The New Economic Nationalism: US, China, and EU Industrial Policy

Defining Economic Nationalism

• 🌍 Economic nationalism is defined as policies prioritizing domestic industries and national development, sometimes at the expense of international cooperation, focusing on economic sovereignty.
• 💡 The "new" economic nationalism represents a shift away from decades of neoliberalism and the belief that free trade universally benefits all nations.

Drivers of the Shift

• 📉 The perceived failure of the liberal international order and free trade to benefit developed nations has fueled a pushback.
• 😷 The COVID-19 pandemic highlighted the risks of import dependency, prompting a focus on reshoring and strategic autonomy.
• 🚀 The rise of China as a global superpower is identified as the most significant economic and political event of this century, central to the new wave of economic nationalism and US-China competition.

Industrial Policy and National Security

• 🇺🇸 The United States has seen a turn towards protectionism and state intervention, starting with the Trump administration's tariffs and continuing with the Biden administration's focus on subsidies and strategic tariffs.
• 🇪🇺 The European Union is navigating a complex position, balancing its alliance with the US and seeking to build a relationship with China, while also increasing investment in industrial policy and national security, exemplified by initiatives like the "rearmur" project.
• 🇨🇳 China's approach, characterized by decades of state-led economic development and state-owned enterprises, contrasts with the US's hawkish trade policy and the EU's more balanced strategy.

China's State Capitalism and Global Impact

• 📈 China exemplifies state capitalism, where the state directs investment and credit, enabling aggressive, long-term industrial policies, particularly in sectors like clean energy and semiconductors.
• 🌐 This new economic nationalism has a mixed impact on developing countries; while wealthier nations benefit from deeper government coffers, China's rise offers a potential silver lining through infrastructure and manufacturing investment, and a greater respect for sovereignty.
• 🤝 The rise of China fosters stronger South-South cooperation and a larger voice for the Global South, potentially leading to a more multipolar world order.

Geopolitical Dynamics and Multipolarity

• 🌍 The US-China competition, while bearing some resemblance to the Cold War, is distinct due to significant economic interdependence.
• 🗺️ The EU is positioned between the US and China, seeking to maintain autonomy while navigating geopolitical tensions.
• ✨ A move towards a multipolar world order with broader power distribution and increased representation for developing countries is seen as a positive development.