US Should Increase Tech Investment, Counter Chinese Leadership at Standards Bodies, Experts Say
U.S. and Chinese trade tensions could last for years and require a more clear, consistent approach from the U.S., experts told the U.S.-China Economic and Security Review Commission June 24. The U.S. should not address competition challenges through decoupling, they said, but should instead invest more heavily in technology research, pursue more involvement at international standards bodies and work with trade partners to counter China’s rise.
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“We need to accept that this is going to go on for the long term,” said David Finkelstein, director of the China and Indo-Pacific security affairs division at CNA, a non-profit research group. “It's just not enough to [only] confront. We have to be positioned to compete.”
Experts told the panel, which is preparing a report on U.S.-China competition to present to Congress in November, that the U.S should prepare for sustained competition through more investments in sensitive technologies and a greater focus on regaining leadership roles at international bodies such as the United Nations. Kristine Lee, a U.S.-China relations expert at the Center for a New American Security, said China is “really dominating the narrative at the U.N.” She pointed to the International Civil Aviation Organization, a U.N. agency focused on establishing standards for the aviation industry, which is headed by a Chinese national.
Lee said “there are a number of important elections coming up” for similar bodies. “I think this is something where we've taken our eye off the ball in previous elections,” she said, adding that the U.S. should support candidates “who will support American and democratic interests.” The Commerce Department recently issued a rule to allow U.S. companies to more easily participate in standards setting bodies in which Huawei is a member (see 2006160035).
Others advocated for more technology investment, especially as China continues to pursue advancements in 5G and artificial intelligence technologies (see 2005080040). “Let's put some money into experimental, high-quality AI network-driven infrastructure,” said Barry Naughton, a Chinese economy expert and the chair of Chinese international affairs at the University of California San Diego. But first, he said, the U.S. needs to clearly outline that approach. “The most important thing is to establish a degree of consistency,” he said, which should include more cooperation with allies.
Satu Limaye, vice president of the East-West Center, a federally funded organization focused on U.S. and Indo-Pacific diplomacy, agreed, saying the U.S. should reduce its trade skirmishes with partner countries. While some have been justified, such as U.S. concerns with the World Trade Organization (see 2006030033), Limaye said the U.S. needs support to confront China. “The U.S. can regain advantage by pursuing strategic trade and ending strategically insignificant squabbles with allies,” he said.
This should include engaging more with allies over foreign investment reviews, said Evan Ellis, a professor at the U.S. Army War College and former State Department official. He said the Committee on Foreign Investment in the U.S. should be strengthened, and suggested that the U.S. help fund attempts by countries to establish their own CFIUS-like process “to protect against predatory and strategically damaging Chinese investments.”
The experts argued against decoupling, saying it would disadvantage both countries. Decoupling would lead to the “unraveling of global production networks” and harm supply chains, Naughton said. “Financial decoupling is I think something that should be treated with the greatest caution,” Naughton said. “Of course we could do damage to China, but a crisis in the Chinese financial system would quickly reverberate around the world and do significant damage to our economy.”