Contemporary geopolitics is defined by two concepts: strategic competition and economic security. The Biden administration’s National Security Strategy began with the premise—inherited from Donald Trump’s first term as U.S. president and now consensus in Washington and throughout the West—that the world is “in the midst of a strategic competition to shape the future of the international order,” and it has focused relentlessly on the economic dimension of that struggle.

Less than a month after his inauguration, President Joe Biden ordered a 100-day review of critical U.S. supply chains to assess their resilience and vulnerabilities. From the Inflation Reduction Act to expansive strategic trade controls, the Biden administration has worked to more fully integrate national security and foreign-policy equities with those of domestic and international economic policy.

They’re often paired together, and it’s true that economic security is key to strategic competition, but not in the way most policymakers think. As a result, the United States and its partners are doing economic security wrong. And unless they do it right, they’re going to lose.

The United States, its allies, and its closest partners have concluded that they are locked in a competition with China for global leadership, a fight that is being contested across every dimension of national power: economic, technological, diplomatic, military, and ideological.

Traditionally, economic security is an integral part of that competition since a strong economy is the foundation of national power and prestige. As a result, economic security policy aims to ensure that the national economy functions in an efficient and effective manner and that it is immune to efforts by foreign governments to coerce policy decisions.

This yields a focus on resilience and reducing vulnerability to external disruption. The 2023 G-7 summit communique is typical of this approach. It prioritized resilient supply chains, protecting critical infrastructure, addressing economic coercion, and preventing leakage of critical and emerging technologies, among others.

Resilience is important, but economic security is much more than risk reduction. The key to a sound economy is innovation, which demands a robust presence at the frontiers of new and emerging technologies. For the Organization for Economic Co-operation and Development, innovation is “imperative,” as it “provides the foundation for new businesses, new jobs, and productivity growth, and is a key driver of economic growth and development.”

Former European Central Bank President Mario Draghi made that clear in a recent report to the European Commission. In it, he explained that the failure to unlock Europe’s “innovative potential” and close the widening gap between European and U.S. growth will leave the continent “less prosperous, less equal, less secure, and, as a result, less free to choose our destiny.” Attention to innovation, not just protectionism and interference, is the only way to truly guarantee future economic security. Playing defense without devoting equal attention to stimulating research and development will fail. Success demands attention to both.

It is difficult to fully appreciate the importance of these new technologies. Artificial intelligence, quantum computing, biotechnology, nanotechnology, advanced materials, and others—every government has its own list of critical, emerging, or disruptive technologies—will reshape the world. To call their collective impact a fourth industrial revolution doesn’t do them justice.

The McKinsey Global Institute concluded that they will “affect billions of consumers, hundreds of millions of workers, and trillions of dollars of economic activity across industries.” The winners in this contest will lock in leadership for generations of technology by collecting revenues that sustain future research and development or setting standards that privilege their products.

Success will confer legitimacy on that country’s innovation model, reinforcing its soft power. Imagine the status and influence that will be bestowed on the country that leads the green transformation. The companies and the countries that dominate in these fields will lead the 21st century economy and the world.

Chinese President Xi Jinping gets it. In a 2014 speech, he said, “Science and technology innovation has become a critical support for increasing comprehensive national strength. Whoever holds the key to science and technology innovation makes an offensive move in the chess game and will be able to preempt the rivals and win the advantages.” These are the ultimate stakes in the competition for technological leadership—and key to any modern concept of economic security.

The Biden administration has increasingly focused on new and emerging technologies. “Common security objectives look to the whole of the Chinese technology ecosystem that is needed for it to support the modernization of its weapons,” former Commerce Department official Kevin Wolf said. “The United States is controlling the thing to make the thing to make the thing to make the thing that will give its military the advantage over ours.”

Significantly, however, the controls will, as National Security Advisor Jake Sullivan clarified last year, “remain narrowly focused on technology that could tilt the military balance.” They are “simply ensuring that U.S. and allied technology is not used against” them.

That is not enough. After all, the United States, its allies, and its partners acknowledge that strategic competition extends well beyond the military domain. In fact, the key to winning that race is economic success, which will rest on the mastery of new and emerging technologies. We need to outpace our adversaries and that sometimes demands that we slow their access to these technologies more generally, not just those with obvious military uses.

Traditionalists, comfortably ensconced in venerable institutions such as the Hoover Institution and the Cato Institute, say that the United States is embracing industrial policy and turning its back on the free-market policies that were responsible for past successes. This misreads history.

