Technology Supremacy: U.S. versus China

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Technology Supremacy: U.S. versus China

March 25, 2017 Fatuzzo Books Leave a comment Go to comments

Technology Supremacy: U.S. versus China

by Carol L. Fatuzzo and Ennio Fatuzzo

Today, the U.S. is clearly the overall, global technology leader.But the U.S. and China are in a technology race for the future, and U.S. continued superiority is not a given. As evidence, just look at the titles of a few recent news articles (references at the end):

“China’s Intelligent Weaponry Gets Smarter”
“Plan for $10 Billion Chip Plant Shows China’s Growing Pull”
“These 6 Chinese Tech Giants are Ramping Up the Pace of Innovation for the World”
“China’s Plan to Build Its Own High-Tech Industries Worries Western Businesses”
“These 6 Chinese Tech Giants Are Ramping Up the Pace of Innovation for the World”
“China’s Plan to Build Its Own High-Tech Industries Worries Western Businesses”
“As U.S. R&D languishes, China pushes precision medicine envelope”

RESEARCH SPENDING ON TECHNOLOGY/SCIENCE

Why does China’s growing technology presence matter? To better understand the concern and the dangers, take a step back and consider how the U.S. gained technology leadership in the first place, and what its importance has been. Basically, in the last century, the countries with highest investment in R&D (Research and Development) ended up with technical superiority and significant competitive advantage. Specifically, in the second half of the 20th century the race was between the U.S. and the Soviet Union, with the U.S. spending more and winning. And this supremacy resulted in world and business leadership for the U.S. in many ways—a position the U.S. still enjoys today. But is this vanishing?

We assume that this relationship between R&D spending and leadership will continue, so consider current R&D expenditures by country. The two countries that top the list of actual dollars spent in 2016 are the U.S. with $457 billion and China with $369 billion. Japan is a distant third with $166B in spending, and it goes downhill from there. So what is the concern? The U.S. is still leading.

Current R&D spending isn’t the whole story. It’s also important to consider changes in the rate of spending. Starting from far behind (primarily as a result of Mao’s “Cultural Revolution”) China has shown a surprising and consistent average annual growth rate of around 18% in R&D spending over the last few years. And its newest government mandated and controlled 5-year plan forecasts that rate to continue. Compare this to the U.S. which has had an average (but variable) 3-4% increase in R&D spending over the same time. Even more concerning, it is expected that the current government policies will decrease this. The result? Even if the U.S. maintains its current rate of spending, China is on a path to surpass the U.S. in total R&D spending in less than a decade.

Where is China focusing its efforts? The new 5-year plan highlights the following priorities/initiatives, and we have added examples to show some already notable Chinese accomplishments:

Quantum Communications and Computation (government saying they will spend over $100 billion to bring chip factories and research facilities to China, successful launch of world’s first quantum communications satellite with developing/implementing secure encryption a goal)
Brain Research (an operational Institute with more than 4,000 working scientists, a new15 year project focusing on early detection of brain diseases and brain-machine intelligence)
National Cyberspace Security (intelligent weapons with a focus on robotics and artificial intelligence, closely related to the Quantum Communications Initiative)
Deep Space Exploration (completion of the world’s largest radio telescope – Five-hundred-meter Aperture Spherical Telescope [FAST] to understand how the cosmos evolved and search for extraterrestrial life, successful launch of the Long March 5 rocket, focus on missions to the moon and Mars)
Clean, Efficient use of coal (development of processes such as high efficiency combustion and carbon capture and storage, increased focus on renewable energy)
Industrial, Medical and Military Robots (Hong Kong chemists create micro swimmers that can be controlled by light, robotics industry explosively growing)
Applications of Gene Science (plans to spend more than $9 billion on “precision medicine” which will match patients to drugs based on genetics, active research in cloning including success in cloning human embryos)
Big Data Applications (comprehensive personal data collection and analysis project being run by the Chinese communist party to develop what they call a “social-credit system”)
Deep Sea Experimental Platform (manned, deep sea platform in the South China Sea to hunt for minerals, also military purposes)
New Arctic Observatory. Antarctic Station (construction of a research facility in Iceland, positioning to protect/expand China’s economic, scientific, political, strategic ambitions—climate change, mineral rights, geothermal energy)

INNOVATION

R&D spending is important, but there is another critical factor determining technology supremacy. We (and many other) believe innovation, or “creativity” as we called it in our book “Creating New Superstars: A Guide to Businesses that Soar above the Sea of Normality” (available from Amazon.com), is an essential companion to R&D spending for developing and maintaining technological supremacy and using that power. And the U.S. has long been the leader in creativity and innovation and its application to business. This has resulted in the vast majority of the most innovative companies (including the top 10 from Fast Company’s 100 list) being U.S. based.

But we aren’t alone in our belief. China states that its top priority is “innovation,” and they are devoting dollars and people to this purpose as a part of the first sub-plan under the new Five Year Plan. Chinese efforts to enhance innovation include building key science innovation parks and attracting top-tier science and technology researchers from all over the world. Research emphasis is on areas that include clean and efficient energy and fifth-generation mobile telecommunication.

And innovation in research isn’t all the Chinese are doing. Numerous Chinese companies are now focusing on innovation with growing success. As evidence, in their newest list of the world’s 100 most innovative companies, Fast Company lists 6 Chinese companies (ranked 11-16). Fast Company also clearly summarizes the developing US-China situation:

“China now ties or tops the U.S. market in online retail, mobile device sales, digital payments, gaming, renewable energy investments, and more. With more than half of its 1.37 billion citizens online, 90% of them via smartphone, China has seen an explosion of tech behemoths and upstarts driving innovation hubs like Beijing and Shenzhen to become more hypercompetitive than even Silicon Valley.” (Reference 3)

Yes China is making progress, but the U.S. is still leading. Why does creativity prosper here in the U.S., and why do we believe the U.S. will continue to be the innovation leader? We posit that creativity and the resulting business innovation prospers in Countries where there is most freedom—freedom not only to create new ideas but also to make mistakes and rebound. And we guess that there is more freedom in a scientific institution here than in a large government institute in China.

But there is an exception. In the field of Biotechnology and the applications of Gene science there are moral and ethical concerns in the U.S. that are placing constraints on research. Apparently, this isn’t the case in China, foreshadowing a growing global dilemma.

So, in the end, what will happen? Who will “win?” There is no simple answer. Yes, there is a technology race between the U.S. and China with fierce competition, but there also is a growing co-dependency—in trade, in business, and even in science. In a world of growing complexity, it is difficult to predict the future, but the concerns are clear.

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REFERENCES

Following are references which provide the data and other information provided above. In most cases, the titles clearly explain the content. For those seriously interested in the developing and complex U.S.-China technology relationship, we suggest taking the time to read a few of these articles.