For a change, some good news: The Journal reports that the Biden administration is in the early stages of building a “tech alliance” against China. The Trump administration began working with the Netherlands to block the sale of Dutch-made semiconductor manufacturing equipment to China’s largest chip maker. The new administration will continue such efforts and also work with allies to maintain the West’s technological edge in areas that will be crucial to defense as well as the economy in coming decades.
We are late to the party, unfortunately. In 2015 Beijing unveiled its “Made in China 2025” plan, which the Congressional Research Service characterizes as a coordinated effort to boost China’s competitiveness by “advancing China’s position in the global manufacturing value chain, leapfrogging into emerging technologies, and reducing reliance on foreign firms.” Although the plan contemplates using foreign technology and expertise to plug gaps, domestic innovation is supposed to be the driver of growth and productivity.
China’s plan focuses on 10 areas, including new information technology, computerized machines and robots, aerospace, maritime equipment and high-tech ships, and biopharma. As of 2018, the Chinese government had invested hundreds of billions to support domestic research and development in these and related technologies.
The U.S. is standing still. As recently as 2001, America’s annual investment in research and development exceeded China’s by more than $300 billion. But according to a recent report from the American Academy of Arts and Sciences, Chinese investment exceeded ours for the first time ever last year. During the past two decades, China’s research and development as a share of its economy has more than tripled.
There are other indications of the U.S. slipping. Over the past two decades, the number of bachelor’s degrees China awards annually has more than quadrupled and now exceeds that of America, the European Union and Japan combined. Although the U.S. continues to grant more doctoral degrees in science and engineering, the gap has narrowed significantly.