The
United States and China are competing for dominance in technology.
America has long been at the forefront in developing the technologies
(bio, nano, information) that are central to economic growth in the
twenty-first century. Moreover, US research universities dominate higher
education globally. In Shanghai Jiao Tong University’s annual Academic
Ranking of World Universities, 16 of the top 20 institutions are in the
US; none is in China.
But China is investing heavily in research
and development, and it is already competing with the US in key fields,
not least artificial intelligence (AI), where it aims to be the global
leader by 2030. Some experts believe that China is well placed to
achieve that goal, owing to its enormous data resources, a lack of
privacy restraints on how that data is used, and the fact that advances
in machine learning will require trained engineers more than
cutting-edge scientists. Given the importance of machine learning as a
general-purpose technology that affects many other domains, China’s
gains in AI are of particular significance.
Moreover, Chinese
technological progress is no longer based solely on imitation. Former US
President Donald Trump’s administration punished China for its
cybertheft of intellectual property, coerced IP transfers, and unfair
trade practices. Insisting on reciprocity, the US argued that if China
could ban Google and Facebook from its market for security reasons, the
US can take similar steps against Chinese giants like Huawei and ZTE.
But China is still innovating.
After the 2008 global financial
crisis and the ensuing Great Recession, Chinese leaders increasingly
came to believe that America was in decline. Abandoning Deng Xiaoping’s
moderate policy of keeping a low profile and biding one’s time, China
adopted a more assertive approach that included building (and
militarizing) artificial islands in the South China Sea, economic
coercion against Australia, and the abrogation of its guarantees with
respect to Hong Kong. In response, some people in the US began to talk
about the need for a general “decoupling.” But as important as it is to
unwind technology supply chains that directly relate to national
security, it is a mistake to think that the US can decouple its economy
completely from China without incurring enormous costs.
That deep
economic interdependence is what makes the US relationship with China
different from its relationship with the Soviet Union during the Cold
War. With the Soviets, the US was playing a one-dimensional chess game
in which the two sides were highly interdependent in the military sphere
but not in economic or transnational relations.
With China, by
contrast, the US is playing three-dimensional chess with vastly
different distributions of power at the military, economic, and
transnational levels. If we ignore the power relations on the economic
or transnational boards, not to mention the vertical interactions
between the boards, we will suffer. A good China strategy therefore must
avoid military determinism and encompass all three dimensions of
interdependence.
The rules governing economic relations will need
to be revised. Well before the pandemic, China’s hybrid state
capitalism followed a mercantilist model that distorted the functioning
of the World Trade Organization and contributed to the rise of
disruptive populism in Western democracies.
Today, America’s
allies are far more cognizant of the security and political risks
entailed in China’s espionage, coerced technology transfers, strategic
commercial interactions, and asymmetric agreements. The result will be
more decoupling of technology supply chains, particularly where national
security is at stake. Negotiating new trade rules can help prevent that
decoupling from escalating. Against this backdrop, middle powers could
come together to create a trade agreement for information and
communication technology that would be open to countries meeting basic
democratic standards.
One size will not fit all. In areas like
nuclear non-proliferation, peacekeeping, public health, and climate
change, the US can find common institutional ground with China. But in
other areas, it makes more sense to set our own democratic standards.
The door can remain open to China in the long run; but we should accept
that the run could be very long indeed.
Notwithstanding China’s
growing strength and influence, working with likeminded partners would
improve the odds that liberal norms prevail in the trade and technology
domains. Establishing a stronger transatlantic consensus on global
governance is important. But only by cooperating with Japan, South
Korea, and other Asian economies can the West shape global trade and
investment rules and standards for technology, thereby ensuring a more
level playing field for companies operating abroad.
Taken
together, democratic countries’ economies will exceed China’s well into
this century; but only if they pull together. That diplomatic factor
will be more important than the question of China’s technological
development. In assessing the future of the US-China power balance,
technology matters, but alliances matter even more.
Finally, a
successful US response to China’s technological challenge will depend
upon improvements at home as much as on external actions. Increased
support for research and development is important. Complacency is always
a danger, but so, too, is lack of confidence or an overreaction driven
by exaggerated fears. As former MIT Provost John Deutch contends, if the
US attains its improvements in innovation potential, “China’s great
leap forward will likely at best be a few steps toward closing the
innovation leadership gap that the United States currently enjoys.”
Immigration
also will play an important role in maintaining America’s technology
lead. In 2015, when I asked former Singaporean Prime Minister Lee Kuan
Yew why he did not think China would surpass the US, he pointed to
America’s ability to draw upon the talents of the whole world – a
possibility that is barred by China’s ethnic Han nationalism. It is no
accident that many Silicon Valley companies have Asian founders or CEOs.
With
enough time and travel, technology inevitably spreads. If the US lets
its fears about tech leakage shut it off from such valuable human
imports, it will surrender one of its biggest advantages. An overly
restrictive immigration policy could severely curtail technological
innovation – a fact that must not get lost in the heated politics of
strategic competition.