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China economy
OpinionComment
Dani Rodrik
Dani Rodrik

Opinion | Why the US should emulate China’s production at home rather than trying to undercut its economic progress

  • We should not allow economics to become hostage to geopolitics or, worse, to reinforce and magnify the strategic US-China rivalry
  • The West’s objective should be to build more productive, more inclusive economies at home – not simply to outcompete China

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Illustration: Craig Stephens
Dani Rodrik

As Covid-19 spread from China to Europe and then the United States, pandemic-stricken countries found themselves in a mad scramble for medical supplies – masks, ventilators, protective garments. More often than not, it was to China that they had to turn. 

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By the time the crisis erupted, China had become the world’s largest supplier of key products, accounting for half of all European and US imports of personal protective equipment. “China has laid the groundwork to dominate the market for protective and medical supplies for years to come,” according to recent reporting by The New York Times.

When China first turned towards global markets, it had the advantage of virtually unlimited supplies of low-cost labour. As everyone recognises by now, though, China’s manufacturing prowess is not the result of unfettered market forces.

As part of its “Made in China 2025” policy, the Chinese government targeted ambitious increases in domestic producers’ share of global medical supplies. The New York Times report explains in detail how the government provided cheap land to Chinese factories, extended subsidised loans, directed state companies to produce key materials and stimulated domestic supply chains by requiring hospitals and firms to use local inputs.

For example, Sichuan, China’s second-largest province, reduced by half the number of categories for which imports of medical equipment were allowed. Most hospitals were obliged to source everything locally, with only top hospitals allowed to bring in supplies from abroad.

02:18

Jack Ma donates 500,000 coronavirus test kits and 1 million masks to the US

Jack Ma donates 500,000 coronavirus test kits and 1 million masks to the US

Western media are now replete with accounts of China’s “drive to dominate important cogs in the global industrial machine,” in the words of The New York Times again.

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