Economic Nationalism of the Biden Administration:Manifestations, Ideological Roots and Impacts

Liu Feitao is Senior Research Fellow and Director of the Department for World Economy and Development,China Institute of International Studies (CIIS).

Since US President Joe Biden took office in 2021, his administration has introduced the “21st-century American industrial strategy” at home and adopted a “worker-centered” trade policy internationally.The twin policies claim theoretical backing from the concepts of Bidenomics and the New Washington Consensus.1The White House, “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution,” April 27, 2023, https://www.whitehouse.gov/briefingroom/speeches-remarks/2023/04/27/remarks-by-national-security-advisor-jake-sullivan-on-renewingamerican-economic-leadership-at-the-brookings-institution/.These policies and concepts attempt to meet challenges on pressing economic issues, including the pros and cons of globalization, the relations between government and market, growth and equality, which reflects that the US mainstream economic thinking is undergoing a significant shift from economic liberalism towards economic nationalism and protectionism.

This shift was initiated during the Donald Trump administration, and the Biden administration has further advanced it systematically and strategically.The US economic and trade policy has thus maintained significant inheritance and continuity across political parties and government changes, implying that“both Trump and Biden have positioned themselves as economic nationalists,self-consciously abandoning the precepts of the old order.”2Franklin Foer, “The New Washington Consensus,” May 9, 2023, https://www.theatlantic.com/ideas/archive/2023/05/biden-economics-industrial-policy-trump-nationalism/673988/.Biden’s economic nationalism is not a replica of Trump’s.However, both are manifested mainly in protectionism with a strong nationalistic spirit.Looking through the vantage point of economic nationalism provides a broader perspective and more explanatory underlying logic to understand and interpret Biden’s domestic and foreign policy, especially his economic and trade policy.

Defining Economic Nationalism

In Western academia, “economic nationalism” first appeared around World War I.Its classical definition typically involves two perspectives: policyoriented and motivation-oriented.The former emphasizes the relationship between a nation’s economy and the external world, while the latter emphasizes the nationalist motivations behind a nation’s economic policies.

From the policy-oriented perspective, economic nationalism refers to a series of policies that aim to reduce the links between economic activities within a country and economic activities outside.3Michael A.Heilperin, Studies in Economic Nationalism, Librairie E.Droz & Librairie Minard, 1960,p.27.Therefore, the concept of economic nationalism is normally associated with specific policies, such as those focusing on restricting global integration and external influence,or trade policies, subsidy policies and investment restrictions aimed at enhancing the competitiveness of domestic companies.4Monica de Bolle and Jeromin Zettelmeyer, “Measuring the Rise of Economic Nationalism,” August 2019, https://www.piie.com/publications/working-papers/measuring-rise-economic-nationalism.In this regard, while economic nationalism is conceptually opposed to international economic liberalism, it neither excludes liberal economic policies at home nor precludes state-centrist approaches.Therefore, it constitutes a broad definition of economic nationalism.

From the motivation-oriented perspective, which is the narrow definition, economic nationalism emphasizes the priority of a nation’s power and interests.Instead of simply pursuing opportunities to enhance capital, policymakers should make economic decisions to unite and strengthen a nation-state.5Rawi Abdelal, “Nationalism and International Political Economy in Eurasia,” in Eric Helleiner and Andreas Pickel, eds., Economic Nationalism in a Globalizing World, Ithaca, NY: Cornell University Press,2005, https://www.hbs.edu/faculty/Pages/item.aspx?num=13532.Robert Gilpin argues that economic nationalism is conceptually equivalent to statism, and its central idea is that economic activities are and should be subordinate to the goals of state-building and the interests of the state.6Rawi Abdelal, “Nationalism and International Political Economy in Eurasia.”Economic nationalism primarily or purely refers to protectionist and mercantilist policies, stressing that while nations increasingly accept to grow their wealth through economic integration with the deepening of globalization, they should preserve their sovereignty and avoid participating in cooperation that would increase their external dependence, especially on countries holding critical strategic raw materials or significant strategic meaning.

In the West, economic nationalism, in the narrow sense, is normally viewed as a set of concepts in opposition to economic liberalism.Economic nationalism and liberalism engage in a dynamic interaction centered around the interplay between globalization and sovereign nations.The motivation behind economic nationalism remains the same through the ages, and that is to pursue state power and wealth with a mission to resist or contend with the particular context of globalization in a given era.The rise of European classical mercantilism was the feudal monarchy’s resistance against medieval universalism.The new mercantilism in the US, represented by Alexander Hamilton, aimed at opposing British colonialism.Henry Clay’s American System was the main form of resistance against British-dominated globalism,and this confrontation lasted until World War I and World War II.After World War II, as the US replaced Britain and became the main driver of globalization, the new round of globalization facilitated by the World Trade Organization gained rapid development, especially in the 1990s and the beginning of the 21st century.After the global financial crisis in 2008, the US witnessed a surge of anti-globalization and economic nationalism, which further led to the rise of populism represented by Donald Trump.The Biden administration’s inheritance and reinforcement of Trump’s economic and trade practices manifests the continuation and development of US economic nationalist policies.

In terms of concept categories, China’s academic circle normally don’t accept the West’s approach of opposing economic nationalism against economic liberalism and tend to define economic nationalism based on the opposition and combination of mercantilism and liberalism, as reflected in the concepts of mercantilist nationalism, liberal economic nationalism, and economic nationalism combining mercantilist and liberal elements.7Wang Chunfeng, “Review of Research on Economic Nationalism,” Study of Ethnics in Guangxi, No.3,2012, pp.171-181.Other scholars advocate categorizing economic nationalism into two types: one type for developed countries, which promotes trade protectionism in the name of free trade and fair competition, and another for developing ones, which stresses developmentalism with control of their own natural resources and economic destiny.8Ibid.

Based on the understanding of the classic meaning of economic nationalism, especially from the viewpoint of interaction between economic nationalism and globalization, this article tends to define Biden’s economic nationalism in a narrow sense, which refers to a series of de-globalization practices intervened and dominated by the government that aim at safeguarding the US economic interests and hegemony.It refers to “policies designed to further domestic economic interests (the interests of domestic producers, consumers, and/or workers) at the expense of foreign economic interests,”9Monica de Bolle and Jeromin Zettelmeyer, “Measuring the Rise of Economic Nationalism,” August 2019, https://www.piie.com/sites/default/files/documents/wp19-15.pdf.which includes protectionist policies in the four categories of trade, industry, technology, and investment.

