Monday, June 14, 2021

Endless Frontiers Can Combat China's Tech Rise


Twelve years ago, my book Silicon Dragon cautioned that China could win the tech race. Now the U.S. has finally woken up to this threat. The U.S. is moving in the right direction with the largest national increase in science, technology and manufacturing in generations. It's a build back better plan, and with European allies coming aboard, this bold plan counters China's Belt and Road initiative and five-year economic plans. 

China has been gaining on the U.S. for years. State-led blueprints have advanced China as a powerful innovation nation in important world-changing tech sectors. The Chinese have moved from copying innovations in the West to crafting their own inventions. Leading edge technologies for electric vehicles, smart phones, robotics, biotech, finance, retail and more have been adopted very swiftly in China’s digitally savvy market.

Chinese tech titans Baidu, ByteDance, Alibaba and Tencent have emerged as powerful counterweights to Facebook, Amazon, Netflix and Google, which have struggled or been blocked in China.  China’s BAT, as they’re called, have out-innovated the West in many game-changing consumer and business technologies that rely on artificial intelligence. They’ve bulked up internationally too, investing heavily in Southeast Asia and Africa, and previously in America’s Silicon Valleys before a U.S. crackdown on foreign (read China) ownership of sensitive technologies.  Moreover, China has been pumping money into building its semiconductor capabilities. The world’s second-largest economy has its own ambitions for space technology and quantum computing too.  

And as anyone who has traveled to China knows, the country’s modern infrastructure beats our nation’s decaying bridges, highways and airports. There is no Rust Belt in China like our abandoned factories and depleted downtowns in Middle America. China was starting from scratch. No need to rebuild former industrial cities.  Just build for the future is what China has been doing.

Several worrisome indicators point to a shift in power. China surpassed the U.S. in 2019 in the number of patent applications to the World Intellectual Property Organization, and increased that lead in 2020 to a 25 percent share globally, bypassing the U.S. at 21.5 percent.  Moreover, China is catching up to the U.S. lead in global research and development.  The U.S. has a 25 percent share of global R&D spending while the PRC weighs in with 23 percent and growing strongly, according to the National Science Board.  The National Venture Capital Association finds that America’s share of global venture dollars has dropped from 83 percent in 2004 to 51 percent today, with China as the biggest gainer. China’s ByteDance, the maker of TikTok, is the world’s most valued unicorn at $140 billion.

By passing the Endless Frontier Act, the government will fund cutting-edge science to combat China’s increasing challenge to America’s technology prowess. More U.S. technology innovation will be commercialized to retain our global leadership well into the mid-century. The $250 billion bill increases investment in critical scientific and tech fields, funds R&D and manufacturing of key technologies, and creates 10 regional technology hubs.

With this urgently needed funding, the middle of the country could recover from a long downward spiral of lost jobs. A growing number of inland innovation districts stand to prosper. Specialized strongholds such as biotech in Cleveland and robotics in Pittsburgh already have emerged with state funding and local resources such as the Cleveland Clinic and Carnegie Mellon University.

More national funding and venture capital investment is needed to boost our Heartland markets. Two-thirds of startup investing goes to three coastal states (California, New York and Boston). Meanwhile, seven core states of the Rest Belt and Great Lakes capture only about six percent of venture spending nationwide. This gap needs to be closed.

The well-named Endless Frontier Act will send more resources to down-and-out places that need support the most. It will help the USA reclaim its might.  As I pointed out in my pivotal book in 2008, whoever wins the race to the technologies of the future will be the global economic leader.

By Rebecca A. Fannin the author of Silicon Dragon (2008) and Tech Titans of China (2019).