Three Policies That Will Make or Break U.S. Tech Competition with China
Editor’s note: In February, The National Interest organized a symposium on the U.S.-China technology race amidst the emergence of DeepSeek and ongoing legal battles over TikTok. We asked a variety of experts the following question: “What are the three most important technology policies that the U.S. should pursue or avoid to compete adequately with China?“ The following article is one of their responses.
Tech Transfer
Standing on the brakes is no way to win a race, but the last administration was obsessed with export controls. From 1949 and the atomic bomb to DeepSeek and AI, U.S. efforts to deny technology to opponents have usually backfired. The question we need to ask is how does this policy make the U.S. a market leader, because it is leading in global markets that will determine success, and that means selling, not denying. The recent AI/GPU regulation decided that both Poland and Switzerland were risks and deserve scrutiny and restraint, a conclusion best described as surreal. China is doing quite well on its own, as U.S. regulations have incentivized Chinese innovation. China exports more (by dollar value) than the U.S. Some might describe that as leading. Tech transfer with friendly countries builds security, but 20th century tech transfer rules do not.
Investment
Economies grow through ideas and investment. The best policies promote investment in technology and innovation. Other policies have dubious results. It’s interesting to note that the last Administration, relying heavily on tariffs, inadvertently created a global depression, while at the same time, other countries that engaged in economic warfare against a recovering Germany (using monetary policy and tariffs) found that economic warfare doesn’t work and is an attractive tool only incumbent powers in decline. What works is spending. The U.S., with its vibrant blend of private and public investment, has an advantage in a global competition. Europe and China show the drawbacks of too much government-directed investment (China compensates for inefficiencies with massive spending that the U.S. is unwilling to match), but private sector spending alone is not enough (bear in mind that both SpaceX and Tesla relied on early stage government funding to get off the ground). Markets will invest in new technologies once public spending makes them viable, not before, and cutting public investment in science and technology puts the U.S. at risk.
Deregulation and Anti-trust
The belief that 400 shrimp pack the same punch as one whale guided the last administration and is tempting the new one. It’s not true. Breaking up tech giants will hurt the U.S. in the global competition and won’t compensate for the lack of a real privacy law (which is one of the main drivers of antitrust policy). In theory, breaking up tech giants could increase innovation, but not soon enough in a tough competition with China. A national privacy law for the U.S. would help, but we can learn from the EU, which has repeatedly shown how getting regulation wrong kills innovation and economic growth. Letting EU tech regulation slop over to the U.S. damages both sides of the Atlantic (and revitalizing European economies is also in the U.S. interest).
About the Author: Jim Lewis
Jim Lewis is the Senior Vice President and the Director of the Technology and Public Policy Program at the Center for Strategic and International Studies (CSIS)
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