America Must Awaken from Complacency to Win the Tech Race

In his inaugural address, John F. Kennedy proclaimed, “In the long history of the world, only a few generations have been granted the role of defending freedom in its hour of maximum danger.” We are such a generation. JFK’s words ring truer today than at the time of his inauguration in 1961 or any time since. The People’s Republic of China (PRC), under the control of the Chinese Communist Party (CCP), is more a peer competitor economically, militarily, and diplomatically than the Soviet Union JFK’s America faced. And the CCP is every bit as resolved as the Soviets to shift global norms away from the defense of freedom.

Naïve arrogance keeps too many Americans from seeing that China has become a tech powerhouse. China has a credible path to gaining technological parity (and in some cases, superiority) in military applications. 

Yet too many believe all the US needs to do is to keep the CCP from stealing American technologies (essential – yes, sufficient – no). They have not accepted the fact that the US trails in key technologies and risks falling behind in others. They don’t fully appreciate how harmful America losing its innovative edge would be to its prosperity and security, now and in the future.

America must awaken from complacency and dedicate itself to winning the race for tech leadership.

China is Competing for Tech Leadership

Ever since JFK’s call to win the space race accelerated investment in talent and discovery, America has enjoyed the advantage of being home to much of the most innovative technologies. This has propelled its prosperity by making its products in high demand and advanced its security by giving its military an advantage over any foe. Yet the CCP’s multi-decade focus on achieving leadership in key technologies has undercut America’s advantage.

A recent study found China leading in 37 out of 44 crucial technologies based on the proportion each nation had of the most highly cited research reports. For those frustrated that open-source publication accelerates the dissemination of dual-use technologies, the good news is China is publishing even more than America. Neither the classified insights the US gains nor the People’s Liberation Army’s (PLA) network of military science academies are included in the comparison. The picture may change if they were. Yet dominant Chinese market shares in critical minerals, batteries, EVs, solar cells, telecommunications, and more lend credence to China’s technological advances. 

A report by the Australian Strategic Policy Institute (ASPI) suggests...

...no one should have been surprised when China tested a nuclear-capable hypersonic glide vehicle. China publishes four times the most cited papers as the US on hypersonic and advanced aircraft engines. It also leads in other sciences vital to hypersonic flight. 

Achieving speeds above Mach 5 requires advances in low-friction surfaces to reduce and dissipate heat produced by air friction. It also demands the development of novel materials able to handle high temperatures and high forces on control surfaces. China publishes three times as many highly cited papers as the second-place country (often, but not always the US) on novel metamaterials, eight times as many on coatings and three times as many on high-specification machining processes. These are areas where China manufacturing producing nearly twice as much output as the US, gives the PRC an advantage. 

The CCP’s penchant for secrecy is reflected in its research focus. Their research leadership in photonic sensors, quantum communications, advanced optical communications, and post-quantum cryptography could allow the CCP to make their communications impenetrable by the West and make the West’s classified communications vulnerable. 

The ASPI study shows the US leading in research publications in high-performance computing, integrated circuits design and fabrication, and natural language processing. But it trails China in machine learning, advanced analytics, and protective cybersecurity technologies.

It shows the US leading in terms of research in small satellites and space launches, but trailing China in drones, autonomous systems, and advanced robotics. 

Finally, it shows the US leading in quantum computing research, but trailing China in post-quantum cryptography, quantum communications, and quantum sensors. 

China Contesting Military Leadership

How does this translate into military applications? During the decades America spent fighting terrorism, the CCP rapidly built its military capabilities. The US military is sprinting to retool to deter great power conflict. At the time of JFK’s address, defense spending represented 9% of GDP. Today it is at a post-World War II low of 3.5%. 

Since the time of JFK’s inauguration, the Department of Defense’s (DoD) research funding has declined from 36% of global R&D to a mere 3% now. Today’s America’s military is more a consumer than a provider of technology. The CCP has fused its quest for technological and military leadership. It is no different in the US. The contest for technological military superiority is in great part determined by which side can more quickly adapt commercially developed technologies. 

• The CCP has the advantage of building anew while the US is handicapped by needing to replace an installed base of aging technology and bloated base structure that is aggressively defended by elected representatives in Congress prioritizing keeping federal jobs in their districts. 
• The CCP has aggressively steered its industry to focus on technologies that give its military a technological edge, while US industry remains focused on gaining the greater payback from consumer markets. 
• Captains of American industry gave Xi Jinping a standing ovation during his US visit last year, even as the US military is increasingly reliant on industry for its innovative edge.