Forms and Features of Biden’s Economic Nationalism

Trump has become a typical representative of current US populism due to his trumpeting of the “America First” principle.Biden won the presidential election holding the banner of “anti-Trumpism.” However, in the first half of his term, he has not issued any “de-Trumpization” economic and trade policies expected by the outside world.Instead, Biden’s economic and trade policies inherited, strengthened and expanded those of Trump’s, which mainly have four forms.

Trade protectionism: protracted tariff war

The Biden administration inherited the Trump administration’s principle that economic security is national security, and it continued and extended Trump’s tariff war.In 2018, Trump invoked Section 232 of the Trade Expansion Act of 1962 and imposed tariffs of 25 percent on steel and 10 percent on aluminum for all trading partners, citing national security.10Jeremy Diamond, “Trump Says US Will Impose Steel and Aluminum Tariffs,” March 1, 2018, https://www.cnn.com/2018/03/01/politics/steel-aluminum-trade-trump-chaos/index.html.However, the fact is that the 1962 Act does not clearly define national security.The Trump administration provoked trade disputes based on vague statements that the domestic steel and aluminum industry was affected by imports, generalizing industrial security into national security.After Biden took office, he adopted Trump’s tariffs on steel and aluminum.He reaffirmed that “economic security is national security,” a national security principle with a strong economic nationalist tint, which the Trump administration strongly emphasized.In March 2021, the Biden administration released the Interim National Security Strategic Guidance, stating, “In today’s world,economic security is national security.”11The White House, “Interim National Security Strategic Guidance,” March 3, 2021, https://www.whitehouse.gov/wp-content/uploads/2021/03/NSC-1v2.pdf.

Biden’s actions run against his electoral stance.During the 2020 presidential campaign, Biden opposed Trump’s trade war against China,describing Trump’s avalanche of unilateral tariffs on Chinese imports as self-defeating because of their high costs for Americans.12James Bacchus, “Biden and Trade at Year One: The Reign of Polite Protectionism,” April 26, 2022,https://www.cato.org/policy-analysis/biden-trade-year-one#polite-protectionism.However, as soon as Biden took office, his economic and trade policy stance changed dramatically.Katherine Tai, as his nominee for US Trade Representative,gave an explicitly negative response when asked during her Senate confirmation hearing whether eliminating tariffs and non-tariff barriers should be considered a goal in negotiating bilateral trade agreements.13James Bacchus, “Biden and Trade at Year One: The Reign of Polite Protectionism.”In October 2021, based on a comprehensive evaluation of China-US economic and trade relations, Tai announced that America would initiate a targeted tariff exclusion process with China to ensure that the existing enforcement framework aligns most closely with US economic interests.14Katherine Tai, “New Approach to the U.S.-China Trade Relationship,” October 4, 2021, https://china.usembassy-china.org.cn/ambassador-katherine-tai-outlining-the-biden-harris-administrations-newapproach-to-the-u-s-china-trade-relationship/.This announcement confirmed that Biden’s office would retain the Trump administration’s tariff policies towards China, shattering the expectations of the business community and academia for the cancellation of tariffs.

Biden even saw tariffs as a leverage for economic and trade negotiations with China.In 2022, due to the outbreak of the Ukraine crisis and the disruption of the COVID-19 pandemic to the global supply chain, the US inflation rate reached a record high in 40 years, and there were growing calls inside his administration advocating slashing tariffs against China to curb inflation.Treasury Secretary Janet Yellen openly advocated eliminating some tariffs on Chinese imports that “aren’t very strategic.”15David Lawder, “Yellen Confirms She Is Pressing Biden for Some China Tariff Reductions,” May 18, 2022, https://money.usnews.com/investing/news/articles/2022-05-18/yellen-confirms-she-is-pressingbiden-for-some-china-tariff-reductions.But Katherine Tai opposed that position, saying “the China tariffs are, in my view, a significant piece of leverage, and a trade negotiator never walks away from leverage.”16Bradley Laas, “Tai Calls Tariffs a ‘Significant Piece of Leverage’,” June 22, 2022, https://www.americanmanufacturing.org/blog/u-s-trade-representative-katherine-tai-calls-tariffs-a-significant-piece-ofleverage/.Tai stressed “it is very, very important that what we do now not undermine the need that we have to make ourselves more competitive and to defend our economic interests in a global system.”17Ibid.The underlying implication is that the tariffs on China are not only a leverage to seek the so-called “fair trade” but also, more importantly, a leverage to encourage the reshoring of manufacturing and protect domestic employment.In this sense, the trade war initiated by Trump has become a supporting measure of US industrial strategy.In other words, the trade war initiated by Trump under the pretext of classical mercantilism (trade deficit) was continued by Biden under the pretext of new mercantilism (industrial protection), and high tariffs have become a regular feature of the Biden administration’s economic and trade ties with China.

Industrial protectionism: supporting and protecting strategic industries

Since the 1980s, economic liberalism represented by Reaganomics has dominated the US economic thought.The Clinton and Obama administrations maintained the Democratic Party’s big-government ideology and governance tradition, and Obama once laid out the Blueprint for an America Built to Last,18Matt Compton, “The Blueprint for an America Built to Last,” January 24, 2012, https://obamawhitehouse.archives.gov/blog/2012/01/24/blueprint-america-built-last.hoping to encourage the reshoring of manufacturing and achieve America’s “re-industrialization” through measures such as tax incentives and expanding infrastructure investments.Affected by populism and the anti-globalization tide, the Trump administration issued the executive order “Buy American, Hire American,”19Donald J.Trump, “Remarks on Signing an Executive Order on ‘Buy American and Hire American’in Kenosha, Wisconsin,” April 18, 2017, https://www.presidency.ucsb.edu/documents/remarks-signingexecutive-order-buy-american-and-hire-american-kenosha-wisconsin.but the order didn’t introduce binding rules and incentive policies, and his policies regarding the promotion of manufacturing reshoring and resurgence were mostly scattered and unsystematic.In comparison, Biden’s office not only explicitly introduced the concept of a modern American industrial strategy but has also upgraded and updated the “Buy American” rules by incorporating them into relevant legislation.These executive actions reflect the Biden administration’s comprehensive expansion of the big-government and industrial protectionist ideology.

