Greg Jensen, co-chief investment officer at asset management firm Bridgewater Associates, recommended last week in The Wall Street Journal that the U.S. adopt China's "quasimodern mercantilist system." Jensen claims that "currency management, public procurement, state subsidies, protectionism and other implicit subsidies" have enabled China to develop "a range of leading industries." He also advocates for industrial policy through the protection of "national corporate champions."
But while it is true that China makes up the majority of manufacturing capacity for electric vehicles (nearly 60 percent in 2023), solar power (over 80 percent in 2022), and battery cells (75 percent in 2022), China's central planning has harmed its economy. It has resulted in industrial overcapacity, increased its debt-to-GDP ratio, and depressed household spending. Adopting these policies would harm America's economy and productivity.
