This report is a companion to CSET’s Analyses of China’s Technology Policies and Ecosystem: The PRC’s Efforts Abroad.
Executive Summary
The research summarized in this brief is based on global tech monitoring, primary source language translations, and data analyses of private sector activity. We work to contextualize China’s technology development and acquisition strategies alongside those of the United States and its global allies and partners, and to situate the U.S.-China rivalry in the broader landscape of democratic and authoritarian technology competition.
Key Themes
We identify several high-level, strategic themes from China’s domestic efforts to achieve global leadership across numerous emerging technology areas:
- China’s rapid progress in talent development and acquisition. China hopes to overtake the United States in terms of talent acquisition, in areas including STEM PhDs graduated, AI education, and centralized talent tracking programs. Its advances could prove worrisome to long-term U.S. national and economic security and competitiveness.
- China’s unique and evolving tech ecosystem. China’s tech ecosystem is evolving to more closely resemble other innovation ecosystems through its rapidly developing patent system and new policy mechanisms. However, it retains unique characteristics, particularly the close linkages among military, private sector, and public sector research under its military-civil fusion policy.
- State actions to boost China’s innovation infrastructure and develop technological self-sufficiency in key areas. China is increasing the number of publicly and privately backed research facilities working on emerging capabilities, particularly State Key Laboratories, and is experimenting with mingling industrial facilities in AI and biotechnologies that could potentially amplify research impact. The PRC also aims to lessen its dependence on foreign technology and supply chains in semiconductors.
U.S. Policy Options
To address these developments in China’s domestic ecosystem, CSET’s research offers U.S. policymakers practical steps for maintaining and growing tech competitiveness:
- When it comes to remaining competitive with China in AI education, the United States should leverage the unique advantages of its comparatively decentralized system and approach. The United States’ decentralized approach to AI education does not necessarily pose an inherent disadvantage compared to the PRC. In fact, diverse curricula and standards could actually provide an advantage in fostering innovation.
- To fortify the U.S. and its allies’ and partners’ dominance in the advanced chip manufacturing necessary for AI and other emerging technologies, the United States should adopt “protect” and “promote” policies around semiconductor manufacturing equipment export and production. Adopting these policies could keep China from becoming a critical part of the supply chain or a critical source of semiconductor technology and manufacturing (especially high-end materials and manufacturing equipment) for the next 20-30 years. The United States has already begun to make strides in this area with the 2022 CHIPS and Science Act.
- The U.S. should also focus on developing and retaining its talent pipeline, particularly access to foreign skilled labor that comprises about 40% of the U.S. semiconductor industry workforce. It should consider increasing country-based caps on annually distributed employment-based green cards, and generally try to expand the number of American students who are in semiconductor-related graduate programs.
- As China continues to make domestic strides, the United States will need to think strategically about the areas in which it attempts to decouple from China, including the advantages and disadvantages of doing so in different areas. The effectiveness of decoupling efforts may depend on the particular characteristics of different technologies.
The brief begins with a look into how CSET conducts its China-related research, it examines the themes mentioned above, and concludes with recommendations. Overall, the underlying CSET research provides a higher-resolution picture of China’s efforts in these areas with illustrative examples and data-backed analysis. Readers are encouraged to consult source reports linked below for greater detail.