China isn’t threatening US emerging tech leadership

A better question might be who cares. The number of shoes is not a good indicator of national power. In fact, no single technology is a good indicator of national power. The U.S. economy is vast, decentralized, continental in size, and is guided by actively competitive markets. It has been exceptionally innovative for decades. Leading in a single technology (like railroads in the 19th century or semiconductors today) reflects a common analytical error that misjudges how economies and technology actually create national power. The concept of a “race” itself is a questionable legacy of Cold War thinking – the Cold War had a finish line (identified by Eisenhower and Dulles at the onset), while the current situation does not.

Stories about the United States falling behind are so predictable that they form a literary genre. In 1957, the President’s Science Advisor predicted that Soviet performance in math and science education would give it global leadership in a decade. In 1969, the Departments of Treasury, Commerce and Agriculture warned President Nixon that a powerful new economic entity, the European Union, would displace the United States. Starting the 1980s, assorted pundits announced that Japan would dominate the global economy. And until recently, there were routine predictions that China would displace the United States, predictions that still make regular appearances.

These predictions have two things in common. First, they were wrong. Second, they were wrong because they counted the wrong things. They did not place their analyses in the context of larger national economies. Instead, they relied on picking illustrative metrics, usually proxy indicators that provide an indirect measurement of technological success. One recurring problem is the tendency to measure inputs rather than outcomes. A politician may have great staff and spend more on an election, but the ultimate metric is how many votes are received. Claims that the Unites States is falling behind China in 5G because China has deployed more base stations or has more 5G enabled phones reflects a similar confusion over metrics. It is not the number of base stations that is important, it is the ability to use 5G to create new goods and services (or be more efficient in the use of existing goods and services) that is important, and this is best measured by the monetization of new 5G enabled services and products and their revenue.

A report that announces that China leads in 37 technologies out of 44 technologies does not explain why the United States is the center for development of artificial intelligence, quantum technology, and biotechnology. China did not develop successful COVID vaccines, lags in quantum, and there are anecdotes that China’s leaders asked the author of a best-selling 2018 book on China’s coming dominance of artificial intelligence why, if that was the case, were GPT technologies developed first in the United States? Of the 37 technologies listed, China’s alleged lead is open to question in 23. Does China really lead in cybersecurity, as the Report asserts? The digital economy depends on cloud computing, next generation networks (like 5G and 6G), and software (like AI products) and these are technologies where the United States has a strong if not dominant position.