Washington Must Wake Up To The Innovation Imperative

There has been a smoldering fire on the geopolitical stage that, if we continue to ignore, we risk allowing it to spread and burn its surrounding environment. I’m referring to the convergence of multiple technology revolutions with the high-stakes competition between the United States and a rising authoritarian competitor in China.

Whichever country leads in technology will sit at the commanding heights of the global economic and trade system, geopolitics, and a new age of innovation. Ultimately, we must ensure the light we see in the future is the beacon of freedom, democratic values, liberal market principles, and private sector-led economy rather than the dangerous, destructive flames of state-led authoritarianism.

We’re waking up to a five-alarm fire.

Last month, I testified before the House Science, Space, and Technology Committee in a hearing titled “The United States, China, and the Fight for Global Leadership: Building a U.S. National Science and Technology Strategy.” In my testimony, I reiterated the clear and present danger laid out in the Council on Competitiveness’ 2018 Clarion Call and 2020 “Competing in the Next Economy” report from our National Commission on Innovation and Competitiveness Frontiers initiative. China knows that emerging technologies like AI, robotics, and quantum will decisively shape tomorrow’s economies, societies, and battlefields, and that the pathway to achieve their superpower goals is dominance in technology and innovation.

China is using every tool in its arsenal to build unbeatable science and technology capabilities, pursuing aggressive plans for every critical technology, backed by hundreds of billions of dollars in investment. This includes a multi-pronged strategy to acquire technologies from the U.S. by hook (talent programs, research collaborations with U.S. universities, and capital to acquire technology from U.S. start-ups) or by crook (theft, espionage, and cyber intrusion). The U.S. intelligence community’s 2023 Worldwide Threat Assessment report notes China views data — of which China is amassing mountains of from the U.S. — as a strategic resource that can make their espionage, influence, and military operations more effective, advance their exploitation of the U.S. economy, and give them a strategic advantage over the U.S. Furthermore, Chinese researchers and high-tech companies operate within its “military-civil fusion” system, making no distinction between civilian and military technologies, commercial or defense firms; they must support China’s economic, political, and national security priorities and policies.

“We have this epic competition with China, which will be won or lost around this axis of innovation, technology, and training,” warned Secretary of Commerce Raimondo at the Council’s recent National Competitiveness Forum. “This is a moonshot moment.”

Cracks in the foundation of the U.S. innovation system put us at risk.

Over the past decade, real dollar federal investment in development and basic research has eroded, and many of our crown-jewel national laboratory facilities have degraded. Commercialization of new technologies in our start-ups has been hampered by a persistent lack of capital to move them across the “valley of death” to the scaling stage. Our powerful commercial high-tech companies, of which we now rely for the latest dual-use technologies needed for national security, are not well integrated into the defense industrial base. Cultural barriers within our academic sector and defense acquisition community have hindered full leveraging of our technological capabilities. And, we have not tapped all of this nation’s potential innovation and entrepreneurial talent.

In my testimony before the House Committee, I highlighted four recommendations from our National Commission on Innovation and Competitiveness Frontiers initiative that are critical to our success in this fight for the future:

· Federal Coordination at the Cabinet Level. The U.S. does not have a single-leadership structure for U.S. innovation and competitiveness in the federal government. The federal government should establish a National Competitiveness and Innovation Council in the Executive Office of the President, with status similar to the National Security Council and National Economic Council.

· Expand and Fund Place-based Innovation Efforts. As competition in the global innovation landscape intensifies, there is a growing urgency to capitalize on untapped talent across the United States and expand the U.S. innovation footprint beyond the coasts and well-known hubs.

· Develop and Deploy Technology at Speed and Scale. The U.S. innovation ecosystem is basically divided into two large sectors — academic research at universities, and product development in private companies. This division of labor has created a “missing middle” in applications research, where invention occurs and innovation begins. To fill this missing middle, we need a new model of R&D that integrates the efforts of all parts of the innovation enterprise.

· Embrace Technology Statecraft. Countries work to strengthen their technology and innovation capabilities by influencing international economic, scientific, trade, and standards organizations and arrangements. In recent years, the U.S. has put shaping the 21^st century economy on the backburner, and China stepped into the vacuum. The U.S. must elevate the use of technology statecraft in U.S. economic and national security.

These challenges are now on our leaders’ radar screens — across both parties — and moving to the top of the national agenda. The CHIPS and Science Act, the $1.5 billion in Inflation Reduction Act funding to upgrade national laboratory facilities, and the historic expansion of the National Science Foundation’s mission to incorporate technology development, innovation, and growth of regional innovation engines are crucial first steps to deal with national needs and threats from China. The U.S.-E.U. Trade and Technology Council is an important new platform to work with allies to shape rules and standards for emerging technology. Washington is cracking down on transfers of U.S. technology to China, through new export controls, greater disclosure requirements on participants in federally funded research, and the Committee of Foreign Investment in the United States (CFIUS).

But the government cannot do it alone. We need a whole-of-nation effort, with government at all levels, the private sector, labor, and the education community working together at the intersection of technology, innovation, and economic and national security to “re-imagine the national innovation system for an era of changewaves,” as articulated by Toby Redshaw, Council on Competitiveness Senior Fellow and a transformation leader at multiple global firms. We can’t just stay a couple of generations ahead in crucial technologies, added National Security Advisor Jake Sullivan; that is not the strategic environment we are in today.