Robert Atkinson, president of the Information Technology and Innovation Foundation (ITIF), said that China is advancing its technological innovation at the expense of Western companies. Atkinson shared his statement during a September 24 hearing.
"If China were trying to achieve the Western economic goal of allocation efficiency—market-based allocation of goods, services, and investments—then the United States would have little to worry about, because as a rising economy, China would have limited innovation capabilities," said Atkinson. "But Chinese leaders do not want to accept the normal pace and stage of developing economies. Nor do they seek to maximize consumer welfare, or even provide good jobs for Chinese workers. Instead, the CCP, especially under President Xi Jinping's leadership, is focused first and foremost on maximizing its techno-economic power by growing China's advanced economy at the expense of the rest of the global economy, especially Western companies."
According to Atkinson, a large part of China’s economic strategy relies on government intervention. China utilizes substantial government subsidies to control and drive its industries and has a significant number of state-owned enterprises. Additionally, China employs market protectionism to prevent foreign competition from entering the market, ensuring that domestic companies can thrive.
Atkinson explained that the result of China’s economic strategy is increased domestic self-sufficiency. He noted that "Western sanctions and other disciplinary trade tools will be less effective," and added that "foreign power and influence over other nations… would increase more." This strategy could also lead to a shift in geopolitical power, enabling China to gain economic and industrial hegemony over the United States.
In his testimony, Atkinson recommended several steps for the U.S. to address what he termed "China's Techno-economic aggression." His first recommendation was for Congress to prioritize "putting in place a much more robust advanced-industry competitiveness strategy" aimed at stimulating domestic trade and utilizing trade policies to restrict unfairly produced imports. His second recommendation was the creation of a "National Competitiveness Council" within the White House, which would focus on formulating and coordinating advanced-industry competitiveness policy across the federal enterprise. His third recommendation was to "institute a government-wide training program to help government officials better understand Chinese technology policy."
A 2022 report from the Center for Strategic and International Studies (CSIS) indicated that China spent at least 1.71 trillion yuan ($248 billion) on industrial policy in 2019, representing approximately 1.73% of China's GDP for that year. In comparison, the U.S. government spent $84 billion or 0.39% of its GDP on industrial policy in 2019. According to CSIS, China's industrial policy spending includes various instruments such as direct subsidies to certain firms and below-market credit to state-owned enterprises (SOEs). In 2019, China provided an estimated $63 billion in direct subsidies primarily targeting firms in priority sectors like software, technology hardware, automobiles, and semiconductors.
Atkinson is the founder and president of ITIF, a think tank focused on science and technology policy, according to its website. He previously served under both the Clinton administration as part of the Commission on Workers, Communities, and Economic Change in the New Economy, and under the Bush administration as chair of the National Surface Transportation Infrastructure Financing Commission.