Inflection Point

We are at an inflection point. Depending on its response, America will continue to provide leadership that benefits both the nation and the world or surrender leadership to an ascendant China, at great risk to its future prosperity and national security. 

How can America successfully defend its innovative edge to underwrite freedom in its hour of maximum danger? 

How can we ensure the US stays a step ahead in new technologies? The US military can only build an offset advantage on technologies where the US leads.

Solutions

As we consider what it takes to preserve an innovative edge, I am reminded of a conversation I had as President of the University of Colorado with an institute director in Boulder who claimed national leadership in studying oceans. When I asked how it was that a university in the Rockies was good at studying oceans he replied, “It turns out that the first thing you need to study oceans in money, the second thing you need is graduate students.” I am sure the fact that the campus in Boulder leads in satellite research and development didn’t hurt either. Colorado is no closer to space than to oceans, yet success in research and development does not require proximity.

Research Funding

Let’s begin, then, by considering how the US is doing providing money for research, then consider tech talent. As it turns out, not so well on either.

Business. America’s biggest source of research funding is business, yet Congress recently allowed a tax incentive for spending on research and development to expire. Renewing the R&D tax incentive is urgent.

Federal. Concerned that China is approaching the US in total research spending...

...the Chips and Science Act authorized a significant increase in research support, but indications are that Congress will fail to appropriate the level of research funding authorized by the act. 

Fully funding the authorized research spending is essential for the US to retain its innovative edge.

Productivity. Studies have found that research is becoming less disruptive. The concern is that using committees to allocate funds and professors fixated on gaining tenure both lead to the pursuit of incremental advances rather than breakthrough work. Governments should treat the search for the best ways to fund science as though it were itself a scientific problem, experimenting with how and who it funds. The US should also aggressively pursue how AI can be transformational in accelerating scientific discoveries in all fields. 

Collaboration. Innovation productivity is fueled by iterative collaboration among those who specialize in a specific field. New rules and chilly politics in both countries has resulted in US-Chinese academic collaborations peaking in 2019 and falling since. As research collaboration with China abates, the US must increase its collaboration with allies. US scientists currently collaborate twice as much with Chinese partners as they do with those from Europe. Yet Europe has much to offer. For example, the EU is a strong competitor to China in all quantum technologies, including post-quantum cryptography, where the US lags China. It is vital that the US and its European and Asian allies tighten research collaboration to build an aggregate lead in critical technologies. 

Bolster geopolitical benefits. Many universities encourage faculty to bypass open source publication and instead steer them toward filing a patent, perhaps a classified patent, to facilitate greater commercialization. This financially benefits the inventor and the university and could have geopolitical benefits. The National Science Foundation programs promoting greater commercialization and the Department of Defense’s (DoD) academic partnerships should include an emphasis on bolstering geopolitical benefits.

Some small steps could further facilitate research:

New NSF Directorate. The Chips and Science Act created a new Technology, Innovation and Partnerships Directorate in the National Science Foundation to help ensure a greater focus on critical technologies. It emerged from concerns that China concentrates its research on technologies that give it a security edge, while US government funding is widely disbursed and US commercial research is focused on consumer markets.

OSC. The DoD’s new Office of Strategic Capital seeks to help advance “critical technologies vital to national security” that might not otherwise get funded.

Talent

The state of tech talent is a substantial factor in tech leadership.

Declining STEM enrollment. While a wide range of talent is essential to an innovative ecosystem, college graduates play an important role. Ongoing declines, driven in large measure by simple demographics, paint a worrisome picture. US college enrollment in 2021 was 15% below 2010 and is expected to drop further still, due to declining births following the 2008 financial crisis. The resulting drop in STEM (science, technology, engineering, and math) graduates will exacerbate the shortage of tech talent. 

Targeted funding should be provided to reverse the disincentive to pursue STEM degrees caused by their often costing up to twice as much to deliver or earn as liberal arts degrees. 

Considering that the PRC is now graduating twice the number of STEM PhDs as the US, significantly more funding should be provided for STEM scholarships and doctoral fellowships.

Declining International STEM Students. With the US ranking near the bottom in the percentage of graduates pursuing STEM fields, it has long relied on attracting the world’s best and brightest. The overwhelming share of these students have historically come from two countries–China and India. Visas for Chinese students and academics have fallen by two-thirds since peaking in 2015. A recent surge in students from India provides hope that they can take up the slack. The US must continue to attract international STEM students to contribute to the preservation of its innovative edge.  It is essential that all students feel welcomed in the country.

