Greg Ip writes:

In the decades since China joined the world economy, U.S. presidents have traveled to Beijing with a predictable list of demands: stop stealing American intellectual property, don’t force technology transfer, open your markets. Donald Trump followed the script on his previous visit in 2017.

Whether he does so again this week, it would be pointless. Those demands reflect a view of Chinese industrial policy (broadly, government support for favored sectors) that is woefully out of date.

Xi Jinping has elevated Chinese industrial policy into something the world has never seen. It targets almost every industry and region, demand as well as supply, services as well as goods, the sophisticated and the mundane. Its goals are economic, technological and strategic. Its tools are microeconomic and macroeconomic.

There is no obvious solution. Trump has reportedly secured agreements by China to purchase soybeans, energy and aircraft, withhold military equipment from Iran, and open up more to American business. But none of this will stop China from swallowing ever more global market share.

Rhodium Group, a research organization, in a sobering new report prepared on behalf of the U.S. Chamber of Commerce and released this week, identifies the key features of what it calls China’s “industrial policy of everything.”

Many Chinese products now match or beat Western competitors on quality and price without government help. Yet rather than dial back support, Beijing keeps broadening it. The country’s five-year plan issued in 2021 listed 19 priority sectors. The latest, released in March, lists 24, adding “brain-computer interfaces” and “nuclear fusion energy.” [Continue reading…]