【By Liu Chenghui, Observer News】"To compete like China, one should build like China." On July 1, the U.S. journal Foreign Affairs published an article analyzing the secrets behind China's success in manufacturing. The article points out that China has made remarkable achievements in electrification, artificial intelligence infrastructure, industrial clusters, and supply chain integration. If the United States wants to achieve similar results in competition, it needs to learn from China's rich experience in organizing and mobilizing economic production, thus formulating a U.S.-style industrial policy.

The article states that for a long time, Sino-U.S. competition has been seen as a contest between two opposing roles in the global economy: China is the main producer of the world, while the United States is the main consumer. However, now both countries are trying to move toward each other's roles. The question is: can the United States find alternative production capacity faster than China, or can China find alternative consumer demand faster than the United States?

In a recent article, former U.S. Deputy Secretary of State Kurt Campbell and former Director of the China Affairs at the National Security Council Rush Doshi warned not to underestimate China and its industrial capabilities. They pointed out that the main shortcoming of the United States is "insufficient scale," meaning it cannot improve efficiency and productivity through scale advantages, and that Washington must unite its allies to address this issue to compete with Beijing.

May 30, Braddock, Pennsylvania, USA, Monongahela Plant of US Steel. Visual China

Assembling such a "U.S. economic team" may alleviate the disadvantage of scale, but scale alone is far from enough. The article believes that to establish an integrated supply chain like China's over the past three decades, the United States must also mine raw materials locally, build infrastructure, and deploy technology, which is an arduous project that cannot be avoided.

"If the United States hopes to achieve results similar to those of China, it must build like China, replicate some of Beijing's practices in organizing and mobilizing economic production, prioritize speed and industrial clustering. What Washington needs is a U.S.-style industrial policy."

China's Electrification and Vertical Integration

Foreign Affairs mentioned that one typical example of the Chinese model is the decades-long process of electrification.

About 20 years ago, China launched a national high-speed rail network construction plan, and at the same time had to build corresponding power infrastructure to support its operation. Later, investments in electric vehicles further increased electricity demand, which in turn led to more grid upgrades and charging station infrastructure construction.

The rise of the electric vehicle industry has, in turn, created a complete advanced electrification supply chain, including batteries, permanent magnets, and energy storage systems. At every stage of development, China not only invested in cutting-edge technologies but also continuously built power grid infrastructure. This decision has brought significant returns.

China's ability to achieve advanced electrification at an astonishing speed is due to government support and also to competitive and highly vertically integrated enterprises.

This vertical integration allows companies to iterate and optimize products more quickly, accelerate R&D, reduce supply disruptions, and lower costs. As a result, Chinese-made solar panels are up to 65% cheaper than those in the U.S. and Europe. In 2024, the price of lithium iron phosphate batteries alone dropped by 30%. Lower-cost technologies are adopted more quickly, leading to increased production, reduced consumer costs, and thus accelerated technological advancement.

June 1, 2024, Haixi Prefecture, Qinghai Province, China's Green Development Qinghai Haixi 50 MW Molten Salt Tower Solar Power Project (drone photo). Visual China

National support has greatly shortened the development cycle of energy technologies. The Chinese government and state-owned enterprises have coordinated efforts in innovation, regulation, and deployment. For example, in developing next-generation small modular nuclear reactors, these enterprises have collaborated with universities to train talent, directly funded laboratories for research, and coordinated design and approval processes, achieving an incredible result of going from concept to commercialization in just ten years, something the United States finds hard to match.

China's achievements in renewable energy are also impressive. In 2024 alone, China added about 28 gigawatts of solar capacity, exceeding the entire solar capacity of the United States. Currently, China's total solar capacity exceeds 1 terawatt, sufficient to meet global solar demand until 2032. China's power generation capacity has surpassed the combined total of the United States and the European Union.

The massive investment in electrification has also given China an advantage in the field of artificial intelligence. Since AI data centers require stable base load power, the outcome of the global AI race largely depends on whether there is a stable supply of large amounts of electricity. Although the United States has the most advanced chips for training frontier AI models, China leads the world in the electrification infrastructure required for deploying AI.

Industrial Clusters and Government Collaboration

Another element of China's manufacturing success is regional industrial clusters, where companies are concentrated to share labor resources and supply networks. In such an environment, companies can expand more quickly and achieve value enhancement during their growth process.

