Two topics collided for me this week: a new joint French and German industrial policy that highlights the importance of AI and a change in national positioning with respect to trade with China. The source was an article, Germany’s fear of China, in this week’s US print edition of the Economist.
The main topic, as captured by the article title, highlights a fascinating change in thinking. Germany used to trade a lot less with China and therefore the potential trade growth was seen as a wonderful market opportunity. But, according to data in the article, that was then, this is now. Around the year 2000 trade between the two countries was about €35bn and at that time it was less than the amount traded with Italy, France, the US, and the Netherlands. Now the value of trade between Germany and China is almost €200 and it exceeds that traded with the aforementioned nations.
The potential for growth fulfilled, now China is perceived more of a threat to existing businesses. This is a complete turn-around in thinking. The result, as the article explains, is a new joint 5-page industrial manifesto put forward by politicians in France and Germany. For free-marketers this is bad news; government is looking to poke its nose into the workings of the market: very un-German like (so the article says). But as part of that manifesto, AI is held up as a bright new spot that needs protection such that companies in France and Germany have a chance to compete in new, very important market.
The Manifesto touched many policy ideas from protection, investment and so on. But it is interesting to see that AI continues to attract more and higher level interest, at a national level. AI is of interest to everyone. It is no longer just about automating a process or discovering a new insight. As quoted in the Economist article, the department in which the German policy maker who coauthored the Manifesto works, has called AI “the most important innovation since the seam engine”.
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