US effort to combat China’s tech rise ‘not nearly enough’

The United States faces a monumental task in keeping its focus on the long-term challenge posed by China’s quest for technology leadership

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Posted July 13, 2021 at 6:31am

This is the first part of a series on the competition between the United States and China over science, technology, and research and development. 

In May 2018, just months after the U.S.-China trade war escalated and both sides began slapping tariffs on each other’s goods, Chinese President Xi Jinping outlined his vision of how his country would unseat the United States as the global superpower. 

“We must strive to become the world’s main center of science and the high ground of innovation,” Xi said, according to a translation of his speech by researchers at Stanford University’s DigiChina project. “We are closer than any time in history to the objective of the great rejuvenation of the Chinese nation, and we need more than any time in history to build [China into] a world [science and technology] superpower!” 

Xi mentioned several areas that would determine future global leadership: artificial intelligence, quantum computing, telecommunications, the Internet of Things, blockchain, synthetic biology, gene editing, brain science, regenerative medicine, integrated robotics, development of new materials, high-efficiency sustainable technologies, and space and maritime technologies. 

It would take nearly two years and a pivotal U.S. election that put Democrats in charge of Congress and the White House before a bipartisan group of lawmakers in Congress would begin to address the contest spelled out by Xi. 

A year later, Congress has passed a slew of bills in both chambers that would provide nearly $80 billion to the National Science Foundation and to national labs overseen by the Department of Energy. The Senate also separately appropriated $52 billion in subsidies for the struggling U.S. semiconductor industry.

The measures also ask the National Science Foundation to focus research on 10 critical areas of national interest, which, not surprisingly, are identical to the ones Xi highlighted in 2018.

‘Not nearly enough’

While differences in the bills need to be sorted out before they can be signed into law by President Joe Biden, more than a dozen people interviewed for this series say the United States faces a monumental task in keeping its focus on the long-term challenge posed by China’s quest for technology leadership. 

The United States not only must continue to increase federal investment in research and development, but also attract top global talent, nurture homegrown scientific expertise, ensure commercial production of technologies that emerge from research, and sustain a domestic manufacturing base that can support American jobs, all while also addressing larger problems like climate change. 

The science and technology bills in Congress are a good start but “it’s not nearly enough,” to address the challenges they purport to address, said Tara O’Toole, executive vice president at In-Q-Tel, a venture capital firm that focuses on investing in technologies relevant to U.S. intelligence agencies. 

The bills are a “step in the right direction in that the Congress has clearly awakened to the fact that much of the geopolitical competition with China is going to be fought on the battlefield of science and technology,” O’Toole said.  

Unlike a contest for military supremacy, the science and technology competition is going to play out among global corporations as much as national governments, and technologies that seem to be ascendant today may change tomorrow, requiring the United States to be agile and to shift course, O’Toole said. 

Congressional proposals foresee a five-year horizon, but “we need a 10-year strategy in science and technology,” O’Toole said.  

‘Getting started’

Rep. Eddie Bernice Johnson, a Democrat from Texas who heads the House Committee on Science, Space and Technology, acknowledges that Congress is just getting started. 

“The two bills are first steps,” Johnson said, referring to the bipartisan proposals that emerged from her committee to fund the NSF and the Department of Energy labs. 

Lawmakers are pushing “to ensure that the United States can tackle our most pressing concerns that we face as a nation from climate change to public health and a strong economy,” Johnson said. “Finding solutions to these challenges will ensure that we remain a global leader. We’ve got to have the money but we also have to have the leadership.”   

But Johnson, a 15-term lawmaker and the first Black person and woman to head the committee, said competition with China cannot be the only driver boosting American science and technology funding. “It’s clear we want to be outstanding on our own,” she said. 

Citing other scholars, Johnson has written that competitiveness alone is not sufficient to ensure “equity, sustainability, or security.” 

Nevertheless, competition with China is helping to drive greater investment in many areas of scientific research that already are underway in university labs and private companies, said Sethuraman Panchanathan, director of the National Science Foundation. 

“Since when has competition been anything other than motivating us, inspiring us to be even more excellent than we have been ever before,” Panchanathan said. Competition is a “positive thing.” 

During the Cold War, competition with the former Soviet Union drove research and development, and later, Japan’s manufacturing prowess during the 1980s drove another round of scientific research, he said. 

The contest with China is “taking what we have, and should have been doing, to a higher level of intensity,” he said. 

Since taking over as director in June 2020, Panchanathan said he has been focused on the thousands of research proposals the NSF annually deems worthy of a review but ultimately doesn’t fund.  

With increased funding, Panchanathan said, more research projects could get funded. 

Scaling up

Recognizing that money is the starting point for other policies, Biden has pledged to increase federal spending on research and development to 2 percent of GDP from the current level of about 0.7 percent. 

