{"text":[[{"start":6.4,"text":"For the past decade, western governments have wrestled with how to respond to the threat of cheap Chinese imports. The issue of “predatory competition” was once again high on the agenda at this week’s G7 summit in Evian-les-Bains, and is set to feature prominently when EU leaders meet on Thursday. Increasingly, the response from Washington and Brussels has been to leverage the might of the state to provide subsidies and protections for industry. According to Global Trade Alert, more than 9,500 subsidy measures have been introduced across the EU and US over the past ten years. In other words, to counter Beijing’s state-led economic model, the rich world has increasingly borrowed elements of it."}],[{"start":49.4,"text":"Today, there is growing acceptance in the west that the state should play a greater role in the economy, despite the costs and distortions this may bring. Recent shocks, from Covid-19 to conflicts in Ukraine and the Middle East, have exposed the fragility of global supply chains when left to markets alone. Rising geopolitical tensions have also highlighted how dependencies can be weaponised, while years of reliance on low-cost Chinese imports have eroded domestic manufacturing capacity in sectors deemed critical to national security and emerging technologies. Few now dispute that interventions — be they subsidies, procurement rules or trade protections — can help build resilience in strategic industries."}],[{"start":null,"text":"
"}],[{"start":90.85,"text":"But governments must guard against interventions expanding beyond these narrowly defined purposes. China’s industrial strength now spans from low-end goods to advanced sectors including electric vehicles, solar panels and wind turbines. Western governments lack the fiscal and bureaucratic capacity to prop up industries across the board, particularly as Beijing has spent decades building vertically integrated supply chains. An OECD report this month found Chinese companies receive, on average, up to eight times more state support — including subsidies and cheap loans — than their rich-world counterparts."}],[{"start":126.55,"text":"Once governments accept a larger role in directing economic activity, however, boundaries become harder to maintain. Industries across the economy can argue they are strategically important and deserve protection from Chinese competition. Support, once granted, is also politically difficult to withdraw, while new subsidies offer an easy win for sectors under pressure. EU state aid surged during the pandemic and still remains above pre-Covid levels."}],[{"start":154.05,"text":"There is an opportunity cost, too. A larger, more interventionist state absorbs administrative capacity that might otherwise be devoted to measures that directly enhance competitiveness. For instance, efforts to deepen the EU’s single market, or investing in US energy and transportation infrastructure, would do more to sustainably strengthen private-sector dynamism than industrial subsidies. It is worth noting that although Chinese companies have benefited from subsidies, the intense competition for state support has also helped to drive innovation and to lower the cost of production."}],[{"start":188.4,"text":"As western governments continue to develop their response to China, they need to move beyond the debate over whether to adopt industrial policy in order to safeguard their economies to defining the limits of such measures. That means being clear on what a strategic industry is, what level of dependence in supply chains is tolerable and where it may simply be better to take advantage of Chinese expertise and low-cost inputs. The priority should be to build resilience where it matters most, remain open where possible, and restore the competitive strengths that made western economies prosperous in the first place."}],[{"start":231.9,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781777953_8667.mp3"}