Washington and the Tech Race: Is the US Prepared?

A Shift in US-China Diplomacy

The initial high-level bilateral summit between the United States and China, featuring Secretary of State Antony Blinken and National Security Advisor Jake Sullivan, deviated significantly from conventional diplomatic protocols. Held in Anchorage, Alaska, the meeting was characterized by a direct exchange of criticisms lasting nearly two hours, rather than the usual restrained discourse.

Prior to assuming office, Sullivan and Kurt Campbell, the administration’s Asia policy lead, posited that the period of engagement with China had effectively ended. Their assessment, made in 2019, proved remarkably prescient as they participated in the unfolding dynamic.

Diverse Perspectives on US-China Relations

Within the first hundred days of the Biden administration, numerous perspectives emerged regarding the optimal approach to navigating the evolving relationship with China.

These ranged from recommendations by a distinguished panel convened by Eric Schmidt, former Chairman of Google, to an anonymous contribution in Politico. This essay deliberately mirrored the style and secrecy of George Kennan’s influential “Long Telegram,” which articulated the strategy of Cold War containment.

Countless reports from various think tanks have also contributed to the ongoing debate, demonstrating widespread engagement with the issue.

Technology as a Central Focus

A broadly accepted premise is that technology now forms the core of US-China relations. The outcome of any competition between the two nations will likely be determined within the digital and cyber domains.

Following the Alaska meeting, David Sanger of the New York Times reported that a key objective was to demonstrate to Chinese officials the Biden administration’s commitment to competing with Beijing across all sectors, particularly in the realm of technological advancement.

Defining a Tech-Focused Strategy

However, the precise components of a technology-centered strategy towards China remain a subject of discussion.

Crucially, understanding the requirements for success in such a strategy is paramount.

Key areas of focus will likely include fostering innovation, securing supply chains, and protecting intellectual property.

• Investing in research and development is essential.
• Strengthening cybersecurity defenses is vital.
• Collaborating with allies will amplify impact.

A Convergence of Views: Republicans and Democrats on Tech and China

A noteworthy development is the emergence of China as a rare point of agreement between Republicans and Democrats. Many now acknowledge the validity of certain arguments previously made by President Trump regarding U.S.-China relations. Jordan Schneider, a China analyst with the Rhodium Group and host of the ChinaTalk podcast and newsletter, observes that Trump significantly altered the discourse surrounding this relationship within Washington D.C.

Prior to the Trump administration, a degree of cooperation with China was generally favored within the foreign policy establishment. However, a shift towards competition, and even rivalry, is now broadly accepted. Erik Brattberg of the Carnegie Endowment for International Peace notes that even Democrats who previously served during the Obama administration have adopted a more assertive stance. Schneider adds that Trump effectively narrowed the range of acceptable viewpoints on China.

The evolving U.S.-China dynamic is increasingly defined by contrasting approaches to technology. Lindsay Gorman, a Fellow for Emerging Technologies at the German Marshall Fund, explains that democracies prioritize open systems and the free exchange of information, while autocratic regimes view information as a tool to be controlled and suppressed for maintaining power. Consequently, technology – particularly concerning data storage, processing, and utilization – has become central to the U.S.-China relationship and the wider global competition between democratic and autocratic systems.

Technology now permeates all aspects of modern life, and the implications are substantial. Tyson Barker of the German Council on Foreign Relations argues that the business models underpinning technology embody specific ideologies. Therefore, the nature and application of technology represent a form of governance itself.

In practical terms, the expansion of Chinese companies globally carries with it the propagation of their associated norms. For example, Huawei’s construction of 5G networks in Latin America, the adoption of Alipay for digital payments in Central Europe, and Xiaomi’s growing market share in Southeast Asia all contribute to the digitization of these economies according to Chinese standards, rather than American ones. The future of technology will fundamentally shape the remainder of the 21st century.

This evolving landscape has sharpened focus within Washington. Brattberg states that a strong bipartisan consensus exists regarding the centrality of technology in U.S.-China competition. However, Gorman points out that there is less agreement on the appropriate course of action. While Democratic experts now holding influence in Washington concur with Trump’s assessment of the China challenge, they advocate for a significantly different approach than that of the previous administration.

Restrictions targeting Chinese firms solely based on their origin are no longer favored. Walter Kerr, a former U.S. diplomat and publisher of the China Journal Review, criticizes Trump’s broad-stroke approach, arguing that targeting companies without justification is not a sound policy. Simply attempting to disadvantage Chinese entities is considered ineffective.

The current emphasis is instead placed on encouraging domestic investment and fostering international collaboration.

The Intertwining of Foreign and Domestic Policy

A primary focus of the current administration is strengthening the United States internally, recognizing that domestic strength is fundamental to effective foreign policy. President Biden articulated this connection in a significant foreign policy address, stating that all international actions must consider the impact on American working families. He emphasized the necessity of prioritizing domestic economic revitalization to advance a foreign policy beneficial to the middle class.

