The House of Representatives recently established a bipartisan committee to study the economic and security threats posed by the Chinese Communist Party. At the committee’s first hearing, Chairman Mike Gallagher, R-WI, called China’s rise an “existential struggle.”
This is not hyperbole. And increasingly, China is beating the United States at its own game – outpacing us and the rest of the world in key areas of technological advancement. The CCP understands that the 21st century will belong to the most innovative nation, the one that’s able to harness the full power of new technologies.
For decades, that nation was unquestionably the United States. But over the last two decades, China has dramatically ramped up investment in research and development, cutting into America’s traditional dominance. From 2000 to 2019, China’s share of global R&D quadrupled to nearly a quarter, while our share slid from 37% to just 27%.
China has increased its R&D spending by nearly 16 times over the same period – and plans to compound its R&D investments by an additional 7% annually. By contrast, federal R&D investment in the United States has never surpassed 0.8% of GDP over the last decade.
FTC Chair Lina Khan proposed rules that will hurt employers in artificial intelligence, biotechnology and precision manufacturing. (Al Drago/Bloomberg via Getty Images)
Spending isn’t the only metric that matters. The United States is also losing the talent battle – and the trend lines are getting worse. China has consistently graduated more STEM PhDs than the United States.
Looking at publication of peer-reviewed articles in journals, Chinese scholars surpassed the U.S. in the last decade. In 2020, China published 38% more peer-reviewed articles than the U.S. and is on track to extend this gap even further over the next five years.
China has singled out intellectual property as key to its long-term goals. For years the CCP has sought to acquire IP through outright theft from U.S. companies, but their strategy is now much more sophisticated. China recently announced plans to elevate the status of the China National Intellectual Property Administration – China’s equivalent of the U.S. Patent and Trademark Office – to make it a top-level, independent agency.
While President Joe Biden didn’t mention IP in his most recent State of the Union address, Chinese President Xi Jinping speaks about IP frequently. “We will increase investment in science and technology through diverse channels and strengthen legal protection of intellectual property rights,” Xi said in his speech at the opening of the 20th National Congress of the Communist Party of China last year.
Clearly, the U.S. is at risk of forfeiting our technological edge at a time when it is more important than ever to protecting our national interests. To out-compete China, we need to out-innovate China. Policymakers must act with urgency to change the policy environment in ways that protect and promote American innovation. Unfortunately, recent policy changes have done just the opposite.
FTC Chair Lina Khan has proposed sweeping new rules to unilaterally ban employers from using noncompete agreements – something California has already done. This will hamstring employers in the most competitive, trade-secret-rich sectors – artificial intelligence, biotechnology and precision manufacturing – and render the United States less competitive against China.
The rule must be scrapped, and Congress should engage in searching oversight of other regulatory actions that would undercut American innovation without so much as a vote by elected officials.
Meanwhile, Supreme Court rulings have made it impossible to patent inventions in certain fields, thus disincentivizing investment in critical industries. China, by contrast, appears willing to patent some technologies for which there is considerable uncertainty surrounding patent eligibility in the United States. This puts U.S. innovators in crucial emergent areas at a significant competitive disadvantage.
China has singled out intellectual property as key to its long-term goals. For years the CCP has sought to acquire IP through outright theft from U.S. companies, but their strategy is now much more sophisticated.
This is a problem that Congress can fix. Sen. Thom Tillis, R-NC, has introduced the Patent Eligibility Restoration Act (PERA), which would clarify patent eligibility for key innovation categories including biotechnology and artificial intelligence – as well as provide a more stable, predictable patent eligibility environment for American innovators.
Such clarification is especially important when it comes to artificial intelligence, where the stakes with respect to China are perhaps most significant. Regulatory foot-dragging has resulted in uncertainty as to what sort of AI-powered (or even AI-created) innovations are patentable, putting American innovation in jeopardy. Absent clear guidance, the current pace of development could slow – with far-reaching consequences for both our military preparedness and the broader economy.
Meanwhile, administrative processes at the U.S. Patent and Trademark Office are creating headaches and worse for innovators seeking to defend their patents. A quasi-judicial administrative body within USPTO – the Patent Trial and Appeal Board, or PTAB – has become a favored forum for companies to challenge the validity of patents they are accused of infringing. This works to the disadvantage of inventors and small businesses who must defend their IP in court and the PTAB simultaneously, reducing the incentive to invent in the first place.
The good news is the U.S. has a proven track record of beating authoritarian governments in strategic technological competitions. But we didn’t beat the Soviet Union to the moon by chance. It required a generational investment in cutting-edge research and development, which was enabled by American citizens solving the toughest technical problems of their day.
The capacity of American citizens to solve the technical problems of our day is similarly unmatched. But the priorities of our government are not aligned to the challenges of the moment. That must change, or the Chinese Communist Party will be poised to win the future.