Opinion | What both US and China get wrong on economic policy and trade negotiations
- Both sides share the misleading perception that promoting manufacturing is key to job creation, innovation and security
- Their leaders have not recognised that the path to more constructive reengagement on trade issues lies in knowledge-intensive services
Even as the US and China differ on many economic policies, both sides share the misleading perception that promoting manufacturing is key to job creation, innovation and security. Their respective leaders have not recognised that the path to more constructive reengagement on trade lies in knowledge-intensive services.
These actions call into question China’s support for innovation. The premise is that an innovative economy depends more on “hard-tech” manufacturing, such as AI-enabled robotics and electric vehicles, than on “soft-tech” services such as e-commerce and video platforms.
Policymakers in both the US and China have neglected the lessons of economic history. In the aftermath of World War II, economic power was largely defined by the manufacturing prowess of the US and a recovering Europe led by Germany. As the West prospered, however, its economies gradually transitioned to knowledge-intensive services. China and many other emerging market economies are following a similar path.