America is engaged in a struggle against the Chinese Communist Party, which seeks to displace America’s global leadership with its modernized model of Marxist, techno-totalitarian control.
Defeating such an opponent will require a whole-of-society effort. One critical part of that effort will be developing superior hardware and software technologies at home. This will ensure that the globe’s cutting-edge products are built by free societies, for free societies, rather than by the CCP, which seeks to use the tools that it already deploys against its own citizens as the architecture of global technological control.
To facilitate the development of those technologies at home, policymakers must encourage the re-shoring, “friend-shoring,” and nurturing of industries necessary to the maintenance of a free society. The tax-policy reform most likely to facilitate domestic manufacturing is to allow investors full expensing of their capital investments. Also known as 100 percent bonus depreciation, full expensing lets corporations immediately write off the cost of capital expenditures in plants, machinery, equipment, and research.
The 2017 Tax Cuts and Jobs Act authorized full expensing; unfortunately, the provision is getting phased out. So even as the U.S. spends trillions to re-shore specific industries, America’s tax code increasingly punishes domestic capital expenditures by preventing businesses from fully recovering the costs of their investments. Congress should make full expensing permanent for all asset classes, including plant, machinery, equipment, research, and experimentation.
Rebuilding America’s manufacturing capacity is only part of the story. Policymakers also will need to prevent the CCP from selling critical technologies in American markets and end our public financing of Chinese companies. The United States cannot reasonably expect to maintain its freedoms and security while running its telecommunications grid on sanctioned Chinese hardware, its ports on compromised ship-to-shore cranes, and its state power grids on suspect Chinese transformers. The U.S. should remove China’s laser-surveillance devices and genetic-sequencing technologies from its supply chains entirely.
To ward off Chinese dominance of critical technologies, federal and state governments must become nimble and reliable purchasers of those technologies—and prevent Chinese companies from selling to them. State and federal governments have repeatedly and unwittingly purchased Chinese technology products for our military and critical infrastructure, enabling Chinese firms to take domestic market share in highly regulated industries like telecommunications and health care.
State and federal governments should prohibit the procurement of Chinese products and services altogether unless a public body or its contractor cannot find an alternative vendor. For sensitive technologies such as laser-surveillance devices, drones, telecommunications equipment, and other components of critical infrastructure, governments should limit their purchases to American and allied free nations’ vendors. If America leads, allied nations will follow, expanding the market for products produced by free nations and protecting producers who otherwise would face subsidized Chinese competition.
Finally, federal, state, and local governments must stop financing the destruction of the American economy, technologies, and military. Public dollars should not be invested in Chinese assets—full stop. All federal, state, and local pension funds should be pulled from China completely. Lawmakers also should ban private investment in critical Chinese technology sectors with military applications.
State and federal policies must prioritize defending the industrial power of free nations while defunding the technologies of totalitarianism. The U.S. defense-industrial base has atrophied, as has America’s ability to meet domestic and allied critical-infrastructure needs. For too long, America has been asleep at the wheel, bankrolling China’s totalitarian project. Given China’s ambition and technological prowess, America’s survival as the world’s leading superpower will depend on its industrial strength.
Photo by Rao Aimin/Xinhua via Getty Images