The Myth of the Tech Race
By fundamentally misunderstanding the difference between the American and Chinese tech scenes, Western policymakers and analysts have rallied behind a zero-sum competition when they should be looking for opportunities to cooperate and reinvest in domestic capacities. Not only are China and America's technological comparative advantages different from one another, but they could even be mutually beneficial.
ANN ARBOR – “The Chinese government is fighting a generational fight to surpass our country in economic and technological leadership,” warns FBI Director Christopher Wray. “To surpass America, they need to make leaps in cutting-edge technologies.” Ominous statements such as these now echo all across Washington, DC. Beyond the trade war, the United States and China are locked in an even deeper, more protracted struggle over technology.
China’s leaders have made domestic technological development a national priority, starting in 2006 with a national drive to foster “indigenous innovation.” This was followed in 2015 by the “Made in China 2025” initiative, a decade-long plan to upscale Chinese manufacturing across ten high-tech sectors, including artificial intelligence (AI), robotics, and new-energy vehicles. According to Patrick A. Mulloy, a former member of the US-China Economic and Security Review Commission, China’s ever-expanding innovation policies are part of a much “larger strategy to achieve global supremacy.”
Yet for all the Western paranoia over Chinese ambitions, most analysts have missed an important fact: China’s comparative advantage in technology is different from that of the US. Whereas China excels in applying technology to improve business models – for example, in e-commerce and fintech – the US remains the unparalleled world leader in basic scientific research, the foundation of advanced technologies. This fundamental difference challenges the zero-sum mentality often underlying the Sino-American tech race.