The first is to provide mandatory market protection for largescale infrastructure investment to promote the resurgence of domestic manufacturing and infrastructure building.In November 2021, the Infrastructure Investment and Jobs Act was signed into law, authorizing the federal government to invest US$1.2 trillion over the next ten years in infrastructure construction, renovation, or upgrading.The law includes an additional $550 billion over the next five years for improving ground transportation networks ($284 billion) and essential social infrastructure($266 billion).20Justin Badlam, Tony D’Emidio, Adi Kumar, Sara O’Rourke and Rob Dunn, “The US Bipartisan Infrastructure Law: Breaking It Down,” November 12, 2021, https://www.mckinsey.com/industries/publicsector/our-insights/the-us-bipartisan-infrastructure-law-breaking-it-down.The protectionism-loaded Build America, Buy America Act (BABA) also became part of the Infrastructure Investment and Jobs Act.According to the BABA, all steel, manufactured goods, and construction materials used in federal-funded infrastructure projects must be produced in the United States, and the 50 percent threshold,the percentage of domestic content necessary for a product to qualify as a“domestic end product” which had remained unchanged since 1954, was raised to 55 percent in January 2021 and 60 percent from October 25,2022, and is expected to increase to 65 percent in 2024 and 75 percent in 2029.21Amy Conant Hoang, Stacy J.Ettinger and Erica L.Bakies, “Final Rule Changes Buy American Requirements for Federal Contractors,” March 7, 2022, https://www.natlawreview.com/article/final-rulechanges-buy-american-requirements-federal-contractors.The BABA also greatly increased the procurement price of domestic construction materials based on international market prices,including a 20 percent discount for large enterprises and a 30 percent discount for small- and medium-sized enterprises.22Ibid.That means foreign products will be difficult to enter the US market if they cannot offer prices 20-30 percent lower than US products.The Biden administration has created a nearly closed domestic market around the trillion-dollar infrastructure investments through these market regulations and price interventions.

The second is to promote the reshoring of high-end manufacturing and the green transformation of economic development with a focus on strategic industries.In the Biden administration’s Building Resilient Supply Chains report,23The White House, “Building Resilient Supply Chains, Revitalizing American Manufacturing,and Fostering Broad-Based Growth,” June 2021, https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf.four critical industries were listed: semiconductor manufacturing and advanced packaging; high-capacity batteries, such as batteries for electric vehicles (EVs); key minerals and materials; and pharmaceuticals and active pharmaceutical ingredients.Among the four strategic industries, semiconductor packaging and high-capacity batteries involve crucial elements to maintain the advantages of strategic technology industries and achieve the transition to a low-carbon economy and thus have become the focus for Biden to promote industrial policy legislation.

The CHIPS and Science Act is a landmark bill marking the United States’ open advocacy of large-scale subsidies and provoking the subsidy war.It went into effect in August 2022, authorizing the government to invest$280 billion into the scientific research and production of advanced chips in the next ten years.Among the investment, about $200 billion is for scientific R&D and commercialization, some $52.7 billion is for semiconductor manufacturing, R&D, and workforce development, with another $24 billion worth of tax credits for chip production.24Justin Badlam, Stephen Clark, Suhrid Gajendragadkar, Adi Kumar, Sara O’Rourke and Dale Swartz,“The CHIPS and Science Act: Here’s What’s in It,” October 4, 2022, https://www.mckinsey.com/industries/public-sector/our-insights/the-chips-and-science-act-heres-whats-in-it.The Act, citing national security,requires that companies receiving government subsidies or their subsidiaries may not engage in any significant transactions involving the material expansion of foreign semiconductor manufacturing capabilities.25The National Institute of Standards and Technology, “Preventing the Improper Use of CHIPS Act Funding,” March 23, 2023, https://www.federalregister.gov/documents/2023/03/23/2023-05869/preventingthe-improper-use-of-chips-act-funding.“Recipients will be required to enter into an agreement restricting their ability to expand semiconductor manufacturing capacity in foreign countries of concern for a period of 10 years after taking the money,” said the US Commerce Secretary Gina Raimondo, “Recipients must not knowingly engage in any joint research or technology licensing effort with a foreign entity of concern that involves sensitive technologies or products.”26Anton Shilov, “U.S.Govt Outlines Requirements for CHIPS Act Subsidies,” March 1, 2023, https://www.tomshardware.com/news/us-govt-outlines-requirements-for-chips-act-subsidies.This poison pill provision, while aimed at pressuring competitors, also affects foreign companies looking to invest in the US, effectively reinforcing “America First” in a more aggressive manner.

The third is to build green barriers under the guise of carbon reduction.The Inflation Reduction Act is touted by the Biden administration as the cornerstone legislation for addressing climate change.The Act allocates$369 billion for energy security and climate investment, which includes $43 billion worth of tax credits to incentivize low-carbon consumption, such as EVs and energy-saving appliances.It plans to achieve a 40 percent carbon emissions reduction target by 2030 and cut budget spending by $300 billion in ten years.27Arturo Conde, “Biden Signs $740 Billion Inflation Reduction Act.Here’s What You Could Get,”August 18, 2022, https://smartasset.com/financial-advisor/inflation-reduction-act.The Act stipulates that eligible EVs will receive tax credits of up to $7,500 for new vehicles and $4,000 for used vehicles.And home renovations that meet low-carbon requirements will be eligible for a tax credit of 30 percent of the total cost, with an annual cap of $1,200.Heat pumps and heat pump water heaters will qualify for a credit of up to $2,000.

However, to qualify for the subsidies, it is necessary to meet the wage and labor standards specified in the Act and fully comply with the requirements of BABA.For example, to unlock the full EV consumer credit, a scaling percentage of critical minerals in the battery must have been recycled in North America or extracted or processed in a country with a free trade agreement with the US.The battery must have also been manufactured or assembled in North America.28Justin Badlam, Jared Cox, Adi Kumar, Nehal Mehta, Sara O’Rourke and Julia Silvis, “The Inflation Reduction Act: Here’s What’s in It,” October 24, 2022, https://www.mckinsey.com/industries/public-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it.Due to the strict restrictions, many US trade partners,including France, Germany and South Korea, are excluded from the tax incentives as they neither sign free trade agreements with the US nor meet the assembly location requirements.Therefore, compared with the CHIPS and Science Act, which mainly aims to attract high-end manufacturing reshoring to the US, the Inflation Reduction Act obviously try to push the reshoring,near-shore outsourcing and friend-shoring of the whole industrial chain,including raw materials, components, assembly and sales.

Technology protectionism: from maintaining comparative advantage to pursuing absolute advantage

Technology protectionism is a new mercantilism, as it directly links technological innovation capacity to national security, economic prosperity and social stability.Therefore, it argues that nations must take precautions through intervention against states and non-state actors and assist stakeholders in obtaining local and global competitive advantages in order to gain geopolitical interests.29Alex Capri, “Techno-Nationalism: What Is It and How Will It Change Global Commerce?” December 20, 2019, https://www.forbes.com/sites/alexcapri/2019/12/20/techno-nationalism-what-is-it-and-how-willit-change-global-commerce/?sh=17f1f094710f.Comparing the technology protection policies of the Biden and Trump administrations, it’s clear that Biden has gone further and been more assertive in promoting technology protectionist policies.

