Competition between China and the United States has long been framed as a contest between two countries with opposite roles in the global economy: China as the world’s leading producer and the United States as the world’s leading consumer. Now, however, each country is attempting to become more like the other in a race to rebalance its economy. Can the United States substitute for lost production from China faster than China can substitute for lost consumption from the United States?

Uncertainty about the answer to this question has shaken Washington out of its complacency. In a recent Foreign Affairs essay, former U.S. officials Kurt Campbell and Rush Doshi warned against underestimating China and its industrial capacity. Diagnosing the United States’ main deficiency as a lack of scale, which they defined as “the ability to use size to generate efficiency and productivity,” Campbell and Doshi argued that Washington must gather a team of allies to address this problem and compete with Beijing.

Assembling an economic Team America might help solve the scale problem, but it will not be enough. Scale alone won’t yield the integrated supply chains the country will need to build the way China has built for the last three decades. To get there, the United States will also need to do the hard work of digging up raw materials, building infrastructure, and deploying technology inside its own borders.

If the United States wants to achieve results like China, it will have to build more like China by replicating certain aspects of how Beijing organizes and mobilizes its production economy, prioritizing speed and agglomeration. What Washington needs is an industrial policy with American characteristics.

An exemplar of China’s model is its decades-long electrification push. When China launched its quest to deploy a nationwide electric-powered high-speed rail network around 20 years ago, it also needed to build the accompanying electrical infrastructure to accommodate the rail network. Later, Beijing’s investment in electric vehicles further increased demand for electricity, prompting more updates to the grid and the construction of more infrastructure, such as charging stations. The creation of an electric vehicle industry catalyzed the emergence of an advanced electrification supply chain, including batteries, permanent magnets, and energy storage. At each stage of development, China invested not only in advanced technologies but also in its grid infrastructure—a decision that has proved fruitful.

China has achieved advanced electrification with astonishing speed in part because of government support and in part because of its competitive and vertically integrated firms. Consider the Chinese automaker BYD: the conglomerate’s operations span the entire value chain, from securing raw materials to manufacturing batteries to producing electric vehicles. Similarly, leading Chinese solar companies such as LONGi and Trina Solar control each step of the supply chain in the manufacture of solar panels and their components. Vertical integration allows companies to rapidly iterate and optimize their processes to accelerate research and development, minimize supply disruptions, and reduce costs. As a result, solar panels are up to 65 percent cheaper to make in China than in the United States or Europe. The cost of lithium iron phosphate batteries, preferred by electric vehicle makers for their balance between power and efficiency, fell by 30 percent in 2024 alone.........

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