"-Beijing did not rely on a tariff-based traditional import substitution strategy. China implemented many promotive and restrictive measures to boost domestic investment and production, especially by attracting foreign direct investment (FDI) that facilitated tech transfer and skills upgrading. Tariffs and non-tariff barriers were among its many policy tools and by themselves don’t explain China’s rapid industrialization.
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China has used long-term plans that offer a degree of predictability. When Beijing says it wants to achieve a given goal, investors listen and respond accordingly.
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China was able to achieve export-oriented growth and investment in the 2000s because its economy was comparatively small. Today, it’s the second-largest economy and can no longer rely on exports for sustained growth. For the United States—the world’s largest economy—export-oriented growth would be even more infeasible.
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Beijing’s export competitiveness isn’t based on an undervalued exchange rate. China’s market interventions focused on keeping its currency weak for over a decade, but that changed more than 10 years ago. The era of rapidly rising official foreign exchange reserves among emerging markets, especially China, is over. That will make potential exchange rate negotiations between the United States and its trading partners more difficult.
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Beijing is more focused on manufacturing efficiency through automation than jobs, despite China still having far lower manufacturing wages than the United States. New manufacturing in the United States will likely need to be more capital-intensive than labor-intensive if it wants to be competitive.
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Beijing is investing heavily in scientific and innovative research by supporting Chinese research labs, academic institutions, and firms. China is on track to overtake the United States in total R&D spending in purchasing-power terms."
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