U.S. Secretary of Commerce Gina Raimondo at a press briefing in Washington, D.C., September 2022
Kevin Lamarque / Reuters

Gina Raimondo

  • Country: United States
  • Title: Secretary of Commerce

In recent months, U.S. President Joe Biden’s administration has stepped up its policy response to the economic and tech competition between the United States and China. July saw the passage of the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, which will direct some $280 billion to bolster U.S. semiconductor manufacturing and R & D and to fund education and workforce-development initiatives. In October, the U.S. Commerce Department announced export controls intended to limit China’s ability to purchase or manufacture the advanced semiconductors, chips, and supercomputers that Beijing needs to strengthen its military and advance its development of artificial intelligence. These steps reflect Washington’s accelerating shift toward “industrial policy,” a term used to describe government efforts to sync economic development with strategic national goals—which sometimes involves intervening in markets in ways that run afoul of laissez-faire orthodoxy.

An important player in these efforts is Commerce Secretary Gina Raimondo. The New York Times recently noted that Raimondo has “presided over the most aggressive use of the Commerce Department’s regulatory powers in a generation,” adding that she finds herself “at the epicenter of a growing Cold War with China as the Biden administration uses her agency’s expansive powers to try to make America’s semiconductor industry more competitive.” On November 30, Raimondo delivered a speech at the Massachusetts Institute of Technology, explaining “the steps necessary to address the full range of challenges that China now presents.” Afterward, she spoke with Justin Vogt, executive editor of Foreign Affairs

You started your speech with the story of how American expectations about engagement with China have not panned out. As you put it, the belief was that “economic engagement with China would serve our mutual interests: first, as a counterweight to the Soviet Union, and later as a gateway to a deeper political and economic partnership. Engagement also provided U.S. companies with greater access to China’s market and helped open China’s economic system. And some even thought that over time China would take its place alongside the U.S. and other advanced economies to become a pillar of the post-war liberal international order.” 

Instead, as you noted, “over the past decade, China’s leaders have made clear that they do not plan to pursue political and economic reform and are instead pursuing an alternative vision of their country’s future. They are committed to increasing the role of the state in society and the economy, constraining the free flow of capital and information, and decoupling economically in a number of areas, including many technology sectors of the future. They have firewalled their data economy from the rest of the world. And they are accelerating their efforts to fuse their economic and technology policies with their military ambitions.” 

You’ve been observing China as a policymaker for a long time, first as governor of Rhode Island and now as secretary of commerce. When did you conclude that your own earlier expectations about China were incorrect or misplaced? Was there a tipping point?

In the past 18 months of interacting with allies, talking to U.S. businesses, and being briefed by the intelligence community, the totality of the circumstances and data just leads you to the clear conclusion that China’s headed down a path, quite purposefully, of not reforming and being against openness. And I did have a huge moment of clarity as governor, when—like every other governor in America during COVID—I was struggling to procure enough ventilators and PPE. And I had this moment of realizing how massively overdependent on China we are for certain kinds of goods, whether that’s medicine, or PPE, or ventilators. And then, of course, as secretary, dealing with the supply chain disruption and the chips issue really opened my eyes as to how vulnerable the United States is by being overly dependent on any one country for particular goods, which is massively destabilizing for our supply chains. 

Let’s talk about the CHIPS Act. How do you know if it’s working? What are the benchmarks that you’re looking for? 

We have very clear national security goals that we want to achieve. And we’ll be putting out a strategy paper in the first half of next year that further articulates those goals. We know where we’re vulnerable. We know, for example, that we don’t make any of the world’s most sophisticated chips in the United States. We know there are certain areas of the supply chain where we are incredibly dependent on China and other countries. And so we will be successful if we meet those national security goals and are making the chips that we need to defend ourselves and to maintain our economy. 

There was bipartisan support in Congress for that legislation, and the concept of industrial policy has become more palatable to people across the political spectrum in recent years. But there is a risk for any plan that involves subsidies, as the CHIPS Act does: if it fails, it can look wasteful and can lead to finger-pointing. How much do you worry about the politics of this issue?

