of its advantages, was used after the Trump administration escalated tariffs on Chinese goods in April to levels equivalent to a trade embargo.
The administration of US President Donald Trump has been aggressively using tariffs as a tool to try to revive US manufacturing and target competitors, no matter whether they are Taiwanese semiconductor fab factories or South Korean shipyards.
From the funding of Intel, the purchase of rare earth miner MP Minerals to a stake in Lithium Americas, the US government is using golden share rules to advance its strategic goals at an unprecedented scale.
Meanwhile, Chinese leaders are set to reveal their initial thoughts on their next five-year plan when the Fourth Plenum concludes on Thursday, in which advanced manufacturing and future industries are expected to be on centre stage.
“China has a massively effective industrial policy … I think it’s amazing. It’s stunning,” Raimondo said, citing the “gorgeous” BYD electric cars as well as the stronger return of Huawei Technologies, which has been sanctioned by the US since 2018.
But she blamed China for not playing by the rules, attributing the success of its industries, from electric vehicles to solar panels, to Chinese government subsidies.
“If every country has, you know, should play by the rules, we would have a fair fight and be able to produce more in America,” she said.
In contrast with Trump’s constant tariff threats, Raimondo suggested the government should not tariff components used for US manufacturing that only make US products more expensive.
Other former officials have also cast doubts over Trump’s manufacturing plan with tariffs on foreign countries, including Jared Bernstein, who chaired the White House Council of Economic Advisers in the Biden era.
Contrasting to Biden’s success in clean energy and chip production, Trump’s broad re-industrialisation is “unrealistic”, according to one post he co-wrote on Substack on September 30.
Raimondo also strongly advocated for more government funding in cutting-edge areas.
“They [Chinese firms] are really innovating in biotech, in quantum because the government is pouring money into it like crazy. Also, they invest in talent,” she said.
“We need to have more incentive for private capital to create these biotech companies, to do this research and development, or the government has to do a lot more of it.”
Such a view was echoed by Nicholas Burns, former US ambassador to China from April 2022 to January 2025.
“As China so heavily subsidises its own quantum companies, biotech companies, national champions on AI, we have to do the same,” he said at an Atlantic Council event on Tuesday.
“Whoever moves ahead and has a degree of … dominance on these issues is probably going to emerge as the more powerful country given the transformative nature of AI in particular,” he added.