How to Beat China in the High-Tech Race

The near-daily cadence of reports highlighting China's growing technology prowess has set the cat among the pigeons in many democracies. In response, these countries are now offering higher subsidies and fatter incentives to increase the competitiveness of their own technology industries.

The US Senate, for instance, passed a $250 billion Innovation and Competition bill on 8th June aimed at outpacing China. The Indian government, since last year, has launched Product Linked Incentive (PLI) schemes for 13 sectors worth ₹2 trillion, some of them targeted at high-tech industries such as semiconductors, telecom, and networking. Earlier this month, a draft growth strategy of the Japanese government also promised generous financial incentives to attract cutting-edge chip-making facilities. Not to be left behind, the EU, too, has announced a €145 billion plan to upgrade its semiconductor and electronics manufacturing.

While the intent is encouraging, it's interesting to note that all these plans are qualitatively quite similar to China's 'Made in China 2025' — a state-led industrial policy for technology. Released in 2015, it was labelled as a threat to global trade for channelling state subsidies to achieve import substitution. But now, many countries seem to be following a similar approach. Of course, China's subsidies are often discriminatory and place extreme restrictions on foreign investment. Even so, all these policies mirror China's at their core — they are all about using old-style industrial policy instruments such as subsidies and incentives to achieve high-tech self-sufficiency.Read the full article in Times of India. Views are personal