This perspective is particularly championed by Jake Sullivan, the President’s National Security Advisor. Sullivan’s prior experience as a key policy advisor during Hillary Clinton’s 2016 campaign led him to deeply consider the interplay between domestic and international affairs. He has asserted that a distinct separation between foreign and domestic policy no longer exists.

The importance of this integration is becoming increasingly apparent in the realm of technology, with growing concerns about the United States potentially falling behind in research and development. It is now understood that insufficient investment in government grants and R&D initiatives hinders the ability of American companies to innovate in crucial areas like quantum computing, artificial intelligence, and biotechnology, according to Kerr.

The concept of “rebuilding” or “sustaining” American “technological leadership” is a central tenet of the Longer Telegram and forms the core principle behind the report produced by the China Strategy Group. This group was convened by Eric Schmidt, former executive chairman of Alphabet (Google’s parent company) and inaugural chair of the Department of Defense’s Innovation Advisory Board. The pandemic has further underscored these priorities, raising the question of how to align the research infrastructure to address the industrial deficiencies revealed by the COVID-19 crisis, as Schneider of Rhodium points out.

While a formal national industrial strategy hasn’t been adopted, leading administration officials are actively seeking ways to stimulate technological research in vital sectors. To this end, the National Security Council, under Sullivan’s leadership, is undergoing a restructuring to prioritize technology-related issues. Biden has also appointed a dedicated deputy national security advisor for technology and a senior director focused on these concerns. The objective is to replicate the innovative energy that fueled Silicon Valley during the Cold War to surpass China in technological competition.

However, the elements that drive American – and Western – innovation are well-established: investment in education, research, and skilled personnel. Brattberg notes that the West continues to possess the majority of leading universities, R&D facilities, and companies, maintaining a significant competitive advantage. Consequently, investing to preserve this advantage is a key component of Biden’s $2 trillion infrastructure plan, which allocates funds to basic research, supply chain resilience, broadband expansion, and the semiconductor industry.

A functional and receptive immigration system is also considered a vital component, as frequently emphasized by those in Silicon Valley. Gorman states that the United States thrives when it attracts global talent and provides opportunities for success. Nevertheless, the Biden administration’s ability to secure an agreement with Senate Republicans on comprehensive immigration reform – or even funding for basic research – remains uncertain. Furthermore, even with success, American ingenuity alone may no longer be enough to guarantee leadership.

Team America

The competition between the U.S. and China in the technology sector will likely be determined by international collaborations and the acquisition of talent from around the globe. According to Schneider, allies represent the “most prominent and direct method” for President Biden to exert influence, surpassing the strategies employed by his predecessor, Trump.

President Biden, Secretary Blinken, and other high-ranking administration officials have consistently voiced their commitment to collaborating with democratic partners when addressing global issues, particularly within the Indo-Pacific region. The sequence of events surrounding Blinken and Sullivan’s meeting in Anchorage – preceded by visits to Japan and South Korea, two key U.S. allies – was deliberate. Furthermore, Japanese Prime Minister Yoshihide Suga was the first foreign leader welcomed by Biden at the White House.

Combining the resources of the U.S. with those of the EU, Australia, Taiwan, and South Korea creates a significant shift, restoring a balance of economic strength and technological innovation in our favor.

The environment is becoming increasingly favorable for Blinken and his team. Chinese diplomats have adopted an assertive, and at times, dismissive approach towards nations perceived as critical of China. A recent instance involved the Chinese embassy in Dublin issuing a series of tweets directed at an Irish-British journalist couple. This couple had been compelled to move to Taiwan due to harassment stemming from their reporting on China’s policies concerning the Uyghur population in Xinjiang.

This aggressive diplomatic style, often referred to as “wolf warrior” diplomacy – a term derived from a nationalistic action film – is generating negative reactions. It is also persuading many policymakers in countries that previously hoped to remain neutral in a U.S.-China conflict to reconsider their position and acknowledge the concerns raised by Washington’s China critics.

This shift may explain the increasing number of complex alliances and coalitions being proposed to safeguard a free and democratic internet for the future. The D10, a secure supply chain network initiated by British Prime Minister Boris Johnson, includes Australia, India, and South Korea alongside the existing G7 nations (U.S., U.K., Canada, France, Italy, Germany, and Japan). Schmidt’s report suggests a T-12 configuration (the D10 minus Italy, plus Finland, Sweden, and Israel).

Other proposals involve expanding existing technology-focused groups, such as the Five Eyes intelligence alliance (U.S., U.K., Australia, Canada, and New Zealand), or leveraging emerging non-technical alliances like the Quad. Gorman highlights the importance of the Quad – Australia, India, Japan, and the U.S. – announcing the formation of a working group dedicated to emerging technologies during their inaugural (virtual) leaders summit in March.

