At the beginning of the Year of the Tiger, the White House is increasingly finding itself on the back of a tiger in its trade war against China — difficult to continue but afraid to dismount for fear of being devoured. It has come under strong pressure from U.S. businesses and consumers to scuttle the punitive tariffs Donald Trump slapped on some $360 billion worth of Chinese imports. At the same time, however, it fears that such a move would be exploited by Republicans in the midterm election.
Yet Washington’s tech war against China is in full swing. In an attempt to maintain its global dominance in science and technology — high-tech in particular — Washington has left virtually no stone unturned: It has reinforced export controls, blocked research cooperation between U.S. scientists and their Chinese counterparts, shut out Chinese students wanting to pursue an advanced degree in STEM, placed Chinese companies and individuals on its Entity List, banned Chinese high-tech imports, set up cliques and orchestrated schemes to isolate China.
But what is the likely outcome?
China has one of the largest talent pools in the world. The country’s annual crop of university graduates with an engineering or science degree outnumber those of the U.S. and the EU combined. In addition, according to Georgetown University, China is expected to turn out 77,000 people with doctorates in STEM subjects by 2025, nearly twice as many as the U.S. This home- grown talent, deemed by Georgetown as China’s key “national asset,” constitutes a formidable force in the country’s innovation drive.
Meanwhile, China’s talent pool is augmented by bright minds from overseas. Already in high-tech companies such as Huawei, Tencent and Alibaba, some of the world’s top scientists and mathematicians are working side by side with Chinese colleagues. An increasing number of expatriates in the high-tech sector are finding China a promised land, not just in terms of financial rewards but also in opportunities to apply their creative ideas. The influx of talent is anticipated to grow as the government strives to make the country attractive to overseas scientists, mathematicians and engineers.
China has not only talent but also financial resources for research and innovation. Its current expenditures in R&D are second only to those of the United States and exceeding the R&D spending of the entire EU bloc. Further, the country intends to devote a larger proportion of its GDP to what it deems essential for high-quality economic development. China’s 14th Five-Year Plan calls for the country’s investment in R&D to increase by 7 percent annually during the 2021-25 period.
Curiously for many outside observers, China also appears to have an effective approach to R&D. Its government-led coordinated approach to the development of critical technology, once dismissed as a waste in the West, now seems to be working, as evidenced by the huge technological progress the country has made in recent years and the serious concern this has caused in Washington. While increasingly referenced and adopted outside the country, China’s way of doing R&D is expected to serve the country well in the years to come.
What would most likely prove to be an antidote for Washington’s effort to stunt China’s innovation, however, is the country’s open-door policy on research and innovation. Apart from luring talent from overseas, China seeks close international partnerships. It strives to build strong connections and share scientific discoveries with the rest of the world. While keeping its borders open for foreign investors and sellers, it encourages its companies to go global, to set up shop in other lands.
The country has good reason to believe that as long as it embraces the world, it will never be pushed away or shut out. A case in point is the popularity of Huawei’s 5G equipment in much of the world, despite Washington’s all-out effort to decimate the Chinese company.
Still, Washington is keen on bringing back the technological blockade it led against China in the mid-20th century. The world has fundamentally changed though — and in China’s favor. For one thing, China is quickly becoming a global innovation hub. It has overtaken the U.S. as the world’s biggest manufacturer of high-tech products. It is also at the forefront of a few sectors globally, including 5G, quantum computing and AI. In addition, according to World Intellectual Property Organization, it has replaced the U.S. as the country filing the most patent applications.
Even under the stringent technological blockade of the West, China was able to detonate nuclear bombs and launch satellites into the orbit some five decades ago —amazingly, with the help of abacuses. America’s failure to strangle the young People’s Republic technologically leads most Chinese to doubt Washington’s ability to stop it on its track toward becoming a global innovation powerhouse. If history is any guide, the U.S. tech war will only fire the zeal of the Chinese people for innovation, rather than extinguish it.
There are other factors at work against Washington’s tech war. It is encountering resistance and outright opposition from U.S. businesses and the scientific community. Many high-tech companies in the U.S. derive a large proportion of their profits from China, which accounts for more than one-third of total sales of American semiconductors. Not so coincidentally, is Intel’s largest client.
Few U.S. companies with true global ambitions can afford to stay out of China’s huge market. For many, forsaking China would mean the loss of the financial ability to conduct the R&D necessary to maintain America’s technological edge globally. According to the Kennedy School at Harvard University, Washington’s tech war is already hurting American companies. It has, for example, caused Qualcomm to lose its position as the biggest supplier of processors for smartphones in China. In the field of science and technology, it is depriving American scientists of opportunities to benefit from the discoveries of their Chinese peers.
Outside the U.S. and among a limited number of its Western allies, Washington’s tech war is winning few friends. Turning research and innovation into a geopolitical football will only lead to a bifurcated world, with different systems and standards among countries for emerging technologies such as 6G and quantum communication — a nightmarish scenario for the global economy. Hindering research cooperation between countries will only raise the cost of innovation and slow scientific and technological advancement globally. It is, therefore, only natural that the rest of the world is reluctant to pay for America’s geopolitical objectives.
Moreover, China’s scientific and technological advances are seen in much of the developing world as benefiting poor countries. It has, in many instances, broken the monopolistic power of multinationals, making otherwise prohibitively expensive manufactured goods accessible and affordable for common folks in developing countries. At the same time, China has been pushing for technology transfers to its cousins in the south, thus contributing to their technological progress. In this context, Washington’s attempt to stifle innovation in China is increasingly perceived as not aligned with the interests of the developing world, and can expect a cold shoulder.
Apparently, by starting and sustaining its tech war against China, Washington has placed itself on the wrong side of history. Like its trade war, the tech war will turn out to be neither good nor easy to win for America. In all likelihood, the White House before long will feel like it’s riding a tiger, if it doesn’t already.