First, Biden has significantly elevated the role of technology in national security strategy and viewed it as the key to 21st-century geopolitical competition.According to the 2022 US National Security Strategy,“Technology is central to today’s geopolitical competition and to the future of our national security, economy and democracy,” and “in the next decade,critical and emerging technologies are poised to retool economies, transform militaries, and reshape the world.”30The White House, “National Security Strategy,” October 2022, https://www.whitehouse.gov/wpcontent/uploads/2022/11/8-November-Combined-PDF-for-Upload.pdf.National Security Advisor Jake Sullivan also said that advancements in science and technology are poised to define the geopolitical landscape of the 21st century.According to Sullivan, on export controls, the US used to aim to stay a couple of generations ahead for critical technology, but facing the current strategic environment, the US “must maintain as large of a lead as possible.”31The White House, “Remarks by National Security Advisor Jake Sullivan at the Special Competitive Studies Project Global Emerging Technologies Summit,” September 16, 2022, https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/09/16/remarks-by-national-security-advisor-jake-sullivan-at-thespecial-competitive-studies-project-global-emerging-technologies-summit/.That means the US technological competition strategy has shifted from maintaining a relative lead in the past to seeking absolute leadership and from pursuing relative advantage to ensuring absolute advantage.

Second, the areas subject to export control and the list of individuals and entities under US sanctions have continued to expand.Since the end of the Cold War, the US export control system has long aimed at non-proliferation and counter-terrorism.However, since the Trump administration incited strategic competition among major powers, the US export control system has again become a major tool of geostrategic competition.The Export Control Reform Act of 2018 requires the President to establish an interagency process to “identify emerging and foundational technologies that are essential to the national security of the US and that are not covered by the definition of ‘critical technologies’ in the Foreign Investment Risk Review Modernization Act (FIRRMA).”32Paul K.Kerr and Christopher A.Casey, “The U.S.Export Control System and the Export Control Reform Act of 2018,” June 7, 2021, https://crsreports.congress.gov/product/pdf/R/R46814.The Export Control Reform Act doesn’t make a clear distinction between “emerging technologies” and “foundational technologies.” Still, it indicates that “foundational technologies” are subject to stricter control measures, which actually refers to final military uses or military users.During the Trump presidency, the Bureau of Industry and Security (BIS) under the US Department of Commerce had intended to define and identify “emerging” and “foundational”technologies accordingly.But the Biden administration deliberately takes advantage of this legal grey area, blurs the boundaries of dualuse technologies, discards the distinction between “emerging” and“foundational” technologies and introduces a new category of “Section 1758 technologies.”33Nicholas Weigel and Maryrose McLaughlin, “Commerce Department Plan to Nix ‘Emerging’ and‘Foundational’ Technologies Distinction in Export Controls,” January 24, 2022, https://www.mofo.com/resources/insights/220624-emerging-and-foundational-technologies-distinction.This general categorization greatly expands the scope of “emerging technologies” that require strict regulation, adding certain advanced and high-performance computing chips and computer goods to the commercial control list.34Bureau of Industry and Security, “Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to the People’s Republic of China (PRC),” October 7,2022, https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file.

Third, export control measures have become increasingly strict.The threshold of technology control is raised and its coverage is extended to personnel and services.Regarding the rising threshold, Chinese entities will be subject to “presumption of denial,” while transactions involving multinationals will be decided on a case-by-case basis.Products covered by the technology control will include logic chips with non-planar transistor architectures of 16nm or 14nm or below, DRAM memory chips of 18nm half-pitch or less, and NAND flash memory chips with 128 layers or more.The definition is a de facto embargo on high-end chips to China.As for control on personnel and services, on top of the Export Control Reform Act of 2018 which gives the BIS the authority to regulate services and other activities of US persons in support of foreign “military, security,or intelligence services,”35Kevin J.Wolf, Shiva Aminian and Anne E.Borkovic, “BIS Has New Authorities to Impose Controls over Activities of US Persons in Support of Foreign Military, Security, or Intelligence Services,” January 5, 2023, https://www.akingump.com/en/insights/alerts/bis-has-new-authorities-to-impose-controls-over-activitiesof-us-persons-in-support-of-foreign-military-security-or-intelligence-services.the Biden administration has expanded the application of this regulation to high-technology areas.In October 2022, the BIS first implemented this regulation, notifying American companies and individuals to apply for licenses for their direct and indirect support in R&D and manufacturing of advanced semiconductors in China.This requirement directly led to the shutdown of US-funded R&D centers located in China and the forced evacuation of American personnel.

Investment protectionism: politicizing and overstretching the national security concept

The US investment review regime is an important barometer to observe the trend of its investment protectionism.From the 1990s to the early 21st century, with the end of the Cold War, the entry into force of the World Trade Organization (WTO) Agreement, and China’s accession to the WTO, economic globalization characterized by an open world economy set off a new wave.Against this background, the Foreign Investment & National Security Act of 2007(FINSA) took into effect in 2007, intending to “focus solely on genuine national security concerns posed by mergers, acquisitions, and takeovers that could result in foreign control of a US business.”36US Department of the Treasury, “CFIUS Reform: The Foreign Investment & National Security Act of 2007 (FINSA),” November 14, 2008, https://home.treasury.gov/system/files/206/Summary-FINSA.pdf.After the financial crisis in 2008, the tide of investment protectionism surged in the US.In 2012, President Obama vetoed Sany Group’s acquisition of wind farm projects in Oregon.The US Congress began to focus on Huawei and ZTE’s investment in the US in the name of national security.Meanwhile, anti-free trade and anti-globalization populism surged, culminating in 2016 when Donald Trump won the presidential election.

The Foreign Investment Risk Review Modernization Act of 2018 significantly differed from the Foreign Investment and National Security Act and marked the dramatic expansion of investment protectionism.The first is the pan-securitization tendency.The scope of review under the law has expanded from controlling foreign investments to non-controlling investments,involving three major areas: critical technology, critical infrastructure and sensitive information.The review also includes certain real estate transactions close to a military installation, US government facility, or property of national security sensitivities.37Cathleen D.Cimino-Isaacs, “CFIUS Reform Under FIRRMA,” February 21, 2020, https://crsreports.congress.gov/product/pdf/IF/IF10952.The second is the pan-politicization tendency.FIRRMA,for the first time, introduces the concept of “country of special concern” into investment review, which specifically refers to countries that have a strategic goal of acquiring critical technology or critical infrastructure that would affect US national security.It does not require making a list of “countries of special concern” but requires releasing an assessment report specifically on China.The third is lowering the mandatory scrutiny threshold, making foreign governments’ “substantial interest” the criterion for initiating mandatory review.Substantial interest refers to a foreign government investor holding 25 percent or more of voting shares in a US business with critical technology,critical infrastructure or sensitive information, or a single foreign government or local government holding 49 percent or greater of the foreign investor’s voting shares.38Cathleen D.Cimino-Isaacs, “CFIUS: New Foreign Investment Review Regulations,” May 28, 2020,https://crsreports.congress.gov/product/pdf/IF/IF11334.With this provision, the US investment review is further focused on those investments with sovereign background.

