The U.S. Can’t Afford a Science and Tech Decoupling From China
Attempts to decouple science and technology cooperation between the United States and China have intensified over the past five years, occurring across three major areas that have long been successful areas of innovation, efficiency and improvements to human capital: education, government and industry. While it is undeniable that collaboration in these fields has benefited China more than the U.S., due to how far behind China comparatively was in the late 1970s, the U.S. shouldn’t ignore the contributions that this collaboration has made to U.S. universities, society and corporations over the past four decades.
In education, universities have been targeted by the Department of Justice’s China Initiative, which sought to eliminate nontraditional espionage by closely scrutinizing collaborations in the STEM disciplines—science, technology, engineering and math—that seemed to benefit China’s growing national and military power. Although the China Initiative was scratched in 2022 after a string of mostly unsuccessful prosecutions of alleged wrongdoings, the U.S. government continues to be highly concerned about collaboration in higher education between the two countries. Some politicians at the state level are even concerned about having Chinese students on local campuses.
However, there are established ways to regulate scientific research and punish those that transgress. In contrast, a wholesale academic decoupling from China risks reducing research in critical areas, while also making it harder for Americans to study and research in China, creating a blind spot that is itself a national security risk. Moreover, accusing Chinese students of being a fifth column risks alienating the portions of Chinese society that are most likely to support and emulate the U.S. system, as many of them have sought out opportunities to study and do research in the U.S. for its values and more open academic environment.
Official government-to-government collaboration in critical areas, such as climate change, pharmaceuticals and public health, has also eroded. In August, the administration of U.S. President Joe Biden decided to renew the 40-year-old bilateral Science and Technology Cooperation Agreement for six months in order to review it, but there are calls within Congress to allow the agreement to expire because of fears that China will exploit any collaboration for its own gain. But as Deborah Seligson recently argued and as many U.S.-based scientists have agreed, there are strong self-interested reasons for the U.S. to maintain this agreement as a foundation, even if specific collaborations should now be subject to greater review and oversight.
Even as competition between the two sides intensifies, the U.S. should aspire to think strategically about cooperation with China and not react impulsively to limit contact, as if ignoring China or pretending that it doesn’t exist will make its competitive achievements just go away. As China’s strengths in science and technology have grown, the U.S. will struggle to achieve important goals—such as “reshoring” critical manufacturing and attracting investment into the country to boost manufacturing employment and good jobs—if Chinese scientists, students and firms are spurned.
In industry, nowhere is strategic thinking needed more than in the transition from gas-powered to electric vehicles, or EVs, an area of growing cooperation but also competition between U.S. and Chinese automotive firms. Commercial collaboration in automotives was previously a bright spot for U.S.-China relations. Since 1979, U.S. companies have invested billions of dollars in foreign direct investment into China to take advantage of lower labor costs and a large and growing market. General Motors and Ford have both struggled in the Chinese market recently, but in 2022 GM still sold more cars in China than it did in the United States.
Even as competition between the two sides intensifies, the U.S. should think strategically about cooperation with China and not react impulsively to limit contact.
Now Chinese automotive companies have also begun to look to the U.S. as a place to invest and manufacture. They often do so to take advantage of tax breaks, but also to promote U.S.-based manufacturing as a boon to U.S. workers and communities, similar to what Japanese companies did in the 1980s after the backlash against their sudden dominance in the auto market. But recent controversies over Chinese automotive investment into the U.S. underscore the degree to which, even in the commercial space, national security concerns and fears of Chinese Communist Party influence have intensified. Alarmingly, misinformation and rumors abound. And despite rhetorical attempts to distinguish China and the Chinese people from the CCP, in practice, anything that comes from China is immediately suspected as a threat to U.S. national interests.
An example is the ongoing controversy over two planned Chinese investments for EV battery-production facilities in western Michigan. In February, Ford announced plans to open a factory in Marshall using licensed technology from CATL, a Chinese company that is the largest EV battery producer in the world. And last year, Gotion, a California-based subsidiary of a Chinese company from Anhui province, announced that it would build a battery factory in Big Rapids. Both ventures are motivated by the desire to supply U.S.-based EV producers with domestically produced batteries, as many U.S. automotive companies accelerate their transition from the internal combustion engine to electric. Localized production is expected to allow those companies to take advantage of incentives in Biden’s Inflation Reduction Act and reduce the costs of EVs significantly.
But both projects have encountered political setbacks. Local opposition to the Gotion plant has intensified, while Ford recently announced it was putting the CATL venture on pause, after the House Select Committee on the CCP announced an investigation into the venture in July. The committee also issued a letter to Treasury Secretary Janet Yellen just last month imploring the federal government to withhold any support for the “CCP-backed” Gotion. Moreover, GM has complained that the Ford-CATL plant should not benefit from the IRA’s tax incentives, even though the plant will be fully owned by Ford. CATL’s cheaper battery technology puts GM at a competitive disadvantage.
Allegations that these investments risk sensitive American intellectual property are dubious given that it is the Chinese side bringing the new technology. Other concerns mostly rely on vague allusions to Gotion being “Communist-backed” or “CCP-linked.” These allegations conflate Gotion’s California subsidiary with the parent company in China. They also ignore that every firm in China—whether state-, foreign- or privately owned—must comply with the legal requirement to allow CCP members in China-based firms to set up a party cell. General Motors doesn’t have a CCP party cell in its Detroit headquarters, but its joint ventures in China certainly do.
What makes this fear-based climate so damaging is that there are currently no U.S. companies with the technology to produce EV batteries at scale. Without these Chinese investments and partnerships, U.S.-based production of this technology will fall further behind and remain more expensive than production in other places, including China and even the European Union, where CATL already runs battery operations in Germany and Hungary, with plans for expansion.
Chinese companies’ success in the transition to EVs is no coincidence. It is the result of a long-planned government strategy to leverage the transition to electric vehicles in order to improve Chinese firms’ ability to innovate in cutting-edge technologies. While this “leapfrog” strategy hasn’t always worked for Chinese firms, it has this time, leading other countries, including the U.S., to reconsider the need for industrial policy to navigate major technological transitions.
Nevertheless, the global automotive industry cannot be seen as a zero-sum competition between the U.S. and China. Attempts to cut Chinese firms off from the U.S. market are more likely to isolate the U.S. at a time when it is already lagging behind, potentially putting it at a permanent disadvantage that will hurt U.S. companies, workers and consumers. Given China’s superiority as a production location for EVs and its still large domestic car market, the U.S. needs to take advantage of investment opportunities that will diversify production away from China and train a new generation of U.S. automotive workers in these new technologies, not close the door to them.
Science and technology cooperation is necessary—to solve global problems, but also for U.S.-based companies and universities to stay globally competitive in a rapidly changing world. U.S. technological isolationism is likely to backfire, leaving the U.S. worse off, while potentially ensuring that China remains the global center for the next revolution in the automotive industry.
Mary E. Gallagher is the Amy and Alan Lowenstein Professor of Democracy, Democratization, and Human Rights Professor at the University of Michigan, where she is also the director of the International Institute. She was the director of the Kenneth G. Lieberthal and Richard H. Rogel Center for Chinese Studies from 2008-2020. Her WPR column appears every other Tuesday.