The US is being outmatched. Government funding of basic and applied scientific research is not only lagging, but falling dangerously behind China, and too little corporate funding is being spent on the basic research that leads to transformative discoveries.
The US intelligence community’s 2019 Worldwide Threat Assessment report identified a number of research areas that will determine global military and economic superiority in the coming decades; AI, gene editing, synthetic biology, 5G, and quantum computing were among the areas specifically referenced in the report. It noted that America’s lead in the science and technology fields has been significantly eroded in recent years. The decline is the result of steadily declining US budgets for basic scientific research and a lopsided emphasis on the life sciences, to the detriment of emerging technologies. According to the National Science Foundation (NSF), the US government spent $67 billion on basic and applied science and technology research in 2017—less than 2% of all federal spending and just 0.3% of US GDP.
In 1956, US investment in scientific research represented about 1.1% of the federal budget and a mere 0.2% of GDP. But following the successful Soviet launch of Sputnik in 1957, investment in basic and applied scientific research surged, peaking at 3.6% in 1965. As the Cold War ended, such funding declined to where it is today, and the funds that are available are distributed in a lopsided manner. Though a range of US federal departments and agencies conduct and fund scientific research—from the departments of Agriculture, Energy and Defense to the National Aeronautics and Space Administration—some 46% of all federal civilian science money goes to just one agency: the National Institutes of Health. That is why the intelligence community can say that the US remains dominant in biomedical science.
Current federal investment in all other areas of critical scientific research is minuscule. The Energy Department invests more than $18 billion a year in research and development—almost a third of American spending on non-biomedical science. About half of that is devoted to nuclear security and energy—important issues, to be sure, but not cutting-edge fields critical to creating a thriving, competitive economy in the future. Much of the federally funded research in the areas highlighted by the US intelligence community—such as AI, computing, and physics—passes through the NSF.
The NSF provides about a quarter of all federal research grants and covers fields such as engineering, mathematics, computer science, and the social sciences. It also funds the purchase of large-scale scientific equipment. NSF-funded researchers have won 236 Nobel Prizes. In 2017, the Foundation’s total research budget was a mere $5.6 billion (or 0.1% of the federal budget and less than 20% of the budget of the National Institutes of Health). Its budget had been declining for years as a percentage of the federal budget and had been cut by 10% from 2017 to 2018. Rather than raising funding for the NSF, the Trump administration proposed to make additional cuts to total funding for the NSF, from $8.1 billion to $7.1 billion in 2020—an additional 12% decrease. By contrast, in 2019, China’s funding for scientific research had reached 2.5% of its GDP and was slated to continue to increase. Historians will no doubt look back at such statistics and wonder what on earth the US government was thinking.
It is hard to maintain leadership in any field with shrinking budgets. The same is true when falling behind on the education front. China opened more than 1,800 new universities from 2001 to 2014 (that’s more than two per week) and produced nearly five million science, technology, engineering, and medicine graduates—nearly 10 times the equivalent American figure. (The US graduates around 1.8 million students per year in all subjects, from about 2,600 four-year colleges and universities.) One of the biggest cross-national tests of student performance is the Program for International Student Assessment, which measures reading ability, math, and science literacy skills every three years among 15-year-olds in dozens of developed and developing countries. The most recent PISA results, from 2017, placed the US at an unimpressive 31st out of 70 countries (just ahead of Latvia). China came in at 10th place, just behind South Korea.
In short, the US is being outmatched. Government funding of basic and applied scientific research is not only lagging, but falling dangerously behind China, and too little corporate funding is being spent on the basic research that leads to transformative discoveries. US companies spend about $24 billion per year on basic research—about a third of the annual federal investment—but more than 10 times that, in excess of $300 billion, on development. That is not enough for the US to maintain its lead over China, and Beijing knows it.
The US has the world’s best research universities and a strong culture of innovation. All that it really needs to do is devote more funds to scientific research to give China a run for its money. At a minimum, the federal government should restore funding to 1965 levels and commit to doubling non-biomedical research funding in the key areas identified by the Worldwide Threat Assessment report. Doing so would require about $12 billion per year over three years, or just 0.25% of the federal budget. To beat the Soviets to the moon, NASA received more than 4% of the federal budget in 1965 and 1966. If it really wants to have a hope of maintaining its scientific edge, that type of commitment is once again required.
But will it be enough in the face of what is, in essence, a state-sponsored foreign technology transfer apparatus? Beijing has enacted some two dozen laws that have created a technology-siphoning machine. That apparatus maintains databases of foreign co-optees and distributes stipends, sinecures, and cash to foreign donors of high-tech innovations. China has targeted all sources of American innovation, including universities, corporations, and government labs, exploiting both their openness and naïveté, with methods and tradecraft custom-tailored to each target.
At American universities, China takes advantage of the commitment to intellectual freedom on campuses. In US corporations, the lure of access to the Chinese market gives Beijing tremendous leverage in eliciting technology transfer from American firms, combined with financial incentives for employees to purloin IP for personal gain. US government labs have an historic commitment to international scientific cooperation but an uneven record of monitoring that cooperation for unsanctioned transfers of information. That is now slowly changing, but it will take time to ween the institutions of their trusting ways.
While Chinese intelligence has a strong track record of attempting to recruit ethnic Chinese, primarily because of cultural and language affinity, recent cases of espionage and technology transfer suggest that the Chinese government has broadened its tradecraft to recruit nonethnic Chinese assets and collectors as well, perhaps as a way of complicating US counterintelligence efforts. China’s most systematic channel for identifying foreign-based nontraditional collectors is its Recruitment Program of Global Experts, commonly known as the Thousand Talents Plan (or the Thousand Talents Program). The Plan is a massive and sustained talent recruitment campaign designed to recruit leading experts from overseas to assist in the country’s modernization drive. Initiated in 2008, the Program recruits leading overseas scientists and experts who work in areas that are deemed a high priority for achieving China’s modernization goals.
When China aims to be a leader in a particular sector or acquire a certain technology, it does so with precision. There is no question that Beijing aims to be a leader in AI, semiconductors, and any number of other sub-sectors of the technology-driven 21st century economy. It has the advantage of having a lot of money to spend, and plenty of people and resources to devote to the issue. Since it certainly appears that the US government will not be devoting similar resources to the tech sector, it is merely a question of time until China captures that title, too. In the battle for the future, the CCP understands very well what is at stake. It took the US and the West too long to realise what China was doing, and by the time they did, Beijing was already approaching strongly from behind. Soon enough, the West will be looking at China in the science space from the front window, rather than from the rear-view mirror.
Daniel Wagner is CEO of Country Risk Solutions and author of the new book The America-China Divide. This is an excerpt from the book.