While the Trump administration paved the way for US investment protectionism by legislation, the Biden administration has promoted the full implementation of investment protectionist policies.In September 2022,Biden issued the Executive Order on Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States (CFIUS), providing detailed guidance for CFIUS in conducting foreign investment risk assessments and further expanding the scope and content of risk reviews while handling the standards in a strict manner.First, it listed supply chain security as the focus of review.The executive order requires CFIUS to consider the covered transaction’s effect on supply chain resilience and security, both within and outside the defense industrial base, in manufacturing capabilities, services, critical mineral resources, or technologies that are fundamental to national security.It particularly emphasizes the need to focus on factors that may not have significant commercial value but have a substantive impact on the supply chain.39The White House, “Executive Order on Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States,” September 15, 2022, https://www.whitehouse.gov/briefing-room/presidential-actions/2022/09/15/executive-order-on-ensuring-robustconsideration-of-evolving-national-security-risks-by-the-committee-on-foreign-investment-in-the-unitedstates/.Second, it expanded the scope of industries to which“advances in technology” apply, effectively acknowledging that the US can consider “ advances in technology “ in any industry as a matter of national security.Third, it increased the review of industrial investment trends that could impact national security, emphasizing that threat assessments should shift from individual case reviews to industry- and system-wide reviews.40Ibid.Fourth, it established review guidelines related to cybersecurity, focusing on investments aimed at interfering with US elections, the operation of US critical infrastructure, the confidentiality, integrity, or availability of US communications, or the access to sensitive data of US citizens.41The White House, “Executive Order on Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States.”

Moreover, the Biden administration has also made a crucial stride on outbound technology investment.The Outbound Investment Transparency Act, proposed by Republican Senator John Cornyn and Democratic Senator Bob Casey, was inserted as an amendment to the 2024 National Defense Authorization Act (NDAA) and passed in the Senate in July 2023.It requires US entities to notify the US Department of the Treasury of investing in sensitive technologies in “countries of concern”.In coordination with the US Department of Commerce, it directs the Department of the Treasury to establish a process to receive notifications.42John Cornyn (R-TX) and Bob Casey (D-PA), “Cornyn, Casey Outbound Investment Amendment Passes Senate,” July 25, 2023, https://www.cornyn.senate.gov/news/cornyn-casey-outbound-investmentamendment-passes-senate/.On August 9, 2023, Biden signed the Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern,43The White House, “Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern,” August 9, 2023, https://www.whitehouse.gov/briefing-room/presidential-actions/2023/08/09/executive-order-on-addressing-united-states-investments-incertain-national-security-technologies-and-products-in-countries-of-concern/.strictly limiting direct and indirect investments by Americans in China in three key areas: semiconductors and microelectronics, quantum information, and artificial intelligence.The outbound investment control covers mergers and acquisitions,private equity, private capital, joint ventures, financing arrangements, etc., with the aim to prevent technology transfer through capital outflows.

The Cognitive Roots of Biden’s Economic Nationalism

Deep social cognitive roots are behind Biden’s inheritance of economic nationalism launched by his predecessor.The roots are primarily reflected in the persistent negative perception of economic globalization within mainstream American society, the lingering disappointment with neoliberal economic policies, and the enduring deep-seated anxiety about US institutional decline.Meanwhile, Biden’s economic nationalism is also an instrument for the country to forge new consensus amid the long-term greatpower strategic competition.

Negative perception of economic globalization

Policymakers in the Biden administration have adopted the populist and anti-globalist philosophy of the preceding government, disregarding the significant benefits the US has gained from economic globalization.According to research findings from the US academic circle, international economic interdependence added $2.2-4.0 trillion to the American GDP in 2018, accounting for 11-19 percent of the $20.5 trillion GDP in that year.Global supply chains have enabled US manufacturers to concentrate on the most productive tasks, allowing them to maintain long-standing dominance in the high end of the supply chain.Globalization has also provided the US with significant innovation impetus and advantages.65 percent of the world’s 25 most valuable listed companies are technology firms, and American technology companies held 82 percent of their total market value.Besides, 55 percent of American “unicorns” are founded by immigrant entrepreneurs, and over 80 percent of these companies have immigrants serving in key management roles.44Peter A.Petri and Meenal Banga, “The Economic Consequences of Globalisation in the United States,”January 2020, https://www.eria.org/uploads/media/discussion-papers/The-Economic-Consequences-of-Globalisation-in-the-United-States.pdf.The above facts indicate that the US has reaped greater benefits from economic globalization than most other countries.

However, the negative effects of economic globalization have been deliberately magnified within mainstream American society.In particular,the negative impact on manufacturing relocation and job loss has been exaggerated.Katherine Tai claimed that under the theory of facilitating the creation of a free global marketplace, production moves outside borders when efficiency and low cost are the only motivators.45Katherine Tai, “Remarks at the National Press Club on Supply Chain Resilience,” June 15, 2023, https://ustr.gov/about-us/policy-offices/press-office/speeches-and-remarks/2023/june/ambassador-katherine-taisremarks-national-press-club-supply-chain-resilience.But the relocation of production mentioned by Tai is not the major reason for manufacturing job loss in the United States.A study shows that total manufacturing employment declined by 5,647,700 workers from 2000 to 2010.Net import increases explained 13.4% of this change, while productivity improvements accounted for 87.8%.46Peter A.Petri and Meenal Banga, “The Economic Consequences of Globalisation in the United States.”Another deliberately ignored fact is that the United States has created more output with fewer workers.In 2015, US factory output was twice that of 1984, while the number of workers decreased by one-third.47Rex Nutting, “Think Nothing Is Made in America?” March 28, 2016, https://www.marketwatch.com/story/us-manufacturing-dead-output-has-doubled-in-three-decades-2016-03-28.That means technological advancement is the primary reason for the decrease in manufacturing employment in America, but that fact has been hidden in mainstream political discourse in the US.The selective presentation of facts in the mainstream narrative in the US has prevented the public from understanding the full picture.81 percent of Americans know that the total number of manufacturing jobs in the country has decreased over the past three decades, but just 35 percent know that the nation’s manufacturing output has risen over the same period, versus 47 percent who say output has decreased.48Drew Desilver, “Most Americans Unaware that as U.S.Manufacturing Jobs Have Disappeared, Output Has Grown,” July 25, 2017, https://finchannel.com/most-americans-unaware-that-as-u-s-manufacturingjobs-have-disappeared-output-has-grown/66822/jobs/2017/07/.

