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Relying on a national champion creates supply chain weakness and taxpayer liabilities,
but it also creates geopolitical vulnerabilities that can be exploited both by global partners and rivals. As it was buying McDonnell Douglas, Boeing held a board meeting in Beijing and
lobbied Congress to end the annual review of China’s trading rights so that it could sell more planes. The Chinese government would order Boeing planes contingent upon certain U.S. policies, like whether the U.S. held off on sending warships into the Strait of Taiwan, or whether the U.S. lifted bans on the export of certain technologies.
National champions are still corporations first. They have earnings calls, shareholders,
and quarterly profit targets. When policymakers in Washington decide to back a single monopoly, their objectives are but one concern among many for that corporation’s senior executives. As then-Exxon CEO Lee Raymond said, “I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.”
These days, the “national champions” argument often gets made in the context of our dominant tech firms. We often hear that pursuing antitrust cases against or regulating these firms will weaken American innovation and cede the global stage to China. These conversations often assume a Cold War-like arms race, with each country’s firms in a zero-sum quest for dominance.
The reality today is that some of these same tech firms are fairly integrated in China and are seeking greater access to the Chinese market. While there is nothing intrinsically improper about these ties, we should be clear-eyed about how they shape business incentives. Various incidents in recent years have highlighted how when U.S. corporations are economically dependent on China, it can spur them to act in ways that are contrary to our national interests.
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Source: U.S. Federal Trade Commission (FTC)
Speaker: Lina Khan, FTC Chairwoman
Format: Speech
China Policy Research 