Chairman Borochoff, Chairman Fiedler, members of the Commission: Thank you for the opportunity to testify today.

Together with my colleagues at the Center for Security and Emerging Technology (CSET), a nonpartisan, data-driven policy think tank within Georgetown University, I research trends related to global investment in emerging technologies, particularly artificial intelligence (AI) and advanced semiconductors. My testimony will focus on these areas in addressing the themes suggested by the Commission. I will cover the following points:

• The technological competition between the United States and China is dynamic and hard to score; any U.S. advantages cannot be taken for granted. The U.S. and its allies have advantages in many technologies, but these advantages may not be durable or geopolitically meaningful.
• Many types of businesses, with varying relationships to the government, are fueling China’s technological development. China’s cutting-edge tech companies range from small startups to massive corporations. These firms draw support from the government in many ways; some are more tightly state-linked than others. Traditional state-owned enterprises play a limited role.
• China’s technology innovators need capital, and China’s government intervenes heavily in capital allocation. Individual Chinese companies benefit from the largesse of the central, provincial, and local authorities, with resultant harm to their competitors in the U.S. and elsewhere.
• Government guidance funds exemplify the potential strengths, weaknesses, and uncertainties of China’s approach. These public-private investment vehicles are channeling massive amounts of capital into strategic technologies. Despite their potential strengths, they have often faltered in practice, and their contribution to China’s long-term technological development remains uncertain.
• Foreign investors are active in China’s technology sector, but they are not central players. Capital, particularly American capital, is not currently a limiting factor in China’s technology industry. Chinese tech firms depend more on other types of foreign inputs, such as expertise.
• U.S. restrictions on investment on mainland China exchanges are unlikely to meaningfully affect the state of play. China’s technology strategy doesn’t depend on these capital flows. Broader investment restrictions might have more impact, but would risk significant collateral damage to American investors.
• Any U.S. restrictions on investment in China should be multilateral, better informed, and part of a broader strategy to maintain the technological advantage of the United States and its democratic allies. Investment restrictions may have a role to play, if well targeted and coordinated with allies. However, shoring up U.S. advantages in human capital and other domains would probably have a greater impact.