Why U.S. Industrial Policy Needs a Balanced Approach to Foreign Investment
U.S. officials argue that current restrictions on foreign capital, especially from China, hinder the nation’s effort to rebuild its industrial base.
Industrial policy has returned to the forefront of U.S. politics, with the CHIPS and Science Act marking a historic push to revive manufacturing and technology sectors. Yet, a wave of legislation and regulatory measures is tightening limits on foreign ownership, joint ventures, and licensing, particularly targeting China but also affecting allies. The piece highlights past successes that relied on foreign knowledge, such as DuPont’s early gunpowder production and the GM-Toyota partnership that revitalized an auto plant.
Current obstacles include a backlog at CFIUS and a lack of review mechanisms for non-ownership arrangements, which have stalled projects like Ford’s battery plant that uses CATL technology. The author proposes a tiered approval framework, borrowing from the Defense Department’s FOCI program, to allow low-risk foreign investment while protecting sensitive data. By adopting such a system, the United States could attract the expertise needed to compete in advanced sectors without compromising security.
Why it matters
Restrictive foreign-investment policies may slow U.S. efforts to rebuild critical industries and maintain global competitiveness.
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