Featured in South China Morning Post: Trump China tariff policy ill-suited to supply chain problems, US panel told

Testifying before the US-China Economic and Security Review Commission, which monitors national security implications of bilateral trade and economic relations, they called for an increase in comprehensive and structural responses, including rebuilding US industrial capacity in such sectors as defense and chips, and working to ensure China is not part of crucial supply chains.

Emerging markets economist Adam Wolfe of Absolute Strategy Research said Beijing’s efforts to strengthen high-tech and other manufacturing capacity with state incentives and subsidies have become long-term policy and that US trade sanctions and restrictions are accelerating it.

“One of the main motivations for China adopting this ... development model of targeting a relatively stable manufacturing share of GDP [gross domestic product] was US sanctions and US tariffs on China, and fear of their own choke points being exploited by the US,” he said.

“So Xi Jinping has made that a priority to say that China will never be beholden to US choke-point technologies, which means that they need to make everything basically domestically,” he added, referring to the Chinese leader.

Wolfe said US policymakers can no longer expect to dissuade China from its industrial policy path. Instead, he said, they must focus on limiting the global ripple effects - particularly the export surges that threaten industries in the US and allied countries, adding that “there is scope for a broad coalition that puts pressure on China to shutter some of this excess capacity”.

He noted that Chinese export prices fell by 16 per cent between 2022 and 2024, with industrial loan growth averaging 24 per cent per year since 2020.

Wolfe called on Washington to pressure Beijing to restore its pre-2020 growth orientation, when, he said, expanding China’s service sector and domestic demand were top policy objectives.

“If they can return China to where it was before 2020 … that should increase the domestic absorption ratio,” Wolfe said. “It would increase China’s employment and make households better positioned to purchase both Chinese goods and imports.”

Complete testimony: Dominance by Design: China Shock 2.0 and the Supply Chain Chokepoints Eroding U.S. Security

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