Second-gen pharma manufacturing secures biotech lead, which solves global catastrophic risks. Anything else cedes the world to China.

Biotechnology is at the center of a long-term contest for power between the United States and China. A technological edge in biological engineering and manufacturing will provide a substantive and lasting advantage that spans the full economy and the entire planet. The management of biotechnological trade and information flows in the near term will have consequences that will play out over decades.

Biological engineering should be viewed as critical infrastructure for the twenty-first century that will underlie and enable the entire economy. Biotechnology is already a substantial component of the economies of the United States and China, although analyses are hampered by the quantity and quality of information, and neither country officially tracks the contribution of biotechnology to their gross domestic product (GDP). After assembling data from a variety of sources, we conclude that in the United States, biotechnology revenues exceed those of better-measured sectors, such as semiconductors, mining, and utilities.1 As detailed below, we estimate that US biotechnology revenues now exceed $400 billion, or 2 percent of GDP. Chinese biotechnology revenues are reported to be of a similar size. Our standard assumption is that product revenues are a useful proxy measure of technical capability, and thus the sum of these revenues could support the conclusion that the two countries are roughly equally matched today.

However, the existing technical capabilities and revenues should not be viewed as representative of the future. The extant economic impact has been quietly delivered using first-generation tools and methods based on the capability to modify and move genes from one organism to another. This impact will be dwarfed by changes to come. McKinsey & Company estimates that biological production could supply up to 60 percent of physical inputs across the global economy and that biotechnology could have a “direct economic impact of up to $4 trillion a year” for decades to come; the authors add, “The full potential could be far larger if we take into account potential knock-on effects, new applications yet to emerge, and additional scientific breakthroughs.”2 The assessment that biotechnology will further transform the global economy is based, in turn, on an assessment that biotechnology itself is undergoing a transformation.

First-generation biotechnology is now being superseded by the emergent capability to read and write DNA. This interconversion of biological and digital representations of DNA enables applying mature digital design methods to engineering biology. Digital transformation of biological engineering delivers quantifiably higher rates of progress. We illustrate the power of these technologies with several anecdotes that demonstrate the acceleration of commercial engineering efforts by more than an order of magnitude. Because scientific and technical progress compound on past progress, actors in this international arena, whether states or corporations, that demonstrate mastery of these emerging biotechnologies will benefit from compounding rates of technological change. Losing the lead is probably a one-time event, and whoever is not in the lead will be severely disadvantaged while constantly playing catch-up. This is the competitive space of the twenty-first century.

A technological lead in biotechnology not only impacts the health and well-being of populations but also provides an edge in developing and producing materials that serve as feedstocks for the rest of the economy. Advanced biological engineering using second-generation tools and methods has already delivered to market materials with novel properties that are useful in both civilian and military applications, where those new materials cannot plausibly be made via synthetic chemistry. Consequently, because of the breadth and depth of its impact on the economy, biological engineering is now recognized as a strategically important technology by the governments of both the United States and China, and maintaining a technological lead in this area is critically important for both physical and economic security. The governments of the United States and China have both identified biological engineering as metaphorical high ground, and both are investing to secure it.

The government of China has explicitly described its intent to dominate the global stage in the twenty-first century through biotechnology and has been working to implement associated long-term strategic goals. While China has a multidecadal vision that has informed its strategy and has subsequently been implemented using various tactics, the United States has no similar long-term vision and has exhibited no coordinated response to Chinese actions. In this paper, we do not address this larger issue. Instead, we examine one particular strategy—decoupling— to lay the groundwork for further policy analysis. In particular, we describe the current environment (size and composition of US and Chinese revenues from biotechnology) and the interdependence of biotechnology in the two countries and then offer a first review of how some decoupling mechanisms might unfold. We also examine the strategic risk that decoupling may pose to each country in the context of accelerating, and compounding, learning rates in biological engineering.

The benefits of the present relationship appear to be asymmetric, as do the consequences of decoupling. Whereas the United States relies on China for some manufacturing and services, China currently depends heavily on access to US basic research in biotechnology; it would be easier for the United States to replace access to Chinese instrumentation and ingredients than for China to replace access to American basic research and education. More broadly, the biotechnological ties between the two economies span finance, trade, and the movement of people and ideas, each of which can be evaluated with respect to the impacts of decoupling.

We approach policy formulation and analysis with the expectation that they should be based on a firm understanding of the world as it is. However, we do not find that existing data is sufficient to support extensive specific recommendations. As a result, our brief recommendations are primarily directed at improving situational awareness to support more-detailed future analysis. Policy proposals derived from such analysis would also benefit from a clear strategic statement and a clear exposition of goals by national governments. Ultimately, this conversation has society-wide implications for how both the United States and China invest in education and domestic research and development (R&D) and for the extent to which each country benefits from those investments.

Biotechnology is recognized around the globe as a strategic technology. Countries that develop mastery of the relevant engineering and manufacturing capabilities will have distinct advantages over those that do not.

