Finally: Sensible Talk about US-China Competition in ICT

As we have noted for the past two years, Internet governance (IG) is one of the focal points of US-China tensions. But IG is but one part of the economic, social and political relationships among the world’s two biggest economies. On November 16, a report addressing the bigger picture, “Meeting the China Challenge: A New American Strategy for Technology Competition” was released by the bipartisan Working Group on Science and Technology in U.S.-China Relations. The report, well-timed for the incoming Biden administration, offers a holistic overview and attempts to re-orient US policy in a more rational direction. While we don’t agree with all of the analysis or recommendations in the report, we recommend reviewing it, as it makes a valuable contribution to the discussion of US-China competition in science and technology.

The working group drew upon a strong concentration of China and ICT policy expertise at UC San Diego. It was chaired by Dr. Peter Cowhey, Dean of UC San Diego’s School of Global Policy and Strategy and former chief of the Federal Communications Commission’s International Bureau, where he led the global telecom liberalization processes of the late 1990s. The working group included twenty-eight China specialists and S&T policy experts from academia, industry, and think tanks, including luminaries such as Orville Schell, Susan Shirk, Barry Naughton, along with various fellows from CNAS, a national security think tank established by the Clinton wing of the Democratic Party.

The report proposes to “recalibrate the U.S.-China relationship in science and technology based on three policy goals:

1. Strengthen U.S. innovation capabilities, increasing funding for fundamental research and upgrading our production system
2. Tailor risk management strategies to address security threats and counter illicit behavior
3. Preserve as much as possible of the open, integrated global S&T and commercial system”

Research and Development

Predictably, the report recommends expanding U.S. investment in S&T capabilities and basic research. Federal funding for R&D should be raised to the historical average since 1976 of 1 percent of GDP. Total R&D funding, including government, university and private sources, should rise to 3 percent of GDP. While calling for targeted action to address the security risks of S&T integration with China, the report contends that an S&T divorce from China would not eliminate most major risks. We should, instead, “reap the benefits of openness.” The report notes that American universities awarded 66,690 doctorates to Chinese students in science and engineering fields from 2000-2017; and their five-year and ten-year stay rate is at 83 percent and 90 percent respectively—the highest of all nations.” Openness is a competitive advantage: “the United States cannot meet its technological goals if it isolates itself from the growing innovation capabilities outside its borders…the only viable leadership strategy is to race faster by investing in American innovation and welcoming talented individuals from all countries.”

5G policy

Here the report offers a refreshing relief from the panic afflicting Washington, DC. It notes that uncritical acceptance of two premises have hampered 5G policy discussions:

1. The United States is badly behind China in the key drivers of 5G technology.
2. The core security risk revolves around the role of Huawei hardware, particularly radio base stations, in the 5G network.

Both premises, according to the working group, are false. The U.S. has highly competitive vendors, especially in software, and Huawei is dominant only in the first generation of 5G deployment. As the technology and market evolves, “5G networks are likely to adapt dramatically over the next few years, from networks that rely on updated versions of legacy telecom equipment and systems, to a diverse ecosystem in which operators can source components from a variety of companies, with standard interfaces allowing them to work together in a single network.” As 5G networks rely more heavily on software, the need for operators to purchase and maintain expensive hardware will be reduced. The report notes that “Chinese companies will remain part of the global supply chain into the future,” and while we need to “take action to mitigate risks based on this (realistic) expectation,” isolating ourselves or the rest of the world from Chinese companies is not a viable option.

Contrary to conventional wisdom, the United States is strongly competitive in the underlying technological drivers of 5G as it evolves. The report says “The US should not attempt to win a race between Huawei and a new American national champion. Instead, it should adopt a forward-looking strategy to enable a variety of new entrants to enter the 5G innovation space successfully.” The O-RAN alliance, which aims to create an open and interoperable fronthaul interface with the 5G radio access network (RAN), is noted, and 3GPP is urged to adopt that approach.

Artificial Intelligence

The UCSD Working Group also counters panic over Chinese AI capabilities. Its key findings are worth quoting at length:

• China’s advantage in AI is over-rated. The United States remains a global leader in AI technology and draws on a set of strengths that China lacks and is unlikely to acquire in the near future.
• The importance of data as a general-purpose strategic resource has been greatly exaggerated. Infinite amounts of data are not infinitely better; the law of diminishing returns applies.
• The AI ecosystem is global and AI research progress thrives on openness. While specific AI applications are protected by existing laws, broadly restricting collaboration, or the open sharing of research with Chinese AI researchers, would slow down AI progress in the United States.
• The United States should adjust immigration policies to ensure the country remains the global hub for human capital and talent for AI development.
• Targeted measures against organizations aiding human rights abuses in China is more effective than broad restrictions of access to U.S. AI technology.
• Semiconductors are foundational to AI. The United States should invest more in advanced semiconductor manufacturing equipment and construct state-of-the-art semiconductor manufacturing facilities in the United States.
• The United States should work with allies and partners to shape international norms around the democratic use of AI.

The report also addresses US-China collaboration in bio-technology, a topic outside the scope of IGP.

Overall, it is a positive sign to see policy debate about US-China relations turn away from the reactionary and fear-driven moves of recent years and take a more constructive and positive approach.