In Hitting China on Trade, Trump Is Seen Neglecting U.S. Emerging Industries

President Trump’s aggressive trade policies against China are aimed at supporting failing U.S. industries, many economists say, while failing to bolster investment in emerging fields, like artificial intelligence.

WASHINGTON — Behind the White House’s plan to punish China with tariffs and other restrictions is a growing concern that Beijing is using industrial policy to dominate industries of the future, at the expense of the United States and other nations.

On Thursday, the Trump administration laid out its case in a 35-page report entitled “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World.” It exhaustively details the steps Chinese officials take to protect and promote their domestic industries and disadvantage foreign competitors, including the use of government subsidies, cyberespionage and forced intellectual property transfers to Chinese companies from American and other foreign firms.

The United States is trying to derail China’s dominance by punishing Beijing. But it has yet to detail how it plans to build America’s dominance in industries that will power economic and job growth in the future, or cultivate what the administration officials call the “crown jewels of American technology and intellectual property.”

Speaking with reporters on Tuesday, a senior administration official said Mr. Trump’s tariffs are designed to benefit American high-tech industries from the sort of “predation” China has used in the past.

Many economists say those steps are insufficient — and possibly counterproductive — to position American companies to compete in emerging, high-tech, globalized industries. They say the administration needs a proactive strategy to bolster American innovation and technology. That includes investing in federal research and development spending, worker skills and attracting more high-caliber foreign students to American graduate programs and fostering advanced industries such as biodefense and artificial intelligence.

Whether industries like semiconductors thrive going forward in the United States “will depend not on America’s success in curbing China’s progress, but rather on its ability to sustain and support innovation by U.S. companies,” Laura D’Andrea Tyson, a former top economic adviser to President Bill Clinton, wrote this week.

Instead of targeting innovation, the administration’s policy efforts to date have focused largely on supporting legacy industries like coal mining and steel production, which have shed hundreds of thousands of jobs in recent decades, and which few economists expect to generate significant job growth in the years to come.

China, meanwhile, targets support to companies that demonstrate a winning strategy for growth. The government forces subsidized and protected firms to compete on the global marketplace, shutting down those that are unable to perform, said Ann Harrison, an economist who specializes in industrial policy at the University of Pennsylvania’s Wharton School.

“Firms are supported, but if it’s not working, they cut it out,” she said. “That’s really different from Trump’s industrial policy. What we’re really doing now is, we’re not supporting emerging industries. We’re bailing out failing industries.”

Many experts worry the United States is not doing enough to help its own advanced industries compete — not just against China, but the rest of the world.

Experts in artificial intelligence say the administration should push for more investment in academic and government research, instead of cutting back on scientific research across the government. They say administration immigration policies have spooked many foreign-born artificial intelligence researchers based in the United States.

Canada, South Korea, France and Britain have ramped up government spending in an effort to ensure that they retain and attract top talent and promote artificial intelligence research. China has unveiled a plan to become the world leader in the field and create a domestic industry worth $150 billion by 2030, committing billions of dollars to the effort.

At the tail end of the Obama administration, the Office of Science and Technology Policy in the White House began to address the industry’s development. But after Mr. Trump took office, the office’s work in that area seemed to stagnate. The administration has yet to name a director for the office, which is currently run by its deputy chief technology officer, Michael Kratsios, who used to work with Silicon Valley venture capitalist Peter Thiel. It recently convened a meeting of companies working in artificial intelligence at the White House, in which Mr. Kratsios indicated the administration would take a hands-off approach to the industry’s development.

“If we don’t have the government setting big goals, then we will just see business as usual: The private sector will continue to optimize for its own problems, pulling people out of universities and not really giving back to government because that is not its priority,” said Jack Clark, who oversees policy for OpenAI, an independent artificial intelligence lab based in San Francisco. “Academia will get left behind and the government will have no clear mandate in this very important area.”

The United States has a long history of industrial policy, including the Obama administration’s bailout of the automotive industry during the financial crisis and its subsequent efforts to foster advanced manufacturing.

“We sought to have a strategic focus,” said Gene Sperling, who directed the National Economic Council for much of the Obama administration, “that did accept that there were strong positive impacts for innovation and jobs in not just protecting the manufacturing base — as was done with the auto rescue — but making the U.S. the attractive place to build what comes next in manufacturing as well.”

Policymakers in Washington have a large array of tools to tilt the economic playing field to help particular industries. Mr. Trump signed a tax law in December that reduced the corporate tax rate to 21 percent, a move that disproportionately helped banks and real estate companies. He has relaxed regulations for fossil fuel exploration and other industries. But he has not singled out emerging growth industries for support, as Mr. Obama did.

That is not China’s approach.

Trump administration officials outlined 53 examples of China’s “economic aggression” that they contend have lifted the Chinese to domination of traditional manufacturing and positioned China to beat the world in industries like artificial intelligence, autonomous vehicles and blockchain technology.

The administration is trying to counter that rise with tariffs, and it also supports a bipartisan bill moving through Congress that would give the federal government greater leeway to block Chinese investments in American companies, a practice that the administration official called “colonization by purchase.”

Many economists and lawmakers applaud the administration’s efforts to crack down on Chinese intellectual property theft.

Fighting Chinese intellectual property theft is critical to supporting American industries. “It is something that is very real,” said Chang-Tai Hsieh, an economist who focuses on growth and development issues at the University of Chicago’s Booth School of Business. “It happens all the time. It is generally viewed by many of these firms as just the way you do business in China.”

But he said that fight may be best waged in American courtrooms, not trade negotiations, and that the administration may have missed a potential victory on that front by recently deciding to soften penalties on Chinese smartphone maker ZTE.

The Commerce Department had previously barred the company from selling into the United States for seven years because of violations of American sanctions. That earlier decision, Mr. Hsieh said, had Chinese companies “terrified.”

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