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America’s Second Sputnik Moment?

The escalating trade war between the United States and China is rooted in a race for technological supremacy. But rather than using punitive tools to maintain its advantage, the US should consider China’s "Made in China 2025" initiative as reason to reinvest in its own science base.

CAMBRIDGE – The burgeoning trade war between the United States and China has as much to do with technology as with the balance of trade. Reports have surfaced that the US Treasury Department is drafting rules to block Chinese firms from investing in American companies doing business in so-called industrially significant technology, while the Commerce Department is planning new export controls to keep such technologies out of Chinese hands.

These moves follow US President Donald Trump’s proposal to impose tariffs on $50 billion worth of Chinese products, many of which are on the priority list for “Made in China 2025,” President Xi Jinping’s blueprint to transform China into a global leader in high-tech industries like aerospace, robotics, pharmaceuticals, and machinery. Although the Chinese government has refused to modify its initiative, the US is demanding that China end all government subsidies and grants under the program. Trade talks have stumbled on this point.

America’s concern with Made in China 2025 is understandable; China’s approach to technology development has been controversial, to say the least. But there are better ways to respond to China’s policies. Two ways, to be precise.