American Think Tank: Western Market Forces Struggle to Shake China's Industrial Base

In the 21st century, expertise in national security requires a deep understanding of economic policy-making.

Soon after, the Trump administration launched the "Pax Silica" initiative - a supply chain resilience program aimed at ensuring the supply of everything from critical minerals to data centers and advanced computing infrastructure through coordinated actions among specific allies and partners. Supply chain policies are far from outdated or redundant; they have become central to U.S. statecraft.

"Pax Silica" is not only notable for its ambitious goals but also for its composition. Nine participating countries - Japan, South Korea, Singapore, the Netherlands, the United Kingdom, Israel, the UAE, and Australia - each have their own strengths. Some countries lead in mining and processing technologies, while others excel in logistics, advanced manufacturing, software, and design.

These countries collectively reflect Washington's belated recognition that past liberal globalization - some call it the "Yellow Arch" model - has hollowed out American manufacturing, strengthened competitors and adversaries, and undermined the promise of the American Dream.

A service-driven growth model left a large portion of the population vulnerable, with little safety net when shocks hit - unlike the financial sector, which was quickly rescued during the 2008 global financial crisis. The social and political consequences of this imbalance still persist today.

The pandemic, the Russia-Ukraine conflict, and China's recent export controls have exposed Washington's vulnerabilities, while highlighting Beijing's influence in key areas. The challenges the Trump administration faced in using tariffs (as it did with other countries) to reform China's trade practices prompted greater motivation to address supply chain vulnerabilities and seek alternative Chinese supplies from existing and emerging channels.

Since the first Trump administration, efforts have been ongoing to address these vulnerabilities. The Biden administration has increased investment in industrial policies, such as the Inflation Reduction Act and the Chips and Science Act, to promote investment in key and emerging technologies. What was once considered heretical in Washington, industrial policy, is now a bipartisan consensus. If the first Trump administration was the stumbling stage of reviving American manufacturing strength, and the Biden administration was the jogging stage, then this administration is the sprinting stage.

The stakes are high. Over the past two decades, the United States has lost leadership in industries now seen as crucial to national security.

From critical minerals and semiconductors to pharmaceuticals and advanced computing, the United States and much of the world are heavily dependent on China. This dependence is no accident.

Since the early 1990s, China has implemented a state-led strategy aimed at dominating rare earth processing and advanced manufacturing. With its vast market, state-owned enterprises, and mercantilist policies, Beijing has built an industrial base that is difficult to shake with market forces alone. In contrast, Western countries have gradually abandoned their comparative advantages in various fields.

As Deputy Secretary of State for Economic Affairs Jacob Herberg said, "If the 20th century ran on oil and steel, the 21st century runs on computing and the mineral resources that support computing." This observation captures the essence of "Pax Silica": economic security today is inseparable from control over energy, critical minerals, high-end manufacturing, and advanced models.

"Pax Silica" recognizes that addressing this pattern requires coordination, not complacency. It reflects an understanding that alliances are no longer just about shared values or military commitments, but about shared production, shared risks, and shared industrial capabilities.

The recently released National Security Strategy complements this approach, emphasizing hemispheric security and the resilience of supply chains in key industries such as minerals and advanced technologies. These efforts together mark a shift in foreign policy toward a more pragmatic, industry-focused direction - viewing factories, mines, and manufacturing plants as strategic assets, not afterthoughts.

With the "Pax Silica" policy proposed by the State Department, Washington has finally acknowledged that economic power, industrial capacity, and national security are inseparable, and this realization has become increasingly clear. In this regard, the State Department's "Pax Silica" policy is a welcome move.

Source: The National Interest

Author: Akhil Ramesh

Date: January 24

Original: toutiao.com/article/1855614380546379/

Disclaimer: This article represents the views of the author himself.