The emergence in 2020 of a global pandemic has starkly illuminated many elements of the relationship between the United States and China while also creating new points of contention. Companies and government agencies in both countries are engaged in aggressive competition to develop testing, countermeasures, and vaccines against a new pathogen that has crippled economies around the world. The intensity of this competition is serving to inflame existing political tensions and also to elevate concerns about the fragility of global supply chains, the risks of monopoly and sole-source manufacturing, the rise of digital intellectual property (IP) theft, and the suppression of facts and concomitant rise in propaganda. We use the pandemic as a case study to illustrate the themes of decoupling across these domains.

What Is “Biotechnology”?

Two significant challenges in quantifying the size of any nation’s biotechnology industry are (1) confusion around the scope of technologies included in the definition and (2) conflation with the broader term “bioeconomy.” We use biotechnology to refer to all engineered or genetically modified (GM) biological systems and revenues therefrom. This primarily encompasses pharmaceutical or other medical applications (also known as “biologics”), GM crops, and industrial applications such as chemical manufacturing accomplished via biological means. We use synthetic biology to refer to a component of biotechnology focused on bringing modern engineering concepts to biotechnology, a component that relies heavily on large, high-quality data sets, digitization, automation, and reading and writing DNA as well as, fundamentally, on the increasing fungibility of information and matter. We use the word bioeconomy to refer to a wider scope of products and activity, including fisheries, forestry, non-GM agriculture, and others.

The quality and quantity of data on biotechnology revenues is poor at best, leading to widespread misunderstanding about its economic importance. Biotechnology is generally underappreciated as a contributor to the US economy primarily because the relevant data is not collected by the government. Whereas the economic contribution of semiconductors was tracked by the Department of Commerce at least as early as 1958, when they made up less than 0.1 percent of GDP, as of 2020, there is still no official tracking of biotechnology.3 As a result, its economic impact has crept up on us unawares. The same set of problems plague assessments of Chinese biotechnology revenues. For example, while it is difficult today for Western observers to ascertain exactly how many Chinese companies are operating in biotechnology, the Chinese government may have the same problem.4 At a warm-up meeting for the 2011 Review Conference of the Biological Weapons Convention, one of us (Carlson) was told by a Chinese representative that the government “had no idea” how many biotechnology or synthetic biology companies existed in the country.

What Is at Stake?

If chemistry reigned as the science most powerfully shaping world affairs in the nineteenth century, in the twentieth century, physics took over that role. The development of quantum mechanics beginning in the 1920s led to nuclear weapons, which fundamentally changed military and diplomatic spheres. The same science also led to the understanding of semiconductors and a subsequent computer revolution beginning in the 1980s, serving as a foundation for technological and economic dominance. Now, after decades of effort, many of the techniques from these prior advances are being successfully applied to engineering biological systems, with the consequence that the molecular substrate of life on Earth is becoming a medium for innovation.

The science of the twenty-first century will be biology. The economic impact of biotechnology is already significant and will eventually span the entire range of human activity. Consequently, biotechnology is recognized around the globe as a strategic technology. Countries that develop mastery of the relevant engineering and manufacturing capabilities will have distinct advantages over those that do not.

Two decades into this century, biotechnology is already a significant contributor to the US economy. Biologically manufactured drugs now account for approximately 40 percent of new drug approvals and drug revenues in the United States.5 The market penetrations of GM corn, soy, and cotton crops are each greater than 90 percent, which implies that GM crops are grown on more than 180 million acres of the 315 million acres of US farmland under active cultivation.6 That is, at least 57 percent of total US cropland is now used to grow GM organisms. Approximately 20 percent of US chemical industry revenues are now generated by biotechnology, via products comprising fine chemicals, solvents, and plastics, thereby displacing petrochemicals from the market.7 While it is difficult to forecast how large a share of the economy biotechnology will ultimately become, it is our view that, because of inherent scaling and energy efficiency advantages, anything that can be made using biotechnology eventually will be.8

This pervasive technology will be used to address urgent needs around the planet.9 The global population is now some 7.8 billion people, and the United Nations projects a population of 9.7 billion people in 2050.10 The consequent demand for food, health care, and materials will create an ever-larger pull for biological technologies. For example, because most arable land on the planet is already under cultivation in some way, feeding that global population is likely to come from continued improvements in yields due to genetic modification of crops and shifts in land use that are aided by engineered crops with novel traits, such as drought resistance and salt tolerance. In the United States, 17.9  percent of GDP is spent on health care, spending that yields paltry results as evidenced by the fact that the United States ranks twenty-sixth among the thirty-five Organisation for Economic Co-operation and Development (OECD) countries in life expectancy.11 As the globe ages and more people are subject to afflictions of old age, such as cancer or Alzheimer’s, halting disease through better use of biotechnology will become not just a moral imperative but an economic one. Finally, biology, as a technology, can be used to manufacture the crucial industrial items we require—plastics, building materials, chemicals, etc.—without inducing further climate change.

As we achieve greater control over engineered biological systems, the impact will expand across the economy. The change in capability will arise from the application of modern engineering techniques to biology, which will require large, highquality data sets, computation for modeling, and extensive use of automation, all of which are inherently digital. In the long term, the fusion of the digital and the biological must be thought of as no less than enabling an entirely new capability to program matter at length scales spanning atoms to ecosystems.