Pat Gelsinger advocates for a US sovereign wealth fund to counter China's tech investments and secure national priorities. Instead of debt-financing, this fund would use investment capital to target critical, long-term areas like semiconductors, rare earth minerals, and energy, ensuring both financial returns and national resilience.

The US market, initially overlooked, proved more dynamic for infrastructure investors. Unlike global markets dominated by rigid government auctions, the prevalence of privately-owned US assets allowed for creative structuring, exclusive negotiations, and relationship-based deals, avoiding a pure 'cost of capital shootout'. This model of sourcing has now become the global standard.

Washington now views Chinese infrastructure investments in Latin America—from ports in Peru to railways in Brazil—as a primary national security threat. The U.S. is actively working to counter this influence, as seen with the Panama Canal port contract, signaling a strategic pivot to compete with China in its own hemisphere.

Effective US industrial policy should foster competition among states rather than imposing top-down federal plans. By offering federal loans with equity kickers to states that opt-in to host critical industries like mining or chip fabs, the government can incentivize reshoring while allowing for a market-driven, locally-supported approach.

The U.S. industrial strategy isn't pure "reshoring" but "friend-shoring." The goal is to build a global supply chain that excludes China, not to bring all production home. This creates massive investment opportunities in allied countries like Mexico, Vietnam, Korea, and Japan, which are beneficiaries of this geopolitical realignment.

Attempting to beat China by mimicking its state-controlled industrial policies is a strategic failure. This approach politicizes the economy, breeds inefficiency, and plays to China's strengths. The U.S. wins by leveraging its own core advantage: out-innovating and out-competing through a market-driven system.

The State Department is using its authority to accept land gifts, typically for embassies, to create large-scale industrial zones. This "Pax Silica" initiative in the Philippines blends local industrial advantages with the predictability of American law to attract private investment and de-risk supply chains.

The "invisible hand" of the market has led to the hollowing out of America's industrial base. The US should learn from China's focus on production and scale, adapting tools like public investment to crowd in private capital for frontier industries, rather than fully copying China's state-directed model.

In trying to compete, the U.S. is mirroring China's protectionism and industrial policy. This is a strategic error, as the U.S. political system lacks the ability to centrally direct resources and execute long-term industrial strategy as effectively as China's state-controlled economy.