US risks falling behind China on technology and innovation, if we don’t reset our priorities

At their G-20 Summit meeting in Osaka, Presidents Trump and Xi declared a truce in the U.S.-China trade conflict to give negotiators time to reach a deal. This was a positive development, although hardly a guarantee of a successful outcome. However, contrary to frequently heard narratives, America’s continued global leadership in technology and innovation does not depend primarily on that outcome; it depends far more on significantly strengthening our own domestic efforts to boost our still formidable capacities in these areas. 

Markets, politicians and the media doubtless will remain preoccupied with the U.S.-China negotiations. While these talks are highly important to resolve or manage longstanding differences, they also can be a diversion for Americans. They can cause us to pay insufficient attention to major domestic challenges that, left unaddressed, will threaten future U.S. technological and competitive leadership at least as much as competition from China. To retain and enhance U.S. leadership in these areas, we need to pay far greater attention to bolstering our own innovative strengths.  

As a starting point, it is important to recognize — and then reinforce — the fundamental principles and programs that have underpinned America’s technology, scientific and competitive preeminence. 

The surge began during the Space Race: America demonstrated national unity and common purpose that animated the drive for rapid technological advances. We geared our educational system to turn out more graduates in science, technology, engineering and math (STEM), dramatically increased funding for basic and applied research, built a modern national infrastructure and enthusiastically welcomed foreign-born scientists and engineers. 

We now seem to have turned away from such policies, while China pursues a bold agenda that embraces most of them. 

Last year, I was invited to give a keynote speech at the Shenzhen Hi Tech Fair. In my meetings with Chinese officials and entrepreneurs, there was strong emphasis on the need for private and state enterprises to promote innovation. Support for science, research and technology was a constant theme, as it is in speeches and policies of President Xi and other Chinese leaders. 

When was the last time we heard this as a prominent, consistent theme of U.S. politicians, 

or saw this as a priority in the federal budget? Instead we see a sharp, dismaying drop in political and budgetary support for science and basic research. This will undermine not only our future domestic growth prospects, but also our ability to compete internationally.

China, on the other hand, is implementing the kind of forward-looking measures that the U.S. once adapted: enormous support for STEM education; rapid growth in funding for research; the development of a vast, modern infrastructure.

Chinese colleges and universities today turn out far more STEM graduates than the U.S. Some Americans dismissively note that most of these graduates do not receive training at the Cal Tech/MIT level. Chinese academicians counter that their top schools do in fact provide world-class education. They point out that lots of American and other foreign companies invest and conduct R&D in China to have access to these grads. Indeed, many foreign companies attest that Chinese STEM graduates are excellent at applied research and incorporating technological advances into production and day-to-day applications. 

Young entrepreneurs and leaders of Chinese universities and research centers acknowledge that China has not yet caught up with the U.S. in a number of advanced technologies, but the country is determined to do so — and fast. China’s rapid rise is a source of great national pride. 

Competition from China might be the stimulus we need to pull together as a country to boost our own innovation and competitive strengths. 

The U.S. did that after the launch of Sputnik in October 1957. People stood in their yards watching in disbelief as this bright, little ball orbited overhead — shocked that the U.S. had not been the first into space. They talked animatedly about what the U.S. could do to meet the challenge. One decisive response was to triple government investment in science and research.  

But commitment to such programs has faded. Now China’s funding for research and development is surging — to about 88 percent of that of the U.S. on a purchasing-power basis, according to recent figures of the Organization for Economic Co-operation and Development (OECD) — while ours is stagnating. The budget of the National Science Foundation, through which much of the federally funded research for artificial intelligence, advanced computing and 21st century telecommunications passes, has fallen steadily as a portion of the federal budget, to 0.1 percent. 

Many American companies are making enormous commitments to science and research, but the federal government still has a critical role to play. If the U.S. is to reinforce its innovative strengths, we must sharply increase — not cut — support for government programs in these areas. 

The Eisenhower Interstate Highway System, started in the 1950s, gave a huge boost to American growth and competitiveness. The well-documented deterioration of U.S. infrastructure over recent decades has been a drag on both. In sharp contrast, China’s dramatic progress in this sphere — including electric grids, high-speed trains, 21st century telecommunications networks and super-efficient ports — has contributed to a huge boost in productivity and digital inter-connectivity. This has enhanced its competitiveness in a range of technologies. To amplify our own, it’s critical to reverse America’s dismaying infrastructure decline. Both political parties talk about it, but a bold national program is lacking. 

Education cries out for attention. We need not only more STEM college graduates but also more grads of junior and community colleges as well as trade schools, trained at jobs that require new skills to effectively utilize advanced technologies in factories, repair shops, green growth projects, smart cities, health care and computer services. American companies, cities and states — partnering with schools at all levels — have devoted considerable energy and resources to these programs, but far more national support is needed. 

And we must not forget the contributions of foreign-born scientists, engineers and entrepreneurs to creating and strengthening America’s technological preeminence. From the Space Race to semi-conductors to advanced computers and software, their role has been vital. Turning them away, forcing them to leave after receiving an education here or turning them off, as we now are doing, severely diminishes America’s future competitive capability. 

To sustain U.S. leadership in science and advanced technologies, with all the economic and national security advantages that brings, we must develop a nationwide, multi-generational strategy and commit sizable resources. Our country will need to reinforce or restore policies and programs that, for decades, enabled us to achieve dramatic technological successes. 

The challenge the U.S. faces is not just about China becoming a great technology power. The

pressing question for us is whether, and to what extent, America can remain one. The answer will depend far less on what happens on the other side of the Pacific and far more on what we do, or do not do, here at home.

Robert D. Hormats, vice chairman of Kissinger Associates, was undersecretary of State for Economic Growth, Energy and the Environment, 2009-13; assistant secretary of State, 1981-82; and a former ambassador and deputy U.S. trade representative, 1979-81. As senior economics adviser to three White House national security advisers from 1969 to 1977, he helped to oversee the U.S. opening to China. He is a former vice chairman of Goldman Sachs (International).