U.S.-China Investments Can Still Benefit Americans
Strategic partnerships in automotive tech offer mutual gains.
1Strategic Investment Mechanisms
The Board of Trade and Board of Investment were established to facilitate tariff reductions and cross-border investments between the U.S. and China. These mechanisms aim to turn the 2025 Busan summit into concrete economic deliverables. However, only the Board of Trade has developed an agenda so far, highlighting the complexities of cross-border investments amid strategic rivalry.
2Challenges in Cross-Border Investments
The Board of Investment faces a choice between approving small, nonsensitive deals or pursuing more impactful investments. The latter could deliver meaningful gains for both countries, particularly in sectors like electric vehicles (EVs), where both nations have complementary needs and strengths.
3EV Sector Opportunities
China struggles with weak demand and fierce competition in its EV sector, while the U.S. seeks affordable green autos and advanced automotive technologies. Well-designed investment partnerships could address these challenges, leveraging China’s battery technology and the U.S. market’s demand for innovation.
4Misconceptions About Tech Transfer
A common misconception is that transferring China’s battery technology would solve U.S. EV challenges. However, batteries alone are insufficient. Chinese automakers’ success stems from advancements in electrical and electronic architecture (EEA), which integrates intelligent features and reduces costs.
5Importance of EEA
Electrical and electronic architecture (EEA) is the brain and nervous system of intelligent EVs. It centralizes vehicle control, shortens development cycles, and enhances user experience. Tesla pioneered this approach in 2017, but Chinese automakers quickly adopted and advanced it, gaining a competitive edge.
6Beyond Battery Technology
Focusing solely on battery technology overlooks broader advancements in powertrains, including plug-in hybrid electric vehicles (PHEVs). China’s affordable PHEVs, capable of 100 miles on electricity and 60 miles per gallon on longer trips, offer a practical solution for U.S. consumers facing rising vehicle and fuel costs.
7Limitations of Technology Transfer
Technology transfer alone cannot make the U.S. auto industry competitive. Advanced EEA and powertrain technologies require new supply-chain arrangements and R&D approaches. Conventional joint ventures or licenses are insufficient for achieving deep-tech iterative learning.
8Lessons from China’s Experience
China’s auto industry modernization shows that localized manufacturing alone doesn’t build domestic capabilities. Partnerships with international automakers in the 1980s yielded mixed results, but carefully designed collaborations in the 1990s facilitated reciprocal technology transfer and R&D improvements.
9Institutional Frameworks for Success
Durable institutions like joint R&D centers are crucial for iterative technological gains. The Pan Asia Technical Automotive Center (PATAC) exemplifies how institutional channels can facilitate knowledge transfer and long-term collaboration, benefiting both parties.
10Future Prospects for U.S.-China Collaboration
The Board of Investment could organize competitive bidding to identify capable Chinese partners. By focusing on low-hanging-fruit technologies like batteries, EEA, and hybrid powertrains, the U.S. can build a foundation for deeper collaboration, ensuring mutual benefits and sustained innovation.
Original article: Foreign Policy — U.S.-China Investments Can Still Benefit Americans