The Biden administration this week signaled that it will continue a hardline approach to economic relations with China, saying it would enforce tariffs reached under the Trump administration and target Chinese subsidies for private industry.
The moves come months after the U.S. Senate passed a bipartisan $250 billion spending package meant to counter Chinese industrial support by investing in technology research and improving U.S. capacity to manufacture critical goods, like semiconductors.
In a new interview, Dell Technologies (DELL) CEO Michael Dell described the U.S.-China economic relationship as “frosty,” and said he welcomes U.S. support for the tech sector as a way to counteract such subsidies in China.
“The relationship is a little bit frosty at the moment, and we could be heading toward a bipolar world,” he says. “That creates, certainly, challenges.”
“I think it’s great that the U.S. is now starting to focus on some of these forward strategic industries,” he says.
A global chip shortage caused by the pandemic has drawn attention to U.S. reliance on Chinese manufacturing for critical parts that make up goods from laptops to smartphones to cars.
Despite longstanding U.S. concern over Chinese industrial subsidies, China announced last year $1.4 trillion in tech investment through 2025 that aims to support key areas like artificial intelligence and wireless infrastructure in an escalating competition with U.S. firms.
In recent months, a Chinese crackdown on major tech companies like e-commerce giant Alibaba (BABA) and search giant Baidu (BIDU) has come alongside continued support for industries like advanced manufacturing.
Industrial policy, government-directed support of preferred industries, has gained a foothold in the U.S. in fraught historical periods like the aftermath of the Great Depression or the Cold War. But in recent years the U.S. has largely avoided such measures, the Council on Foreign Relations said in a report released in March.
“For decades, there’s been zero industrial policy — it was kind of a dirty phrase,” says Dell. “Nobody wanted to talk about industrial policy.”
“But when you have an incredible nation, like China, deterministically investing in these strategic industries, and the U.S. doing absolutely nothing and sort of getting hollowed out in areas like semiconductors — that’s a real danger,” he says. “We’re kind of seeing that.”
Speaking to Yahoo Finance, Dell hailed the bipartisan $250 billion tech investment bill, dubbed the U.S. Innovation and Competition Act of 2021, which passed the Senate in May.
The bill has yet to come up for a vote in the House of Representatives.
“It’s great that the U.S. is now focused on this,” Dell says. “I hope it’s not too late.”