The misrepresented and distorted facts have shaped the public perception, allowing politicians to deflect domestic contradictions.In this regard, “hollowing out in manufacturing” cannot withstand deliberation from the economic sense.But as a political slogan, it has catered to the psychology and needs of voters in the Rust Belt and redirected the focus of domestic issues towards economic globalization once again.At an event celebrating the Michigan gubernatorial election victory in November 2022, Biden said,“American manufacturing, the backbone of our economy, got hollowed out.Companies began to move jobs overseas instead of products overseas because it was cheaper for them.”49Bradford Betz, “Sending Manufacturing Jobs to China,” November 29, 2022, https://www.foxbusiness.com/politics/biden-accuses-us-getting-lazy-sending-manufacturing-jobs-china.At the 2023 World Economic Forum’s annual meeting in Davos, Katherine Tai said that the current version of globalization is “running into some limitations” by creating income inequality,and the world needs to shift to a new trading system that aims to promote inclusiveness, resilience and sustainability.50Yuka Hayashi, “U.S.Trade Chief Says Globalization Is Running into Limitations,” January 20,2023,https://www.wsj.com/livecoverage/davos2023/card/u-s-trade-chief-says-globalization-is-running-intolimitations-tBbMH6HDNtAnJ6He30Yu.Ultimately, the mainstream of American society believes that its social and economic issues, such as the loss of manufacturing jobs and the widening wealth gap, are largely attributed to the “original sin” of economic globalization and free trade.

Disappointment to neoliberalism

Both the Democratic and Republican parties increasingly share similar skepticism towards neoliberalism, reflecting a general disappointment within mainstream American society towards neoliberal economic policies.Since President Biden took office, he has initiated a series of policy concepts, such as “foreign policy for the middle class,” “21st-century industrial strategy,”and “worker-centered trade policy,” which were labelled as “Bidenomics”by the media and academia.Its core idea is that the neoliberal trickle-down economic theory followed by both Democratic and Republican governments since the Reagan administration, which supports tax cuts for the rich and large corporations, shrinking public investment and embracing liberal trade,has failed.51The White House, “Bidenomics Is Working: The President’s Plan Grows the Economy from the Middle Out and Bottom Up—Not the Top Down,” June 28, 2023, https://www.whitehouse.gov/briefing-room/statements-releases/2023/06/28/bidenomics-is-working-the-presidents-plan-grows-the-economy-from-themiddle-out-and-bottom-up-not-the-top-down/.The Biden administration vowed to “grow the economy from the middle out and the bottom up,” and make the middle class, instead of corporations and capital, a central theme in national economic development.The vision will be implemented under three key pillars: making smart public investments in America, empowering and educating workers to grow the middle class, and promoting competition to lower costs and help entrepreneurs and small businesses thrive.52The White House, “Bidenomics Is Working: The President’s Plan Grows the Economy from the Middle Out and Bottom Up—Not the Top Down.”The essence of Bidenomics is to advocate for government-led industrial development strategies and its supporting protectionist policies, and it was called “economic nationalism,Biden-style” by US economist Paul Krugman.53Paul R.Krugman, “Wonking Out: Economic Nationalism, Biden-Style,” June 11, 2021, https://www.nytimes.com/2021/06/11/opinion/economic-nationalism-biden-trump-trade.html.

However, it is on economic nationalism that the right wing of the Republican Party and the Biden Democratic administration have found common ground.Republican Senator Marco Rubio has called for “a 21stcentury pro-American industrial policy” as early as 2019, emphasizing that the market does not know what outcome is better for the national and public interest, and policymakers should “remember that the national interest, not economic growth, is the central obligation.”54Marco Rubio, “American Industrial Policy and the Rise of China,” December 9, 2019,https://www.rubio.senate.gov/public/_cache/files/5922cc54-2966-48a1-8e88-f7b51bbeca06/D0E7312935012E45F20C67A3450DDAFD.ndu-china-industrial-policy.pdf.In July 2022, the US House of Representatives voted on the CHIPS and Science Act.The crossing over of party lines by 24 Republican members allowed the bill to pass with a significant margin of 243 votes in favor to 187 votes against.In June 2023, the conservative think tank American Compass released a report titled “Rebuilding American Capitalism: A Handbook for Conservative Policymakers.” The report was co-authored by prominent figures such as former US Trade Representative Robert Lighthizer and former Attorney General Jeff Sessions, and it was endorsed by Republican senators, including Marco Rubio, Tom Cotton, J.D.Vance, and Todd Young.The report’s main argument is that outsourcing “high-paying manufacturing jobs” is the root cause of the decline of the middle class in the Rust Belt.The US needs to formulate strong national economic policies and bring employment opportunities back to the country through massive investments in industry and infrastructure, increased government subsidies, tariff imposition,protection of domestic markets, and strengthened labor unions.55American Compass, “Rebuilding American Capitalism: A Handbook for Conservative Policymakers,”June 14, 2023, https://americancompass.org/rebuilding-american-capitalism-provides-the-agenda-for-conservative-economics/.

The policy agenda of Republican conservatives is highly similar to that of the Biden administration.While the similarity makes the latter feel fortunate for seizing the initiative to promote economic nationalism,especially the industrial policy agenda, it has also put the Biden administration in a discourse competition with the Republican Party.Considering that key economic indicators such as unemployment and inflation rates have performed better than expected, the Biden administration seems to have reason to feel self-assured about Bidenomics.Therefore, after launching his re-election campaign, Biden made a high-profile declaration that he is more than happy to refer to his economic agenda as Bidenomics because it is delivering tangible benefits.56The White House, “Remarks by President Biden on Bidenomics,” September 14, 2023, https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/09/14/remarks-by-president-biden-on-bidenomicslargo-md/.

Anxiety about US institutional decline

International political economics scholars have found that since the rise of Adam Smith’s liberalism theory, “mercantilist ideas have re-emerged in two situations.Rising and developing powers have occasionally embraced the doctrine as a pathway to accelerate political and economic development.Great powers in perceived decline have also been receptive to the idea as a possible means to reverse their fall.”57Daniel W.Drezner, “Mercantilist and Realist Perspectives on the Global Political Economy,” December 22, 2017, https://doi.org/10.1093/acrefore/9780190846626.013.260.

