The Biden Administration’s Strategy for Advanced Manufacturing: the Lever of Economic Security by LIU Guozhu
The advanced manufacturing strategy under the Biden administration has made progress but also faces numerous challenges.
Welcome to the 21th edition of our weekly newsletter! ChinAffairs+ is a weekly newsletter that shares Chinese academic articles focused on topics such as China’s foreign policy, China-U.S. relations, China-European relations, and more. This newsletter was co-founded by me and my research assistant, ZHANG Xueyu. I am SUN Chenghao, a fellow with the Center for International Security and Strategy (CISS) at Tsinghua University, Council Member of The Chinese Association of American Studies and a visiting scholar at the Paul Tsai China Center of Yale Law School (fall semester 2024).
Through carefully selected Chinese academic articles, we aim to provide you with key insights into the issues that China’s academic and strategic communities are focused on. We will highlight why each article matters and the most important takeaways. Questions or criticisms may be addressed to sunchenghao@tsinghua.edu.cn
Today, we have selected an article written by LIU Guozhu, which focuses on the Biden Administration’s Strategy for Advanced Manufacturing.
Summary
Since Biden took office, he has prioritized advanced manufacturing as a key element of U.S. economic security. Building on policies from the Obama and Trump administrations, his strategy is more proactive, driven by the failure of neoliberal policies, deindustrialization, and the rise of Chinese manufacturing.
The strategy focuses on advancing technology, increasing public investment in research, fostering a supportive domestic ecosystem, strengthening supply chain resilience, and improving workforce training. While advanced manufacturing has gained bipartisan support, challenges such as political polarization, skill gaps, permitting issues, and skepticism about economic nationalism remain.
Why It Matters
In recent years, the U.S.-China trade war has escalated, with both countries competing in sectors such as basic manufacturing, advanced technologies, and global supply chains. The United States has focused on developing its domestic manufacturing sector as a response to China’s industrial rise and the loss of domestic jobs. At the same time, China has introduced the “Made in China 2025” initiative, aimed at upgrading its manufacturing industry and reducing reliance on foreign technology to gain a stronger foothold in the technological competition.
During Biden’s presidency, he has placed significant emphasis on advancing U.S. manufacturing by implementing key development policies, constructing a China-exclusionary global supply chain, and imposing export controls on China to maintain U.S. technological superiority, while attempting to reduce the U.S.-China trade deficit. As Biden’s successor, Trump has portrayed China as a “predator” of American jobs, and once in office, he is expected to launch a new round of technological and economic competition with China. Trump's base of “working-class voters” has eagerly awaited how his industrial policies would revitalize both U.S. advanced and traditional manufacturing sectors.
Given that most policy discussions focus on the broader U.S.-China relations, this paper takes a closer look at the U.S. manufacturing development strategy to provide a more nuanced perspective on the topic. From the perspective of most Chinese scholars, there is no fundamental difference between Biden’s and Trump’s policies on economic security.
Key Points
Advanced Manufacturing and the U.S. Economic Security
The Biden administration’s strategy for advanced manufacturing is primarily influenced by the following three factors: the critical importance of advanced manufacturing to the U.S. global status and economic prosperity; the economic issues arising from the outsourcing of manufacturing due to neoliberal economic policies since the 1980s; and the challenge of China’s rise in the advanced manufacturing sector. In response to these economic security concerns, there has been a growing bipartisan consensus on the need for a modern industrial and innovation strategy.
The Importance of Advanced Manufacturing to the U.S. prosperous
Historically and in contemporary terms, advanced manufacturing has been a cornerstone in establishing U.S. dominance in global economic and political affairs. Despite the “hollowing out” of U.S. manufacturing in recent decades, it remains an essential part of the national economy, serving as a key driver of macroeconomic growth and vitality. Moreover, advanced manufacturing plays a significant role in improving the U.S. trade balance. It is also integral to U.S. national security, as many advanced manufacturing technologies are critical for maintaining military strength. Lastly, the sector is a major contributor to the creation of high-paying jobs, providing important opportunities in the labor market.
Contrary to Expectations: The Decline of U.S. Manufacturing Under Neoliberal Economic Policies and the Impact of Globalization
Since the 1980s, neoliberal policies have profoundly shaped U.S. domestic industrial and foreign economic policies, leading to the integration of more emerging economies into the U.S.-dominated global economic system. However, the acceleration of globalization has had significant side effects, such as the increased outsourcing of U.S. manufacturing and the hollowing out of domestic manufacturing, which has gradually undermined the U.S. economy and security.
