China Springs The Trap

By Dave Johnson

Created 08/13/2010 - 2:15pm

China has a national economic/industrial policy and we don't. They create the conditions for key industries to thrive and we don't. They make sure all of the infrastructure, finance, supply chain, educational, legal, technical and policy elements are in place for an industry to take hold and take off and we don't.

If they don't have an industry or a technology they want, they build it or get it. And they make sure that they get it. They invite a company in to their potentially huge market, they require that company share a technology with one of theirs, they make sure that their companies learn how to build what they need to build with the processes they need to do it, they make sure their designers know how to design what they need to design, they make sure that the parts are made there, the materials are made there, the people are trained there. The policy is called "indigenous innovation [1]."

And when everything is in place, they spring the trap: they don't need the outside partners anymore. Thanks for the help, now go away. (But don't try to do anything about it, that would be "protectionism.")