Stepping up the tech fight against China
Summary
- Beijing has been churning out patents, spending on R&D, while the US fiddles
For a change, some good news: The Journal reports that the Biden administration is in the early stages of building a “tech alliance" against China. The Trump administration began working with the Netherlands to block the sale of Dutch-made semiconductor manufacturing equipment to China’s largest chip maker. The new administration will continue such efforts and also work with allies to maintain the West’s technological edge in areas that will be crucial to defense as well as the economy in coming decades.
We are late to the party, unfortunately. In 2015 Beijing unveiled its “Made in China 2025" plan, which the Congressional Research Service characterizes as a coordinated effort to boost China’s competitiveness by “advancing China’s position in the global manufacturing value chain, leapfrogging into emerging technologies, and reducing reliance on foreign firms." Although the plan contemplates using foreign technology and expertise to plug gaps, domestic innovation is supposed to be the driver of growth and productivity.
China’s plan focuses on 10 areas, including new information technology, computerized machines and robots, aerospace, maritime equipment and high-tech ships, and biopharma. As of 2018, the Chinese government had invested hundreds of billions to support domestic research and development in these and related technologies.
The U.S. is standing still. As recently as 2001, America’s annual investment in research and development exceeded China’s by more than $300 billion. But according to a recent report from the American Academy of Arts and Sciences, Chinese investment exceeded ours for the first time ever last year. During the past two decades, China’s research and development as a share of its economy has more than tripled.
There are other indications of the U.S. slipping. Over the past two decades, the number of bachelor’s degrees China awards annually has more than quadrupled and now exceeds that of America, the European Union and Japan combined. Although the U.S. continues to grant more doctoral degrees in science and engineering, the gap has narrowed significantly.
Two decades ago, American researchers published four times as many peer-reviewed articles in the science and engineering disciplines than their counterparts in China. China received fewer than 20,000 patents two decades ago, but this figure rose to more than 400,000 by 2018, exceeding annual U.S. patent grants by more than 100,000.
Prodigious Chinese efforts in research and development have contributed to the country’s economic rise. As recently as 2007, America had six times as many companies in the global Fortune 500 as did China. By 2018 China had reached near-parity.
This erosion of the relative standing of the U.S. in science and technology has reached what the American Academy calls a tipping point. The country can slow China’s efforts to acquire foreign technology and manufacturing capacity, but America cannot prevent them from pursuing the domestic policies, including support for industries, that have fueled their rise. Although new technological alliances are part of the answer, they are no substitute for U.S. domestic efforts. If America doesn’t raise its game, the country will lose its position as the world’s leading economic and military power.
Responding to this challenge should be a pillar of the infrastructure bill the Biden administration plans to introduce later this year. Better roads, bridges, tunnels, ports and airports would contribute to our competitiveness, as would universal access to high-speed broadband. But without improvements in science, engineering and technology, the U.S. will continue to fall behind.
To begin, the administration should propose ramping up annual spending on research and development by 0.5% of GDP—about $100 billion—over the next four years and maintain this level indefinitely, with annual inflation adjustments. A large share of this increase should be reserved for basic research, the kind of investment private industry is least likely to make. Universities, where much of the basic research will be done, should be able to benefit from ownership of the intellectual property through patent and licensing agreements. Decades-old tax and patent laws should be updated to make sure that this happens.
To improve the research pipeline, the federal government should increase its support for graduate students pursuing advanced STEM studies. To improve public-school instruction in these areas and increase the number of undergraduates pursuing STEM degrees, the government should offer 10,000 full scholarships each year to American citizens in exchange for a pledge to teach STEM in a public school for five years after graduating.
In recent decades, the U.S. has failed to invest in the country’s future. Now Washington must do better before it is too late.