In fact, “American decline” is a politically sensitive topic in current American society, but it is undeniable that from the “Occupy Wall Street”movement in 2011 to the riots on Capitol Hill in 2021, the American society’s confidence in its democracy has been repeatedly hit.Biden warned that “an overwhelming majority of Americans believe American democracy is at risk, that American democracy is under threat.”58The White House, “Remarks by President Biden on Standing Up for Democracy,” November 3, 2022,https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/11/03/remarks-by-president-biden-onstanding-up-for-democracy/.Jake Sullivan said that the country faced the challenge of inequality and its damage to democracy.The drivers of economic inequality are complex, including policies like regressive tax cuts, deep cuts to public investment, unchecked corporate concentration, and active measures to undermine the labor movement.59The White House, “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution.”

The sense of crisis is reflected in the general public’s confusion about the country’s direction.Data from the “RealClearPolitics” website’s tracking polls conducted between 2012 and 2022 shows that over 50 percent of participants believed the country was on the wrong track, with the highest reaching 76 percent.60RealClearPolitics, “Direction of Country,” July 23, 2023, https://www.realclearpolitics.com/epolls/other/direction_of_country-902.html.The sense of decline shows that neither the Obama administration,the Trump administration, nor the incumbent Biden administration has effectively boosted the American people’s confidence in the country’s future.Accordingly, a poll in June 2023 finds that 72.5 percent of likely general election voters in the US believe the country is in a state of decline.By political party, 50.7 percent of Democrats believe the US is in decline,along with 91.7 percent of Republicans and 71.5 percent of independents.61Hannah Nightingale, “73% of Voters Say United States Is in Economic and Cultural Decline: Poll,”January 29, 2023, https://thepostmillennial.com/73-of-voters-say-united-states-is-in-economic-and-culturaldecline-poll.The anxiety about the country’s decline in American society has often been exploited by politicians to incite nationalist sentiment and clear obstacles for partisan policy agendas.Political slogans such as Trump’s “Make America Great Again” and Biden’s “Build Back Better” are such products.

Forging new consensus for major-power strategic competition

The Biden administration launched the concept of the New Washington Consensus in an attempt to build consensus at home and abroad for comprehensively advancing geopolitical and geoeconomic competition.The term “Washington Consensus” was coined in 1989 by economist John Williamson of the Peterson Institute for International Economics (PIIE),referring to a list of neoliberal market economy policies proposed by experts at the International Monetary Fund, the World Bank and from the US and Europe, in response to the Latin American debt crisis.It advocates free trade, floating exchange rates, free market and macroeconomic stability.62Douglas A.Irwin and Oliver Ward, “What Is the ‘Washington Consensus?’” September 8, 2021, https://www.piie.com/blogs/realtime-economic-issues-watch/what-washington-consensus.In the 1990s, following the end of the Cold War, the Washington Consensus became synonymous with privatization and deregulation, essentially representing the international version of Reaganomics.63Wu Yifeng, “Neoliberalism in Western Economics,” Red Flag Manuscript, No.5, 2014, pp.10-14Referring to Sullivan’s speech at the Brookings Institution regarding US international economic policy, the New Washington Consensus presents notable differences in ideas and policy implications.

First, as Bidenomics marks the end of Reaganomics, the New Washington Consensus signifies the end of the Washington Consensus and the decline of neoliberal economic ideas domestically and internationally.In his remarks on renewing American economic leadership at the Brookings Institution, Sullivan explicitly criticized three assumptions of the past economic policies: first is that “markets always allocate capital productively and efficiently,” second is that “deep trade liberalization would help America export goods, not jobs and capacity,” and third is that “all growth is good growth.”64The White House, “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution.”Policies derived from these assumptions are marketization, trade liberalization, and reducing government intervention, which is at the center of the Washington Consensus.But Sullivan argued that such economic policies resulted in the hollowing out of America’s industrial base, loss of manufacturing and employment, diversion out of the real economy, supply chain vulnerabilities, and a widening gap between rich and poor, among other problems.Sullivan’s introduction of the New Washington Consensus can be seen as the end of the Washington Consensus.

Second, incorporating zero-sum competition and geopolitical elements into the New Washington Consensus makes it a geopolitical trap camouflaged by economics.Sullivan argues that “Much of the international economic policy of the last few decades had relied upon the premise that economic integration would make nations more responsible and open and that the global order would be more peaceful and cooperative.”Yet the reality faced by America is that “a large non-market economy had been integrated into the international economic order in a way that posed considerable challenges.”65The White House, “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution.”He ranted against China subsidizing traditional industrial sectors and key industries of the future, impacting US manufacturing and eroding its competitiveness in critical technologies.Sullivan also said, “Economic integration didn’t stop China from expanding its military ambitions in the region or stop Russia from invading its democratic neighbors.” Against such background, “dependencies could be exploited for economic or geopolitical leverage,” and the US must adapt to “a new environment defined by geopolitical and security competition.”66Ibid.

Third, the New Washington Consensus features an international strategy framed as “a foreign policy for the middle class.” The middleclass-oriented foreign policy consists of five pillars: developing and implementing a modern American industrial strategy through significant public investments to revitalize its manufacturing and strategic industries;collaborating with allies and partners to build supply chains for critical goods, technologies, and minerals to ensure the security of American supply and industrial chains; bypassing traditional free trade agreements to promote the establishment of so-called high-standard economic and trade partnership frameworks like the Indo-Pacific Economic Framework for Prosperity(IPEF); expanding investments in developing economies and competing with China’s Belt and Road Initiative; and building a “small yard, high fence”by strengthening export controls to grasp cutting-edge technologies and strategic technological advantages firmly.

Fourth, the New Washington Consensus calls for building a “new economic order” to revitalize US hegemony.According to Sullivan, “The world needs an international economic system that works for American wage-earners, works for its industries, works for its climate, works for its national security, and works for the world’s poorest and most vulnerable countries.” It’s critical to “return to the core belief the US first championed 80 years ago: that America should be at the heart of a vibrant, international financial system that enables partners around the world to reduce poverty and enhance shared prosperity.”67The White House, “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution.”Such remarks reflected the US attempts to preserve its economic hegemony.

In summary, the New Washington Consensus is not merely an economic concept but a geopolitical trap with the fundamental goal of maintaining American hegemony.Its strongly protectionist industrial policies have been met with doubts and criticism from the international community,including US allies.Therefore, it is not a development consensus between the US and the international community; at best, it is a hegemonic consensus among American nationalists.