With any major policy, there’s always implementation risk. And I always laugh when people say to me, “Oh, OK, now that you’ve got the CHIPS Act passed, what are you doing next?” Because the truth of it is the implementation is so much more important and so much more difficult than getting it passed. But the reality is that industrial strategy is an approach rooted deeply in America’s history. And we’ve done it successfully for a long time. President Biden uses the term “modern industrial strategy,” which means taking what we’ve been doing but calibrating it to new challenges and to the technologies of the future. We have to be thoughtful, protect taxpayers, have the right guardrails, and work in concert with our allies. So do I worry about politics? I worry so much more about our dependence on Taiwan for all of our most sophisticated semiconductors. 

The export control rules announced in October were focused on highly advanced next-generation chips. Is there is an argument for expanding those rules to slow China’s progress on less advanced chips and technologies, as well?

That is quite explicitly not our strategy. We have a lead over China in certain sophisticated semiconductors, and we need to maintain that. They have said they want to advance their military capability. And so we need to use our export controls to deny them that technology, whether it’s the actual chips or the equipment, because we need to maintain our lead as long as possible. But for the more commodity chips, the more widely available technologies, we’re not going to control them. Because that wouldn’t be effective. Those are widely available; the Chinese could get them from other countries and can make them themselves. We’re not interested in slowing China’s economy down. What we’re interested in doing is protecting the people of America and preventing China from getting our sophisticated technology to advance their military capabilities.

The Commerce Department’s Bureau of Industry and Security (BIS) has faced criticism in the past for being unable or unwilling to enforce export controls: critics say there are too many loopholes and that BIS has too often issued licenses that allow U.S. companies to skirt export controls. Some have even argued that BIS shouldn’t be in the Commerce Department but should instead be housed in one of the national security agencies. How do you respond to those arguments?

I think if you look at the incredibly significant effect that our export controls are having on Russia right now, and how we’re significantly impairing Russia’s ability to conduct its war in Ukraine, it’s quite clear that BIS is extremely effective at enforcement, especially when we do it in concert with our allies. On Russia, we have a coalition of three dozen countries that we led: they aligned their export controls with us and we’re all enforcing them together. When we are strategic, and when we enforce to the fullest extent and do it with our allies, it’s enormously effective. Is it perfect? No. The reality is that whether it’s Russia or it’s China, they are going to get up every day and try to find ways around our export controls. And that’s why we get up every day and figure out how to close those loopholes. It’s constant and continuous.

The cooperation of allies seems really important. How can the United States persuade countries such as Japan and the Netherlands—which produce some of the products and technologies that China wants to obtain—to get on board with efforts to restrict China’s access? How can Washington multilateralize the new rules? For example, can it offer those countries offsetting benefits of some kind, or some other incentives?

I don’t think they need incentives. Their national security interests are quite similar to ours. It’s certainly not in the interest of the Netherlands or Japan for China to have the world’s most sophisticated AI chips to put to use in their military. So we are working very closely with our allies, listening to them, giving them the time and space they need to go through their own government processes and technical analysis. But I’m quite confident that they will work in concert with us, mostly because their national security interests are aligned with ours.

Can you tell me a bit about your broader experience of the United States’ bilateral relationship with China? Do you have contact with counterparts in the Chinese government? Is there any dialogue around managing this economic competition?

Right now, China is forming its new government, and I’m eager to see who my counterpart will be and would look forward to communication and engagement with that counterpart. I met several months ago—in person, in my office—with China’s minister of ecology and environment. We had a discussion about how we could work together to combat ocean pollution and plastics pollution. We’re sober about the direction of travel that China is taking. We are eyes-wide-open about the massive challenge and the fierce competition. But in areas where we can work together—climate change, debt relief—we want to work together and we will have dialogue and ongoing commercial engagement. For example, we have a team of intellectual property attachés on the ground in China, working on IP issues and sticking up for American companies. So there is engagement, there has been engagement, and there will continue to be engagement.

This interview has been edited and condensed.

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