The United States is locked in a race with China and Europe to scale certain foundational technologies, such as semiconductors, and to develop and deploy emerging technologies, such as artificial intelligence and quantum computing. This race has both economic and national security dimensions, given the technologies’ potential military applications, as well as their impact on economic competitiveness more broadly.

Faced with this challenge, China and the European Union (EU) are pursuing aggressive and broad industrial policies to alter the competitive landscape and advance their interests to achieve world-leading status in various technologies. President Xi Jinping has stated explicitly that global tech dominance is essential to the Great Rejuvenation of the Chinese Nation, and what he hopes will be China’s reassumption of global and geopolitical preeminence.[1] Similarly, in Europe leading voices including French President Emmanuel Macron have doubled down in their push for “technological sovereignty,” arguing that Europe needs to band together and promote European champions for key technologies, including semiconductors, electric vehicle batteries, hydrogen, and cloud computing.[2]

The resulting policy prescriptions in China and the EU involve subsidies, discriminatory regulations, and other protectionist barriers that keep U.S. competitors at bay, while promoting domestic champions. Meanwhile, in the United States, industrial policy is a much less significant factor. Instead, private companies are the driving force behind the innovation and research that determine how the U.S. will fare in this global competition.