The United States remained the world’s top R&D spender as of 2018 with combined federal and private expenditure. But between 2000 and 2017, China’s R&D expenditure outpaced U.S. spending, according to the NSF. The R&D World, a journal tracking research expenditures, forecasts that in 2021 China will claim the No.1 spot with $621 billion, compared with U.S. R&D of $598 billion. 

Although congressional proposals to boost funding for the NSF and national labs would contribute toward Biden’s goal, the United States still faces challenges in translating the fruits of research into scalable, commercial products, said one senior administration official who deals with such issues. 

There’s broad bipartisan agreement in Washington on the need for an industrial policy to successfully commercialize and sustain the benefits of research, said the official, speaking on the condition of anonymity because the administration is still debating such policies. 

After nearly a half-century of unquestioned faith in free markets, there’s political consensus in Washington that private companies acting in the interests of their shareholders cannot be counted on to advance national interests. 

Questioning market orthodoxy 

“It wasn’t so long ago that ‘industrial policy’ was a dirty word,” said Virginia Democrat Mark Warner, chairman of the Senate Intelligence Committee. 

Although open markets, competition and innovation led by private companies are essential, Warner said, “we have to be pragmatic and honest about the role of the U.S. government when it comes to establishing and maintaining those conditions: they don’t just happen automatically.” 

U.S. government-funded R&D ultimately led to the development of the Internet, wireless communication, and other technologies that we take for granted today, Warner said. 

Florida Republican Sen. Marco Rubio, who has been calling for a targeted investment policy since 2019, recently renewed the call. 

Addressing a closed-door Republican Study Committee in May, Rubio called for challenging the “orthodoxy that the market’s always right,” according to a report in the Washington Examiner.  

In a recent Senate speech, Rubio cited the example of Operation Warp Speed last year that brought together the U.S. government and private pharmaceutical companies to develop mRNA vaccines against COVID-19 “as an example of a targeted industrial policy where the government partners with the private sector to solve a big problem.” 

Despite the emerging consensus, differences emerge over how and who should be in charge of executing it. 

Rubio and other Republicans favor letting the Pentagon’s Defense Advanced Research Projects Agency or DARPA take the lead in translating scientific advances into technologies, while others prefer the role go to the NSF, and yet others want a whole new cabinet agency that would oversee the effort. 

Biden already has taken a step in that direction when he elevated the White House Office of Science and Technology Policy into a Cabinet-level position. Eric Lander, a mathematician and geneticist, is the first director of the office to hold that Cabinet rank.

Combating short-termism 

Such moves aren’t enough, said Robert Atkinson, president of the Information Technology and Innovation Foundation, a think tank that focuses on innovation policies. 

“The idea that you can fix this problem” of international science and technology competitiveness “only with an R&D strategy is shortsighted,” Atkinson said.

Atkinson, who has written about short-term bets by companies such as Lucent that led to their collapse, said he fears that America’s tech giants could similarly falter. 

He proposes a national advanced industry and technology agency that would ensure long-term U.S. leadership, consolidating efforts now split across multiple agencies. 

Steve Vogel, a professor of political science at the University of California, Berkeley, who also has called for an industrial policy, has advocated creating a new Department of Industrial Strategy.

“I don’t think that’s a likely scenario anytime soon,” Vogel said. Instead, the same goals could be achieved in a “less institutionally ambitious way … through a council with some power,” he said. 

Over-centralizing the administration of science is bad, said M. Anthony Mills, a resident scholar at the American Enterprise Institute, a conservative think tank. 

Since the late 1800s there have been many calls for a central agency or department to oversee U.S. scientific research, but the country always has leaned toward a loose network of multiple agencies, Mills said. 

Making things

Biden’s elevation of the OSTP to a Cabinet-level agency might accomplish some of the goals that Vogel and Atkinson advocate without creating a new federal department.  

In a Jan. 15 letter to Lander, then President-elect Biden called for focusing on five areas: addressing public health needs after COVID-19; breakthroughs to address climate change; U.S. technology leadership to compete with China; distributing the fruits of science across the country; and ensuring long-term health of U.S. science and technology. 

Sustaining global technology leadership boils down to manufacturing things that emerge from labs, said Michael Lind, professor of practice at the Lyndon B. Johnson School of Public Affairs at the University of Texas, Austin. 

America’s aggressive focus on manufacturing in the two centuries prior to World War II turned to complacency after the war when vast parts of Europe and Asia were reduced to rubble, and the United States “ceased fearing industrial competition,” Lind said. 

All through the 1980s and in later years, U.S. companies fixated on profits by inventing and designing things at home while shifting manufacturing to cheaper foreign locations, Lind said. 

But “if you only invent things and you don't make them, then you're going to lose out,” Lind said. In the long-term “there’s far more money to be made by dominating the world automobile market generation after generation,” for example, than inventing new products and letting other countries make them.