Influence of Biden’s Economic Nationalism

The Biden administration’s economic and trade policy has inherited the economic nationalism from the Trump era while downplaying its populist elements.Through institutional and strategic arrangements, it has pushed economic nationalism with protectionism as its main form to a new height.From the perspective of cognitive roots, Biden’s economic nationalism aims to revitalize the American real economy, rebuild national confidence, serve electoral politics and support the US in major-power strategic competition.It’s clear that Biden attempts to preserve the US hegemony through promoting economic nationalism.However, the implementation of related policies is set to intensify confrontation among major powers and challenge the interests underlying the US-led alliance system due to the inherent narrowness of economic nationalism, which will ultimately undermine America’s hegemonic position.

Eroding foundation of US economic hegemony and weakening its central position in global economic system

The American global economic hegemony was established by a dual system, consisting of the international trade system with the General Agreement on Tariffs and Trade (GATT) and later the WTO as its framework, and the international financial system centered around the US dollar.The functions and mechanisms of both systems were rooted in the neoliberal economic ideology.But both Bidenomics and the New Washington Consensus start from the denial of the assumptions of neoliberal economic ideology.In this logic, the protectionist policies in trade,industry, technology, and investment outlined by Bidenomics and the New Washington Consensus will certainly impact the US-led international trade and financial systems.

From the trade perspective, Biden’s continuation of Trump’s tariff war and the continued paralysis of the WTO’s dispute settlement mechanism is a move to de-functionalize the WTO under the banner of reform.Crippling the WTO allows the US to impose economic protectionist measures not to be bound by WTO rules.The US exceptionalism in the international trade arena will damage America’s international reputation and ability to influence rules-making.

From the international finance perspective, the US dollar system has formed a relatively independent ecosystem.The US dollar’s role as a reserve currency has caused its relative scarcity in the international market.The global demand for US dollars has pushed up its value and made US exports more expensive, which reduces overseas demand for American exports and thus results in the loss of manufacturing and employment.As the Biden administration promotes economic and trade protectionist policies to push the reshoring of manufacturing, the channel of dollar flow to the international market will be narrowed, and the function of the US dollar to provide liquidity to the international market will be weakened.Meanwhile,due to the increasingly serious protectionism in science and technology and investment, there is also growing resistance to the dollar’s return to the US.If the international circulation of the US dollar was blocked in both directions,its role in international circulation and its status as the dominant reserve currency would be continuously weakened, ultimately undermining the dollar hegemony.

In a nutshell, Biden’s economic nationalist policy indicates America’s declining willingness or ability to provide public goods in international trade and finance, but its ambition to maintain its global economic hegemony and interests has remained undiminished.

Changing the principles of alliances and weakening the interest foundation of US-led alliance system

Biden’s economic nationalism continues to adhere to the “America First” principle.The BABA excludes products from both American allies and non-allied countries.The imposition of steel and aluminum tariffs applies to all countries, including both allies and non-allies.And the US industrial subsidies are primarily directed towards American companies or domestic producers due to the stringent localization standards put in place.Biden’s economic nationalism also follows the “pan-security” principle that national security comes first and economic security is national security.Just as Secretary of the Treasury Janet Yellen said, “In all foreign relations,national security is of paramount importance,” “We will not compromise on these [security] concerns, even when they force trade-offs with our economic interests.”68US Department of the Treasury, “Remarks by Secretary of the Treasury Janet L.Yellen on the U.S.-China Economic Relationship at Johns Hopkins School of Advanced International Studies,” April 20, 2023,https://home.treasury.gov/news/press-releases/jy1425.But the problem is that when the US applies this principle to its allies, it becomes “national security is of paramount importance and allies are required to make necessary economic sacrifices,”which makes overstretching of the national security concept a prevalent cancer in the West.The US coercion of its allies into banning Huawei equipment is an example.

Furthermore, Biden’s economic nationalism is anti-globalist as it holds that the era of trade liberalization marked by lower tariffs has ended, and the logic of win-win growth has been replaced by a zero-sum game of “I win,you lose.” Therefore, the Biden administration has completely discarded the free trade agenda centered on efficiency and growth, and shifted its focus towards industrial and supply chain collaboration and rules-making guided by “security” and “fairness.” Under the dominance of economic nationalist policies, the US is increasingly demanding more from its allies, and the imbalance in alliance relationships will continue to accumulate.

Splitting the global economic system and exacerbating the fragmentation in global governance

Under the policy framework that defines China as its “most serious competitor” who poses the “most consequential geopolitical challenge,”the US economic nationalism will undoubtedly intensify its competition against China.From the perspective of American society, China’s development miracle, especially the success of China’s modernization path, is a significant external factor that fuels the rise of economic nationalist sentiment in the United States.In the eyes of American economic nationalists, the “China threat” is tangible.China is not only a symbolic “most serious competitor” who poses the “most consequential geopolitical challenge” but also the root cause of a range of issues, such as the outsourcing of American manufacturing, the loss of job opportunities,and growing wealth inequality.Consequently, China becomes the primary target for the external projection of economic nationalist sentiment in America.With the growing irrational atmosphere towards China, the space for rational discourse and decision-making is increasingly squeezed.In this environment, trade protectionism, industrial and technological competition, and investment restrictions targeting China continue to escalate, exacerbating the competition and suppression against China.Recently, with the approaching 2024 US presidential election, Republican candidates represented by former President Trump have even made extreme statements about cutting off all economic and trade ties with China.The scenario of both parties competing to demonstrate their tough stand against China may intensify.In such circumstances, the decoupling with and technological pressure on China may continue to escalate, which risks splitting the global economic system and aggravating the fragmentation in global governance.

Conclusion

Nowadays, economic globalization is encountering setbacks, and the tide of de-globalization and anti-globalization sentiments may not recede in the short term.However, it’s important to note that economic globalization has always been a process of ups and downs as part of the world’s development.The general trend of economic globalization developing progressively amid twists and turns has not changed.Biden’s economic nationalism responds to the anti-globalization sentiment and bolsters it with comprehensive protectionist policies.It is in essence anti-globalist and therefore has no future.Biden’s economic nationalism also reflects concerns about the fate of the US and the potential decline of American hegemony, which is the shared mentality of Democrats and Republicans in embracing economic nationalist policies.In the future, whether the Democratic Party continues to hold power or the Republican Party takes office, economic nationalist policies are likely to persist in some form.As frustrations and disappointments pile up and political polarization further intensifies, the possibility of US economic nationalism becoming more extreme cannot be ruled out.