The share of U.S. manufacturing in the overall economy, including advanced manufacturing, has been on the decline. As a consequence, a reduction in newly created jobs and exacerbated income inequality appeared. Meanwhile, the shrinking of U.S. manufacturing has increased dependency on imports from outside the region, creating greater supply chain security risks. Combined with the relocation of manufacturing abroad, the U.S. defence industrial base has been affected. What’s worse, the decline of advanced manufacturing has weakened the U.S. technological innovation capabilities, and the offshoring of advanced manufacturing has contributed to an increased trade deficit in this sector.
The Impact of China’s Rise in Manufacturing on the U.S.
The post-Cold War era of globalization has brought substantial changes to the global economic structure, with developing economies, particularly China, playing an increasingly prominent role. U.S. policymakers are particularly concerned about China’s growing advantage in sectors such as electric vehicles and batteries. In high-speed rail, next-generation mobile communications, artificial intelligence, and mature semiconductor manufacturing technologies, China has shown strong development momentum, which has posed the comprehensive and long-term challenge on the U.S.
Moreover, there are growing concerns that China’s economic structure is evolving, moving up the value chain in response to comparative advantages. A study by the U.S. Senate Committee on Small Business and Entrepreneurship highlights that if China successfully implements its “Made in China 2025” development goals, the significant “China shock” already experienced in traditional manufacturing will extend to sectors such as aerospace, computer and information technology, machinery, and automobiles. The U.S. is worried that if China leverages institutional advantages to undermine America's position at the top of the value chain without corresponding innovation from the U.S., the long-established U.S.-China supply chain will be disrupted.
The Biden Administration’s Strategy for Advanced Manufacturing
Leveraging the Development of Advanced Technologies to Lead Advanced Manufacturing
The Biden administration’s strategy for advanced manufacturing aims to “harness and protect its technological leadership through rapid development and adoption of innovative manufacturing technologies”. The administration has set five strategic goals: First, achieving clean and sustainable manufacturing to support decarbonization, which is a primary goal of adopting advanced manufacturing technologies. Second, accelerating microelectronics and semiconductor manufacturing. Third, promoting the integration of advanced manufacturing to support the bioeconomy, with a call for a “whole-of-government approach”(协调全政府的方法). Fourth, developing innovative materials and processing technologies. Fifth, advancing the future of smart manufacturing.
Strengthening the Foundation for Advanced Manufacturing through Increased Federal Investment
After World War II, U.S. policymakers increasingly recognized that markets alone would not invest in technologies, innovation, or infrastructure beneficial to entire industries. Therefore, the government had to take proactive steps to establish a foundation for breakthrough technologies through public R&D. Upon taking office, President Biden, in close coordination with the Democrat-controlled Congress, significantly increased public investment in basic and applied research. The Biden administration has placed emphasis on research in semiconductor-related technologies and clean energy technology development.
Actively Optimizing the Ecosystem for Advanced Manufacturing Development
The development of advanced manufacturing requires a favorable ecosystem, including an environment for technological innovation and application, investment subsidies for new enterprises, tax incentives, product outlets, and infrastructure capacity. Since Biden’s inauguration, several measures have been taken to optimize the ecosystem for advanced manufacturing development: First, strengthening “Buy American”(购买美国货) policies at the federal level. Second, the federal government has created regional innovation and technology centers. Third, subsidies and tax credits for key and emerging technologies have been provided, focusing on semiconductors and renewable energy sectors. Fourth, there has been an increased investment in infrastructure to facilitate the development of advanced manufacturing.
Enhancing Supply Chain Resilience to Revitalize Domestic Manufacturing
The COVID-19 pandemic revealed structural weaknesses in the U.S. industrial base and key supply chains, particularly in terms of insufficient manufacturing investment and the hollowing out of manufacturing. From the outset of his presidency, Biden prioritized strengthening key supply chains to revitalize the industrial base. In 2021, Biden issued an Executive Order on U.S. Supply Chains, emphasizing resilience and outlining measures to be taken across government agencies. These actions included: First, historic investments in long-term supply chain resilience. Second, institutionalizing supply chain resilience across the federal government. Third, collaborating with allies and partners through mechanisms like IPEF and QUAD, to promote collective supply chain resilience.
Improving Workforce Development and Training Mechanisms for Advanced Manufacturing
The Biden administration has reformed the Science, Technology, Engineering, Mathematics, and Medicine (STEMM) ecosystem to enhance U.S. competitiveness in advanced manufacturing by providing lifelong support for students, teachers, workers, and the public. The National Science Foundation has launched experiential learning programs for emerging technologies and efforts to reduce funding gaps for underrepresented groups.
