The Right Way to Protect America’s Innovation Advantage

Getting Smart About the Chinese Threat

A new Xiaomi VR headset is displayed during a product launch in Shenzhen, China, May 2018. Bobby Yip / REUTERS

As the U.S.-Chinese trade war rages on, a broader conflict is brewing between the two countries over which will secure the upper hand in technological innovation. In a speech at the Hudson Institute earlier this month, U.S. Vice President Mike Pence suggested that Beijing is combining unfair trade practices with aggressive influence campaigns, the systematic theft of foreign intellectual property, and heavy-handed support for domestic industries, all with the aim of developing a long-term technological and strategic advantage. Pence’s speech signaled that the endgame to the Trump administration’s China strategy is not a trade deal but rather the decoupling of the U.S. technology sector from its Chinese equivalent in order to preserve the United States’ technological edge.

The Trump administration is right to be concerned, but it is preparing for the wrong kind of technological competition with China. Despite loose talk of a new “tech cold war,” the United States and China are far more integrated than the administration appreciates. As the two leading tech economies, they make up an innovation ecosystem that requires cooperation when it comes to research, supply chains, talent, and investment in the latest technologies. Any attempt to separate the two technology sectors by force would prove counterproductive at best and devastating at worst. This simultaneously competitive and interdependent relationship warrants a completely different strategy—one that exploits the benefits of collaboration while strengthening the United States’ ability to compete. 


The accelerating pace of technological progress is driving Washington’s fear. Potentially transformative technologies, such as the next generation of telecommunications networks (known as 5G), artificial intelligence, and quantum computing, are just around the corner. U.S. officials, therefore, see China’s efforts to take the technological lead as an existential threat to U.S. national security and economic competitiveness.Chinese companies, such as Huawei, that rose to be global powerhouses by stealing intellectual property and maintaining close relationships with the state are gaining influence. They are helping set international standards

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