The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

China

President Joe Biden

Youtube Screenshot

Should Washington push an "industrial policy"? That is, should the U.S. government get involved in promoting certain domestic industries?

Darn straight it should. And that goes double when it comes to semiconductors. Computer chips are the little brains that run appliances, airplanes, mobile phones and cars. You can't have a modern economy without them.

We saw what happens when key manufacturing activities go offshore. During the COVID-induced supply chain crisis, Western manufacturers couldn't get their hands on the chips they needed to meet demand for their products. Some had to close or slowed production.

American automakers were especially handcuffed. General Motors, for one, blamed the chip shortage for a 15% drop in its U.S. deliveries of new vehicles in the second quarter from a year earlier.

And so it's hard to overstate how bringing chip-making to this country is good for this country. It would not only create many thousands of American jobs; it would ensure that other U.S. manufacturers don't have to beg Asians for semiconductors.

Toward that end we should hail the Chips and Science Act, championed by the Biden administration. It was astounding that 187 Republican House members voted against the bill, though gratifying that 24 did.

The GOP leadership had joined Chinese lobbyists in opposing it. Never mind that chip independence had the full-throated support of several former Trump officials, notably former National Security Adviser H.R. McMaster. To partisan robots, the national interest rarely overrides the joys of political warfare.

Commerce Secretary Gina Raimondo rightly called the $52 billion in new semiconductor money "rocket fuel for our global competitiveness."

Asia dominates the production of semiconductors. Taiwan makes 65% of the world's semiconductors and accounts for nearly 90% of the advanced chips. And if China attacked and took over Taiwan, an adversary would have a stranglehold on America's — and the world's — manufacturing.

Meanwhile, the Chinese government has been pouring hundreds of billions of dollars into its own semiconductor industry. So, by the way, have the Europeans.

This is part of a bigger picture in which the U.S. has been reversing decades of "off-shoring" factory jobs to lower wage countries. Almost 350,000 jobs will be "reshored" this year — on top of about 265,000 added in 2021. The chips act and the Inflation Reduction Act are fueling many of the moves with tax breaks and other economic incentives.

"Globalization is in retreat," economists at Barclays told their clients.

Supply chains have become an economic battlefield of the 21st century. In a jarring example, Europe faces an energy crisis for having become dependent on Russia for gas and oil.

Raimondo, a former venture capitalist, has been wonderfully aggressive on this front. When Taiwan's GlobalWafers abandoned a plan to spend $5 billion on a plant in Germany, she called the CEO and nabbed the factory for Texas. Here come 1,500 jobs.

Citing the chips bill, U.S. semiconductor companies say they plan billions in new investment, and their jobs pay very well.

President Joe Biden preened at the recent groundbreaking for a new $20 billion plant Intel is building near Columbus, Ohio. Beside him stood two good Ohio Republicans, Gov. Mike DeWine and Sen. Rob Portman.

The Chinese government has been pouring money into other hot tech fields, such as artificial intelligence and robotics. These are areas in which the United States used to have a safe lead.

"We need America to dominate in certain areas of technology," Raimondo said. "Critical minerals, electric vehicle batteries, semiconductors, artificial intelligence." This obviously goes beyond jobs. It's about national security.

Well, is America going to compete or not? Washington just put its chips on chips. That would seem a smart wager.

Reprinted with permission from Creators.

Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

David Perdue
David Perdue

With most conservative candidates in primary races across the country pledging allegiance to former President Trump and disseminating his Big Lie, what is a Republican candidate to do to get ahead? Why, just accuse their Republican opponent of having ties to China, of course!

Spurious, misleading, and even exaggerated accusations of connections with China are a source of anxiety for Republicans in the 2022 races, while campaign strategists and candidates have labeled such allegations a “prime attack in a Republican primary,” according to the Washington Post.

Incumbent Georgia Gov. Brian Kemp — who is running against four other candidates in the Peach State primary, chief among them former Senator David Perdue — ran a TV spot accusing hisTrump-backed rival Perdue of outsourcing jobs to China before becoming a senator.

"Millionaire David Perdue got rich sending jobs to China," the narrator in Kemp’s ad claimed. The ad used a clip of Perdue in his days before the Senate, when he said, "I lived over there. I’ve been dealing with China for over 30 years," and another clip from a Georgia Public Broadcasting interview where Perdue claimed, “We outsourced every single product that we sold in our stores."

Kemp’s communications director touted the effectiveness of the China ad in a statement to the Post. “We tested a number of hits, and that was the best-polling one — the outsourcing to China.” Tying Perdue to China has become central to the incumbent governor’s paid advertising and messaging.

Invoking China is a crucial strategy in the Pennsylvania primary, too. Candidate Mehmet Oz, whom Trump is backing, has accused opponent David McCormick of carrying out business deals with China. McCormick struck back, as one would expect, alleging that Oz made bank from dealings with Chinese state TV and patronized products made in China.

In a blistering attack last Friday night, Trump accused McCormick of being a “liberal Wall Street Republican” who has managed money for China. “I don’t know David well, and he may be a nice guy, but he’s not MAGA,” the former president added.

A pollster who has worked for Trump and is polling in many 2022 primaries told the Post that tough talk on US-China relations, even far-fetched claims, is all the rage in this year’s Republican primary debates because that’s what Republican voters want to hear.

“If you coddle China, or you are soft on China, that makes you not so much America first and not so tough,” pollster Tony Fabrizio said. “Being tagged as soft on China is not a good thing. Trump focused and catalyzed some of it. But China has been seen as the primary world foe for at least the last decade or more.”

Fabrizio also spoke of a poll he conducted earlier this year which showed that Republicans consider China a bigger threat to national security than Russia, even after Russia’s missile bombardment of Ukraine has claimed thousands of civilian lives.

Two years of battling the Covid-19 pandemic, coupled with Trump’s litany of anti-China messaging, has increased the Republican voters' negative perception of China. In March, the Chicago Council on Global Affairs conducted a poll that found that 75 percent of Republicans considered Beijing’s development a “critical threat” to the interests of the United States of America, up from 67 percent in 2020 and 42 percent in 2018, according to the Washington Post.

Last year, Trump’s team ran a poll to ascertain the former president’s most effective messages and found that the former president’s supporters love his attacks on China.

An informal adviser for Trump, Michael Pillsbury, weighed in on this seismic perception shift. “It is something quite new — Republicans used to be the business of party and free trade,” Pillsbury told the Washington Post. “And I remember during the early considerations of President Trump — putting heavy tariffs on China — there were voices within the White House and within the party that this goes against Republican traditions.”

“The current mood toward China,” Pillsbury added, “is darker than it has been in decades in the United States.”