Additionally, the administration has introduced workforce training programs, including workforce hubs and the “Workforce Sprint” initiative, which brings together employers, unions, and organizations to establish high-quality education and training standards, ensuring a diverse and robust manufacturing workforce.
Progress and Challenges in the Biden Administration's Advanced Manufacturing Strategy
The advanced manufacturing strategy is a complex, long-term process. Federal investments have spurred business spending in key sectors, and public-private workforce training partnerships have shown positive results. Supply chain vulnerabilities are beginning to improve. However, the legacy of neoliberal policies, political polarization, the “skills gap”, and rising economic nationalism all create uncertainty about the future of the Biden administration's strategy.
Progress in the Biden Administration's Advanced Manufacturing Strategy
Catalyze Business Investments with Federal Funding: Federal public investments have spurred significant business investments in key advanced manufacturing sectors, particularly semiconductors and clean energy. Since the CHIPS Act in 2020, global companies like TSMC, Samsung, and Intel have increased investments in the U.S., while total investments in clean energy industries have reached $418 billion under the Biden administration.
Transform U.S. Technological and Economic Landscape: Investments in advanced manufacturing are reshaping the U.S. economic geography. Traditionally concentrated in West Coast cities like San Francisco and Seattle, more than half of the Biden administration’s investments are now in the Midwest’s “Rust Belt”, including cities like Pittsburgh, Columbus, and Madison.
Develop Infrastructure for Advanced Manufacturing: The Bipartisan Infrastructure Law allocated nearly $400 billion to over 40,000 projects, catalyzing $614 billion in private sector investments. This infrastructure development has improved efficiency in goods and services flow, advanced power grid resilience, and is establishing a nationwide electric vehicle charging network.
Build Resilient Supply Chains: The U.S. benefits from a global network of allies, but faces challenges from the hollowing out of its manufacturing base. The Biden administration is leveraging this advantage while rebuilding manufacturing, as evidenced by initiatives like the Global Supply Chain Cooperation Joint Statement (2022) and the Mineral Security Partnership, which enhance diversified and sustainable energy mineral supply chains.
Challenges in the Biden Administration’s Advanced Manufacturing Strategy
Despite broad bipartisan support for advancing U.S. manufacturing, significant differences remain between the parties, especially regarding clean energy policies. Trump has criticized Biden's Green New Deal as a “green hoax” and opposed subsidies for electric vehicles, while indicating plans to reinstate fossil fuels and speed up drilling and pipeline approvals after his 2024 victory. This political polarization weakens the continuity of the U.S. advanced manufacturing strategy.
Skills Gap: A mismatch between job demands and workers' skills hampers businesses' ability to find qualified technical workers, hindering short-term manufacturing progress.
Licensing Procedures: Complex and lengthy permitting processes at local, state, and federal levels slow down construction for new facilities, especially for semiconductor manufacturers, deterring investments.
Trade Policies with China: The U.S. “over-securitizing” its trade policies with China has negatively impacted some advanced manufacturing sectors.
Global Reactions to Economic Nationalism: The Biden administration's strategy has prompted counteracting policies from other regions, such as the EU's European Chips Act and Net-Zero Industry Act, to mitigate the potential negative effects.
Conclusion
The advanced manufacturing strategy under the Biden administration has made progress but also faces numerous challenges. Currently, the Trump administration has introduced the Strategy for American Leadership in Advanced Manufacturing (《美国先进制造业领导力战略》), breaking the long-standing Republican opposition to industrial policies and placing greater emphasis on developing and transforming new manufacturing technologies. At the same time, both the Biden and Trump administrations have maintained a strong focus on advanced fields such as smart manufacturing, microelectronics and semiconductor manufacturing, and high-performance materials technology. The continuity of policies between the two administrations in advanced manufacturing will increase the likelihood of success for the U.S. strategy.
About the Author
Liu Guozhu刘国柱：He is a professor and researcher at Zhejiang University, and the director/researcher of the Center for American Studies. His main research areas include US foreign relations, international relations, and non-traditional security issues. Liu’s multiple research reports have been collected and reported by the National Development and Reform Commission, the Ministry of Foreign Affairs, and CCTV.
About the Publication
The Chinese version of this article was published in Journal of Tongji University (Social Sciences Edition)（《同济大学学报（社会科学版）》）. The Journal was founded in 1990 and published on the 25th of every month. It is a comprehensive academic journal of humanities and social sciences sponsored by Tongji University, supervised by the Ministry of Education, and publicly published and distributed both domestically and internationally. After years of effort, this journal has become a comprehensive social science journal with extensive influence, ranking among the top in terms of reprint rate and impact factor among national comprehensive university social science journals.