Regulations – Standards

Comparative regulatory regimes, defining global standards, and establishing secure supply chains are also important to the tech race. 

AI governance. A debate on AI governance is raging between two factions: on one side are those fixated on the consequences of far-off Artificial General Intelligence, together with market leaders seeking to insulate themselves from future competition. On the other side are pragmatists who fear excessive regulation would limit opportunities and favor China. This is playing out in the military in the context of when to keep a person in the loop, making decisions for otherwise autonomous weapons. 

The big geopolitical question is whether AI will be more beneficial for open or closed systems, democracy or authoritarianism, free market or a centrally planned economy. While centrally planned economies are less efficient than free-market economies and eventually break down, especially at scale, might the opposite be true of AI-empowered centrally planned economies? Will AI orient free-market economies toward oligopolies with concentrated control of platforms? 

In last November’s OpenAI drama, “Those who think we should slow down and be careful mounted a coup against those who think we should speed up and be careful.” The outcome means AI will now move faster. Expect to see more companies going beyond experimentation and discovering real use cases. How deep fakes and AI-generated misinformation impacts the upcoming election will likely influence public attitudes toward AI. 

The EU views itself as a regulatory superpower and has taken the lead in regulating AI, while a divided Congress in the US will give the courts and states outsized importance. 

While keeping a close eye on the risks of AI, it is important to ensure that governance efforts don’t disadvantage the US.

 Tech standards. China would like standards to embrace its digital approach directed toward controlling users while US seeks to advance tech that empowers users. The Biden administration  took a positive step recently by issuing the first-ever “National Standards Strategy for Critical and Emerging Technology.” 

While agreements excluding the US that define terms of digital trade are advancing, the US reserved longstanding opposition to taxes on cross-border data flows, requirements to store data in an export markets such as China, and demands to share source code of software with importing countries including China. The administration took a pause to reconsider its positions.

Progressives argue the rules could hinder efforts to rein in “Big Tech” companies via antitrust moves and regulation. Others argue the US abandoning its leadership role on tech standards harms businesses of all sizes and in the words of Senator Ron Wyden (D-Oregon), is a “win for China, plain and simple.”

It is vital for the US to step forward soon to reassert its leadership in achieving consensus on the terms of the fast-growing digital economy.

Export and outbound investment restrictions. Seeking to prevent contributing to the CCP’s military capabilities, the US implemented export controls for advanced semiconductors and chip-manufacturing equipment in October 2022, tightening them in October 2023.  Last August, it added outbound investment restrictions on technologies with important security implications–semiconductors, AI, and quantum computing.

While the US may add further restrictions, their negative consequences must also be noted. They restrict sales of domestic companies that could be invested in further innovation and spur development of capabilities within China that could become formidable competition. Additionally, they have prompted reprisals by China, which limited exports of critical minerals gallium and germanium and more recently, graphite. 

Export and investment restrictions contribute to the US preserving its innovative edge but are no substitute for steps that would accelerate American innovation.

Supply Lines. Supply sources for high-tech products that are not overly reliant on China is essential. The chip plants being built in the West help, but Taiwan will remain the dominant supplier. Even considering chips alone, resilience requires more than just fabrication, but also testing and advanced packaging. While there has been a far greater emphasis of supply chain resilience in recent years, establishing robust alternatives to China has been hampered by the current bipartisan resistance to negotiating trade agreements.

Huawei having a 70% market share in Africa and a strong presence across the Global South impedes US tech leadership. While Open RAN may provide a solution, a greater resolve to support international infrastructure is necessary. 

Conclusion

Preserving tech leadership involves a sometimes-dizzying array of variables. There is no silver bullet that will keep America’s edge in innovation. Keeping a national advantage in technology is essential to the US prevailing in its strategic competition with authoritarian powers. 

The tech race remains America’s to lose. America’s innovative culture is more willing to fail fast and learn faster. America still holds the most important high ground–chip design, AI, and quantum computing. Despite these advantages, it must shake off today’s complacency and take this race seriously. Threats posed by complacency rival threats posed by the PRC. Together, they amount to a giant red flag waving.

As we assume “the role of defending freedom in its hour of maximum danger,” let JFK’s charge on innovation be our watchwords–to “dream of things that never were and ask ‘Why not?’”