While the U.S. myth is that of the solitary entrepreneur, laboring away in their garage, giving the finger to “the man”—government or big business, take your pick—the truth is that the U.S. government has promoted industrial policy since the founding of the republic. Economic historian Michael Lind has argued that “the most innovative entrepreneur in the 20th century was the U.S. government”—a view supported by figures like Eric Schmidt, former CEO of Google.

Equally damaging to our ability to understand and pursue economic security is capitalist orthodoxy (an assertion as heretical as the claim that our understanding of history is wrong). The relentless focus on shareholder returns, the overriding consideration in the U.S. version of capitalism, has prompted a prioritization of efficiency and profits over all other considerations. This yielded the just-in-time production networks that girdled the globe in the search for greater returns—and proved dangerously thin in times of crisis.

The folly of that approach was made clear during the COVID-19 pandemic, when governments around the world scrambled to secure the personal protective equipment needed to fight the virus’s spread. At its root, however, this problem reflects systemic pressures within the capitalist model that encourage businesses to cut all costs, including those related to security measures, in the belief that the government will intervene in a crisis. In short, profits are privatized and losses are socialized.

Genuine economic security demands a better and more accurate assessment of the price of insecurity and better distribution of those costs among all stakeholders, not just leaving it to the public. Those costs are likely higher than anticipated when decisions by business partners and competitors may not be made according to market logic but are shaped, if not dictated, by geopolitical considerations as framed by Beijing.

China, the United States’ principle adversary, isn’t burdened by these assumptions. China has eagerly embraced industrial policy, producing several national plans and providing hundreds of billions of dollars to promote technology development and its vision of economic security. Its version of capitalism rejects Western orthodoxy, blending the public and private sectors so thoroughly that observers speak of “CCP Inc.,” a “dizzying mix of public, private, and hybrid-ownership firms” that makes it almost impossible to say “with any precision where CCP influence ends and where firm autonomy begins.”

In addition, China has promoted decoupling with the West in key technologies, tilting the competitive ground in the home market to favor domestic companies. All this aims to promote technological self-sufficiency, reduce China’s own vulnerability, and position its companies as global leaders in vital industries—the very model of economic security.

Western critics counter that this model will fail. They charge that it cannot innovate or respond to the fluidity demanded by rapid technological change. That blithe response overlooks history and the current moment. Historically, the Chinese were extraordinary innovators, inventing paper, printing, the compass, and gunpowder. Various analyses show that China is ahead of or tied with the United States in critical new and emerging technologies. Writing China off as only capable of theft or imitation is dangerously shortsighted.

Creation of a position at the highest levels of government with these responsibilities is essential, just as Japan created an economic security minister, for example. A top-level official with a well-rounded perspective, capable of rallying the entire government and society would do the trick. Ideally, there would be a national economic security advisor to complement the existing national security advisor, but that would likely trigger bureaucratic conflicts within the White House at the very least. Rarely has this approach worked, except, perhaps, in wartime, but the current competition and stakes warrant a similar level of concern. An Office of Economic Security within the White House would be a valuable first step.

This individual would provide clarity—intellectual, political, and bureaucratic. A first task would be articulation of an economic security strategy, which would oblige the administration to focus intellectual and political energies on understanding and explaining what economic security is and requires. Success demands a profound appreciation of both public and private sector activities. Most fundamentally, there must be a consciousness of the need for trade-offs that balance economic gains with security concerns.

Economic security policy must be ecumenical, however. Governments should spur innovation without being locked into particular pathways and products. Policy should not seek to pick winners and losers but should aim to support a diversity of approaches instead. Innovation is vital, but so too is establishing a foundation for inquiry and development. Essential to the success that is key to economic security is a strong STEM sector to promote research, as well as to disseminate and diffuse the results.

Multilateral cooperation is key to any economic security strategy. The impulse to use economic security as a cover for protectionism must be resisted. A strategy that is framed by narrowly defined and purely national interests will fail. No single country can innovate across all fields of emerging technologies. No country can completely internalize the supply chains that are needed for new and emerging technologies, either. Genuine economic security requires a community of like-minded nations, and we must be expansive in our identification of those partners. There shouldn’t be an ideological litmus test, but a prerequisite is support for international law and a rules-based international order. Also important is adherence to security protocols to protect intellectual property, as well as ensure safe, secure, and resilient supply chains.

The United States has been slow to awaken to the sweep and significance of economic security. Getting economic security right demands a rethinking of basic assumptions about national security, economic policy, and the interplay of the two. It will not be easy. Principles must be revisited and reworked. Basic instincts and policy reflexes resisted. But given the stakes in the competition for economic leadership—determining who will write the rules of the future global order—the United States, its partners, and other like-minded nations must rise to the challenge.