Although Chinese President Xi Jinping failed to mention an adversary by name during the 70th-anniversary celebrations of the People’s Republic, he declared that “no force can stop the Chinese people and the Chinese nation forging ahead.” China indeed forges ahead in its pursuit to outspend the US in research and development. A recent report by the Council on Foreign Relations (CFR) concluded that China would likely become the largest R&D spender after 2030, which directly threatens US economic competitiveness and national security.
To counter Chinese challenges, Washington should strategize and direct national funding for innovative technologies, cultivate and attract top-tier STEM talent with favorable immigration programs, and encourage cooperation and transparency between the Department of Defense (DOD), the intelligence community, and the private sector. Lack of communication between the agencies and sectors prevents holistic funding outcomes for specific national and social concerns. Historically, the US increased federal funding to secure both geopolitical and economic supremacy during periods of intense competition.
From 1945 to 1965, the US doubled federal spending in scientific research and technological development. However, by the late 1960s, funding steadily declined. When the Soviet Union launched Sputnik into orbit, Washington founded both the National Aeronautics and Space Administration (NASA) and the Advanced Research Projects Agency (ARPA). Through ARPA, and later as DARPA, federal funding flooded into US universities for military-related research and development. Increased federal funding propelled the US to the moon, a crucial moment in the space race against the Soviets. The recent CFR report argues that a similar ‘moonshot’ approach is necessary for Washington to prevail in its geopolitical rivalry with China. So far, federal funding for research and development in sensitive and military-related technologies has not grown, relative to the economic and military threats emanating from Beijing.
Few people remember that taxpayer dollars funded the development of the Global Positioning System (GPS), the Internet (known initially as Arpanet), and touchscreens through agencies like the Department of Defense. During its peak, federal investment for research and development reached 2 percent of US GDP and recently bottomed out at 0.7 percent. Private investment, during the same period, filled the gap and eventually surpassed 2 percent. However, the private sector is not as strategically-oriented in preserving national interests and developing military-related technologies crucial to the US-China rivalry.
During the last two decades, China increased spending on research and development tenfold. Chinese patent applications published scientific papers, and STEM graduates continue to grow, while US achievements stagnate. During the Cold War, the US confronted a relatively isolated and economically weak opponent, while today, China is both a competitor and vital economic partner in an interconnected world economy. Therefore, Washington’s federal funding of cutting-edge technologies is modest at best.
Further, the rate of innovation multiplies and small developments in the private sector transform industries, economies, societies, and militaries. Artificial intelligence will eventually streamline shopping, secure cities, manage traffic, and even diagnose cancer.
China’s approach to the Fourth Industrial Revolution is forward-looking and holistic, while the US still develops a strategy. Investment in robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, the internet of things, fifth-generation wireless technologies (5G), 3D printing, and fully autonomous vehicles will secure geopolitical victories throughout the remainder of the 21st century. Therefore, a lack of coordination between the federal government and the private sector disadvantages US abilities to counter Chinese innovation. In contrast, Beijing directs government-led investment to mobilize data, talent, and economic output toward geostrategic goals. That being said, the ‘gap’ between private sector innovation and federal implementation slows down Washington’s ability to compete.
Xiang Songzuo, an economist at the Renmin University of China, recently joined other professionals in demanding that the Chinese government reform its ways concerning research. Xiang labeled President Trump’s efforts to punish technology companies like Huawei and ZTE as “US-imposed technology containment.” While China could look to various models to spark economic growth, Xiang argues that a focus on basic research and education is crucial. Short-term stimuli cannot eclipse strategic investment in long-term structural reforms in innovation. Therefore, even within China’s centralized and future-oriented system, there are increased calls for more research and development, not less.
Under the Trump administration, the United States expanded military spending but simultaneously threatened supply chains vital to the global economic ecosystem. While this increases costs for US firms, it also pressures Chinese companies, which rely on US hardware and software for their products. Moreover, hostile trade and immigration policies create barriers to foreign talent. Even worse, strategic investment in STEM fields at home has not increased significantly to combat the wave of upcoming STEM graduates expected in China. The Department of Defense and Intelligence Community also lose personnel to the rapidly expanding private sector.
In many ways, the Trump trade war is a preemptive strike at Made in China 2025, a concerted effort to stall Beijing’s strategic plan toward global supremacy. China boasts a manufacturing industry recognized as the best in the world, complete and efficient industrial systems and supply-chains, and an impressive and interconnected telecommunications system reinforced with first-rate infrastructure. However, the trade war might not be enough. Instead of slowing Beijing down, Washington should speed up US innovation.
Washington should develop ‘moonshot’ approaches, similar to the US response to Sputnik, to out-innovate China in sensitive technologies like artificial development, robotics, energy storage, 5G telecommunications, quantum information systems, and biotechnology. The task to confront rising Chinese specialists in such emerging technologies will not be easy, but with proper funding and national strategy, the US can win like during the space race. Washington should encourage university scholarships in STEM fields, and modify immigration policies to enable its world-class institutions to attract and educate a science and technology-focused workforce.
As it did previously, the US must forge ahead by cultivating top tier talent and preserving its central national security and geo-economic interests. Otherwise, Beijing will fund its way to global supremacy by the end of this Fourth Industrial Revolution.
