Bidenomics Industrial Policy Hurts Americans and Boosts China

Feb 23, 2024 by AFP

As our activists talk to voters on doorsteps, we hear concerns about big government and the impact of Bidenomics. A frequent concern is those big government handouts benefiting China.

Ironically, China is the case study for failed top-down government policies. The Biden Administration’s industrial policies emulate the Chinese Communist Party’s (CCP) practice of picking winners and losers. These policies have not worked in China and copying them in America damages our economy. Adding insult to injury, Biden’s green energy tax credits end up benefiting our rivals. That move is not just bad policy–it hurts Americans. Reps. Moolenaar and LaHood have introduced a bill to stop Biden’s failed policy before it has catastrophic impacts.

Gotion (the North American subsidiary of CCP-affiliated Gotion High Tech) wants to build electric vehicle battery facilities in the Big Rapids region of Michigan. Gotion is part of the first wave of these factories across the country eligible for Biden’s Inflation Reduction Act. Gotion, last fall, expected to receive tax credits until a large outpouring from the local community changed their tune.

It’s important people spoke up because the government is incompetent at picking winners and losers. The green energy production tax credits from President Biden’s Inflation Reduction Act are rewarding politically motivated investments and production. That is despite the rest of the world moving to an all-of-the-above energy portfolio. It’s even worse when our international rivals qualify for these tax credits. The government must not subsidize our rivals at the expense of America’s interests and prosperity.

These misguided policies, both at federal and local levels, fail Americans, benefit China, and defy common sense. China needs the help now because its own industrial policy has come back to haunt them.

China is reckoning with the fallout of decades of state-run investments. 2023 was a rough year for the Chinese economy. Even though the Chinese economy looked ready for a strong recovery in a post-Covid world, its economy sputtered. China’s growth stagnated due to lackluster investment in China and longer-term systemic issues. By the end of 2023 the International Monetary Fund’s October report showed China was a drag on the regional and world economy.¹

China’s inefficient investment climate comes from the Chinese Communist Party (CCP) itself. The CCP prioritized the real-estate sector which remains in crisis and caused China’s sluggish reopening. CCP General Secretary Xi Jinping knows China’s economic future is in jeopardy. The CCP wants to get its economy back on track through new and emerging technologies such as electric vehicles, batteries, and renewable-energy equipment.²

America must avoid making the same mistakes as China. These heavy-handed industrial policies put the US economy at risk of the same problems China faces. The United States government has proven that it cannot successfully make wise investments. Expecting the bureaucratic state to pick the right industry to boost the US economy is akin to gambling. Remember the gamble China took on it’s real estate market, which has caused a drag on the global economy?

America’s economic dominance comes from market demand and entrepreneurial innovation. Big government intervention causes waste and inefficient investment. Instead of rewarding political allies, the government should stand back. Principled public policy focuses on ensuring fair access to capital, not playing favorites.

Representatives Moolenaar and LaHood have an emergency solution for one negative impact of the Inflation Reduction Act. The No GOTION Act will ensure the bad industrial policy of the Biden Administration does not benefit our rivals around the world.

The U.S. Government should not pick winners or losers among companies, and it certainly should never benefit foreign rivals. Congress must pass this bill to protect American interests. It is the first step to end these misguided industrial policies of Bidenomics.

Dominic Nordel is a federal affairs liaison at Americans for Prosperity.