There is a certain seductive logic to watching your rival gain advantage through state support and concluding that you should respond in kind. Across the American political spectrum, from think tanks like the Information Technology and Innovation Foundation to conservatives who once treated “picking winners” as a term of derision, industrial policy has staged a remarkable comeback. The pitch is straightforward enough: if Beijing is subsidizing its way to dominance in semiconductors, electric vehicles, and advanced manufacturing, surely Washington cannot afford to stand on free-market principles while the factories disappear. It is a compelling story, and it is also, on closer inspection, largely a myth.
For all the alarm generated by China’s industrial ambitions, the evidentiary base for the enthusiasm is surprisingly thin. Rigorous evaluations of whether Chinese industrial policy has actually worked remain scarce, a striking gap given the scale of resources involved. When researchers have finally attempted to take the full measure of it, what they find is not a juggernaut of state-directed efficiency but rather an expensive disappointment.
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