Simultaneously, Senator Mark Warner of Virginia has put forward a plan for a technology partnership managed by the State Department. This partnership would involve coordinating with allies and establishing a $5 billion fund for research, specifically aimed at countering China’s technological influence.

The Shifting Landscape of Global Tech Standards

Increasingly, the establishment of international technological standards is occurring outside of Western influence. Despite the ability to guide its allies, the United States encounters significant resistance on the global stage.

The withdrawal of the U.S. from the Trans-Pacific Partnership (TPP) during the Trump administration signaled a potential scaling back of the U.S. strategic focus on Asia. This trade agreement, initially negotiated under President Obama with ten other nations bordering the Pacific, aimed to define trade regulations within the Asia-Pacific region.

The TPP, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), has progressed without U.S. participation. Notably, China has now indicated a desire to become a member of this agreement.

Ceding Ground in Technical Standardization

Washington’s reluctance to actively engage within multilateral organizations has resulted in a diminished role in the setting of global technical standards. This vacuum has been actively filled by Beijing, which has strategically leveraged the United Nations system.

Currently, Chinese officials hold leadership positions in four of the fifteen specialized UN agencies. This includes the International Telecommunication Union (ITU), a key body responsible for establishing global technical standards.

Furthermore, China is providing support for Russia’s initiatives to reshape internet governance. In 2019, with China’s backing, Russia secured a vote at the UN General Assembly to begin drafting a new treaty concerning cybercrime.

The objective is to supersede the U.S.-supported 2001 Budapest Convention on Cybercrime – a framework developed by democracies through the Council of Europe – with a treaty that, according to critics, could be exploited by authoritarian regimes to suppress dissent.

Russia and China also previously attempted, without success, to utilize the ITU (now under Chinese leadership) to replace the Internet Corporation for Assigned Names and Numbers (ICANN), the expert-led organization governing internet domain names.

China’s Strategic Vision: Standards 2035

These actions are integral to “China Standards 2035,” a defined strategy to promote Chinese preferences in international standards, particularly in areas like 5G and the Internet of Things (IoT).

As Emily de La Bruyère and Nathan Picarsic highlighted in a TechCrunch article, Beijing has spent two decades building influence within multilateral bodies and key industrial sectors.

Now, it is leveraging these positions to establish the rules governing the future global infrastructure, effectively defining its architecture.

• China is actively seeking to shape global tech standards.
• The U.S. has reduced its involvement in multilateral standardization efforts.
• The ITU and ICANN are key organizations in this evolving landscape.

Differing Perspectives on U.S. Strategy Towards China

Despite a growing agreement regarding the challenges posed by China, disagreements persist concerning the optimal approach to managing the relationship.

Those advocating a more assertive stance, as reflected in the Schmidt Report, acknowledge that a certain level of technological separation from China may be beneficial to U.S. interests. However, determining the extent of this separation presents a significant challenge. Barker, from the German Council on Foreign Relations, notes that this bifurcation is already occurring, and the central question is its ultimate depth.

Complete decoupling is rarely proposed, according to Brattberg, a scholar specializing in tech diplomacy. Many are hesitant to accept the notion of entirely distinct ‘free’ and ‘authoritarian’ internet systems. Such a division would also carry substantial drawbacks, including increased costs and a potential deceleration of innovation, as a former UK intelligence official pointed out.

Identifying the critical technologies that the U.S. must produce domestically is paramount. Gorman emphasizes the need for a strategic approach to decoupling. There's a danger in overdoing it, potentially stifling innovation within the U.S. The ongoing discussion centers on addressing genuine national security concerns without resorting to authoritarian measures like blanket bans.

Even achieving domestic consensus is complicated by the differing views of America’s allies, a point previously discussed in relation to Huawei. While the debate surrounding Huawei’s involvement in 5G networks has shifted, with France and the UK now phasing out its equipment, the broader question of China’s economic and technological role in Europe remains contentious.

The U.K. government has articulated a clear position, recognizing China’s increasing assertiveness as a risk to its interests in its Integrated Review. It has also established a goal to become a leading “science and tech superpower.” France, similarly, has unveiled an Indo-Pacific strategy supporting a free and open Pacific region, directly challenging China’s objectives.

However, many nations remain hesitant to take a firm stance. Singapore’s Prime Minister Lee Hsien Loong articulated this sentiment in Foreign Affairs, stating that Asian countries do not wish to be compelled to choose between the U.S. and China. Berlin’s Indo-Pacific strategy also indicated a reluctance to make a definitive choice.

New Zealand, mindful of its substantial trade relationship with China, is cautious about expanding the scope of the Five Eyes intelligence alliance. Italy, in 2019, endorsed China’s Belt and Road Initiative and designated the country a “strategic partner” last year. Furthermore, the European Union proceeded with a trade agreement with China despite strong opposition from the United States.

