One of the few things Americans seem to agree on at a time of almost unprecedented political polarization is that the nation risks losing out, economically, militarily, and even culturally, to China. A major 2021 poll found that the largest portion of Americans surveyed believe that China is economically stronger than the United States – a significant shift from just two years earlier when most Americans believed the reverse was true. In Congress, meanwhile, a Washington Post columnist recently noted that “the need for federal research dollars to compete with China Inc. in…critical technology [is] one of the few issues on which Republicans and Democrats agree.”
But is America really losing out to China? And if it is, what does that mean for global challenges like climate change that can’t be tackled without Beijing? Those are questions I set out to answer in my new book, China’s Next Act: How Sustainability and Technology are Reshaping China’s Rise and the World’s Future, which will be published by Oxford University Press later this month. Before I get to the answers, a little more about me and why I wrote the book. During the Obama administration, I served as an Environment, Science, Technology, and Health Officer for China at the U.S. State Department. There was a widespread belief at the time, which I shared, that the United States and China could not only work together to address challenges like climate change and infectious disease, but also that working together to counter these shared threats would eventually draw the two countries closer together. I wanted to understand why and how that vision failed so spectacularly over the past decade amid ever-rising greenhouse gas emissions and the COVID-19 pandemic – and, of course, what we can do differently going forward.
One of the biggest changes over this period is the growing belief that the U.S. is falling behind China, economically, technologically, and otherwise. But I found surprisingly little evidence that is the case. On the other hand, Beijing sees issues like climate change in a fundamentally different way – not as safe zones that can be isolated from broader tensions and disagreements, but rather arenas for economic, geopolitical, and even ideological competition. Even as we gear up to combat the climate crisis and other shared challenges, the United States must do so by competing as well as cooperating with China more effectively.
The first thing to keep in mind when it comes to China is that, even as it has become the world’s second-biggest economy, it still faces daunting challenges to achieving true prosperity. It is, after all, still relatively poor: China’s Gross Domestic Product per capita in 2021 was lower than Pacific Island nations like Palau. When compared to countries like Japan and South Korea at comparable stages of development, China lags on income growth, educational attainment, and other critical metrics. And, perhaps most daunting of all, China faces an acute demographic crunch that threatens to reduce productivity, innovation, and growth while imposing rapidly mounting healthcare and social security costs. These are familiar challenges in many rich countries – but unlike the United States, China faces them with much lower levels of income.
In large part to respond to challenges like demographics, China has poured resources into leapfrogging ahead in advanced technology and sectors like robotics and biotechnology. The sheer scale of this investment has given rise to breathless warnings that the U.S. is falling behind. But there is little sign of this when it comes to the most advanced technology. The most recent version of the widely-cited Global Innovation Index put China first among upper-middle-income countries – but not even in the top 10 overall. A 2020 World Bank report, meanwhile, found that “China falls short of leading economies” on a range of advanced technologies. Other measures show that the gap is biggest in the most cutting-edge fields; a recent index of early-stage biotechnology innovation for example assigned China a value of 0.3 as compared to 1.5 for the United States and Europe.
So if America isn’t falling behind China, do we really need to care about China at all? The answer is yes – and more than ever before. Even though my research showed there is little evidence that China is racing ahead of the United States, its massive investment in areas like artificial intelligence still poses significant threats. For one thing, although China generally remains behind in cutting-edge research and development, it holds some advantages in deploying novel technologies at scale, including new tools for mass surveillance. These technologies threaten free speech and expression, even beyond China’s borders.
But the biggest reason we need to rethink America’s response to China’s rise is that Beijing has made clear it wants to shape the world’s response to climate change, future pandemics, and emerging technologies. If it succeeds, we risk not only a more barren planet and grave new technological dangers, but also one where liberal values are out-competed by Beijing-backed alternatives. China has become a powerful, and in many cases indispensable, player in international climate negotiations, public health bodies like the World Health Organization, and bodies that set the rules and standards to guide the development of new technologies. The Biden administration has indicated that it intends to counter China’s influence in all of these areas.
So far, though, Washington’s response to competing with China risks making two very big mistakes. The first is over-reacting to China’s growing technological prowess in areas like biotechnology that depend on international research collaborations, especially with China. While some restrictions on biotechnology research and investment make sense, there is a real risk of doing lasting harm to one of America’s most dynamic and innovative sectors. The second risk is relying too heavily on industrial policy, like billions in proposed spending to help re-shore critical U.S. manufacturing capacities. There are some areas where such large-scale public investment is justified on national security grounds, but in an era of record deficits and multiple crises, America simply can’t afford to unwind every China-linked supply chain.
Finally, my research shows that the best way to compete with China is to invest in three things: people, data, and values. In the twenty-first century, the single most important asset is talent. Fostering it, including improving K-12 education, reforming immigration, and promoting social inclusion, is the single best way to bolster America’s competitive edge over China. Data, meanwhile, is the crux of leveraging emerging technologies to promote economic growth. But America’s provisions for data privacy and governance are a mess and need major reform. Perhaps most urgent of all, America needs a recommitment to common values, including tolerance, free expression, and free enterprise. These values give America a distinctive edge over China – and will continue to do so, provided we can keep them.