Tis NBR Special Report is designed to show that U.S. policymakers cannot as...
2020-09-24 1 ENGLISH REPORTS
As with our declinist scenario, and as summarized in figure 5, our four-part model can help define a set of more-positive changes that significantly raise the Western game and put today’s anger to practical use. Importantly, bipartisan support is achievable in many of these areas if there is a will to make this an overriding national priority. If 20 high-level policy efforts are broadly followed, U.S. and Western positions versus China would almost certainly improve over course of the 2020s. Let’s look at each dimension in turn. FIVE STEPS FOR REBALANCING SUPPLY CHAINS 1. Require operational transparency. Requiring U.S. and Western companies to publish information about the size of their China operations in terms of revenues, value of imported goods, technology-transfer activity, critical dependencies, investments, partnerships, and similar information would provide both transparency and measurable data so changes could be tracked over time.
Such reporting is analogous to today’s efforts to get companies to produce more-detailed carbon emissions data.) Transparency is the only way to really understand the dynamics behind today’s trade deficit. It’s a lowcost, high-value area. 2. Provide financial incentives to reduce dependencies. Many firms are already diversifying their production to become less dependent on China, but direct financial incentives, in the form of grants or tax breaks, could accelerate the process, as they are now doing in Japan. In the United States’ case, some work will come back to America, but countries such as Vietnam, Mexico, and India will also likely benefit, which would weaken China. There are modest costs to such programs, but also tangible value—and this would be a sign of real change, especially when combined with the previously mentioned reporting requirements. A case in point is recently proposed legislation to support the U.S. semiconductor industry that includes incentives for companies to establish fabs in the United States.
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