Commentary
As the Senate and House of Representatives negotiate their so-called “China bill” or America COMPETES, one of the central issues is whether to give semiconductor companies subsidies to invest in the United States. This would be a big mistake.
Like most of COMPETES, the bill’s $50 billion handout to the semiconductor industry has little to do with beating China. In fact, it will help China achieve its industrial goals and, thus, its competitive position vis-a-vis its rivalry with the United States.
Two years ago, Chinese Communist Party (CCP) leader Xi Jinping presented the world with a new framework for investing in the Chinese economy. The CCP calls it “dual circulation.” China wants to onshore its tech supply chains, especially in semiconductors, where recent experience with national industrial champion Huawei has shown it to be particularly vulnerable.
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