For example, in the Pearl River Delta, the Chinese government designated special economic zones, built large ports and logistics infrastructure, and provided tax incentives to attract suppliers and assemblers. Companies benefit from reduced transaction costs and shortened commercialization cycles, so high-value manufacturers are concentrated in these areas. A large portion of the supply chains of companies like Apple and Chinese drone manufacturer DJI are located in this region.

May 21, 2025, Hefei, Anhui Province, the automobile production workshop of the first new energy vehicle joint venture of Volkswagen in China, Volkswagen Anhui, where industrial workers and industrial robot arms are working. Visual China

In Hefei, Anhui, the local government and major electric vehicle companies jointly invested in building supplier parks with housing and transportation connections. Software developers, advanced display suppliers, and manufacturers gathered in the city, forming a cluster-based automotive industry supply chain. Global automakers have noticed this. In 2024, Germany's Volkswagen invested 2.7 billion U.S. dollars in its Hefei production and innovation center, further solidifying the city's status as the "Detroit of the 21st century."

"China has realized the key, now it's the U.S.'s turn to act"

The article writes that as the United States renews its industrial policy for the first time in half a century, the Chinese model provides important lessons for U.S. policymakers. U.S. decision-makers should focus on industries where domestic gaps are most evident, such as lithium-ion batteries, solar panels, and permanent magnets, where the United States has only one major manufacturer in each field, and their scale is far smaller than that of Chinese companies. These serious gaps cannot be compensated by allies and require the rapid establishment of domestic production bases.

The United States could also tailor its approach, creating lithium battery industrial clusters in the Midwest, where there are abundant critical mineral resources, transforming the once-called "Rust Belt" Great Lakes region into a "Battery Belt."

However, merely designating clusters is not enough. The U.S. government must also act as an "accelerator." Simplifying approvals and shortening environmental reviews are just the first steps; Congress should also grant federal agencies such as the Department of Energy and the Department of Transportation the authority to expedite projects.

Currently, it often takes more than ten years to build a nuclear power plant in the United States, and this situation should change. Federal agencies should jointly establish a "fast track" to provide licensing convenience for strategic projects. State governors and mayors should work with federal counterparts to form dedicated teams to quickly coordinate land use, utility services, and labor deployment.

"The United States cannot and should not completely copy China's economic organization model. However, the United States should certainly learn from China, the world's leading manufacturer." The article ends by encouraging the United States, stating that underestimating China is a serious mistake, but underestimating the United States is equally dangerous, because world-class research institutions, open capital markets, and the concentration of global top talents remain the core strengths of the United States. To convert these strengths into productive capacity, the United States should selectively emulate today's outstanding manufacturing powers and rediscover its ability to build quickly and efficiently.

The article concludes that deindustrialization is not about nostalgia, but about revival. To grasp the future, the United States must genuinely advance infrastructure and deploy technology.

"The United States does not need to become China, nor can it become China. But China has already realized the key: the prosperity of future generations depends on investing in the industrial foundation of the 21st century. Now, it's the United States' turn to act."

This is not the first time that an American media outlet has issued such a call.

"Tariffs will not bring back American industrialization." Bloomberg published an article with this title on May 14, offering advice to the Trump administration: to revitalize manufacturing, the United States needs to learn from China's approach.

In the article, Dan Wang, a researcher at the Hoover Institution of Stanford University, and freelance writer Ben Reinhardt directly point out that American industry is no longer as prosperous as before, while Chinese industry is thriving.

The article offers three more reliable suggestions to the Trump administration aimed at revitalizing American manufacturing: first, study China's development strategies, including attracting foreign investment and building a vast network of industrial centers; second, create new manufacturing paradigms and seek opportunities in emerging technologies such as artificial intelligence; finally, pay attention to maintaining American advantages, such as alliances and the attraction of global talent.

It is worth noting that since Trump took office in January this year, hundreds of visas have been revoked, international students have been arrested and deported, and foreign researchers now face the risk of being investigated by the FBI. In addition, Trump has targeted top universities and research institutions, threatening to cut federal research funding.

"For the United States to succeed, it must show its best self," wrote the Financial Times on March 31. "The more arbitrary Trump is, whether in trade policy, immigration policy, or investor treatment, the more likely it is to lead to an outcome: ultimately, the one isolated from the rest of the world will not be China, but the United States itself."

This article is an exclusive contribution from Observer News. Unauthorized reproduction is prohibited.

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