The Complexities of Global Tech Competition

A significant hurdle for the Biden administration lies in constructing viable coalitions without demanding that allies and partners face untenable decisions. Success will hinge on their ability to redefine the central question. According to Brattberg, while European nations are hesitant about complete “decoupling,” they readily embrace “diversification.” Furthermore, they are disinclined to join a U.S.-led alliance directly.

Instead, Washington should present collaboration as “coalitions comprised of similarly-minded democratic partners,” he suggests. Achieving this necessitates the U.S. addressing its bilateral concerns with allies initially.

Addressing Bilateral Concerns

It is crucial to engage with the EU more effectively to resolve matters such as data transfers, digital taxation, and data privacy, he stated. Digital sovereignty should not compromise partnerships with like-minded nations.

Flexibility will be paramount; numerous experts agree that forming ad hoc coalitions focused on specific issues will be more beneficial than establishing a single, rigid democratic tech alliance.

This approach would maintain focused groupings while avoiding the exclusion of nations possessing vital expertise in particular fields, such as Sweden in 5G technology or Taiwan in semiconductor production. Washington must also adopt a collaborative stance, acknowledging and respecting that its allies may not consistently align on all aspects of their relationship with China.

Investing in Allies and Counteroffers

Essentially, the U.S. should avoid striving for perfection and instead accept that agreement on most issues, most of the time, will likely provide sufficient momentum. Gorman, a scholar at GMF, emphasizes that the U.S. can still compete globally and expand the network of like-minded countries.

However, this requires investment in their technological sectors to ensure alignment with democratic values and standards. She describes this as “providing a compelling alternative.”

Even if the United States maintains its technological advantage in the short term, a shift in perspective is needed, recognizing that Silicon Valley’s dominance is not guaranteed indefinitely. Chinese technological advancements are occurring in areas like 5G, while Chinese companies are competitive in pricing (mobile phones) and increasingly in quality (e-commerce) and innovation (as exemplified by TikTok).

China's Leverage and Taiwan's Role

China also wields considerable influence through its control of supply chains, rare earth metals, and its substantial consumer market. A particularly significant point of leverage for China is its position concerning Taiwan.

As long as Taiwan remains a leading manufacturer of semiconductors – with TSMC producing 90% of the world’s most advanced chips – the global technology sector will remain susceptible to the instability of cross-Strait relations. Consequently, technology risks becoming merely another pawn in the geopolitical contest between the U.S. and China.

Prioritizing Tech Issues

Barker of the German Council on Foreign Relations notes that the Biden administration appears better prepared than its predecessor to weigh the associated tradeoffs. However, it remains unclear how Washington will prioritize technology issues, particularly when confronted with potential Chinese cooperation on other critical areas.

The U.S. and its allies must constantly balance a multitude of priorities concerning China. While the Trump administration’s focus on a limited number of issues provided leverage – even if it meant overlooking concerns like human rights abuses in pursuit of a trade agreement – it came at a cost.

The Biden Administration's Approach

The Biden administration, conversely, has yet to clearly define its priorities. If statements from the White House are accurate, it aims to make progress simultaneously on climate change, Taiwan, trade, human rights, and numerous other fronts. This ambition, in itself, creates a vulnerability.

As historian Niall Ferguson pointed out, National Security Advisor Henry Kissinger was strategically disadvantaged during his 1971 visit to China due to a multi-faceted agenda, while China remained singularly focused on Taiwan. Beijing’s diplomats, despite occasional missteps, remain skilled negotiators.

They will likely attempt to exploit divisions within the administration, potentially linking progress on climate initiatives to concessions on geopolitical matters, as cautioned by Brookings scholar Thomas Wright. Therefore, an ‘all-encompassing’ strategy appears improbable, especially considering Biden’s agenda encompasses both the issues prioritized by Trump – trade, 5G, and Taiwan – and those he previously overlooked, such as human rights, democracy, and climate change.

The Strength of Alliances

America’s alliances may prove to be Biden’s most valuable asset. By forging a strong, unified front with a broad range of allies, the U.S. can better resist Chinese pressure to trade concessions on one issue for progress on another.

Instead, compelling China to negotiate with the U.S. and its allies on an issue-by-issue basis could enhance Washington’s prospects for success. Despite the discussions surrounding industrial strategy, alliances, and diplomatic efforts, the tech race offers a unique advantage.

Washington is not the sole, or even primary, actor involved. The Biden administration can establish guidelines, invest in fundamental research, and protect American interests abroad, but American innovation ultimately depends on its innovators – and a wealth of them continue to work diligently.

Update May 3, 2021: The list of specialized UN agencies was updated to exclude WIPO, as its director general is Daren Tang of Singapore.