At Risk in Debt Talks: Cuts to R&D Can Give China Tech Supremacy

The United States continues to face major challenges in the race for global technology supremacy. Recent political maneuvers within China have underscored its laser focus on scientific and technological advancements as integral to its competitive strategy with the West. A variety of national and economic security stakeholders — as well as political leaders from both parties — continue to sound the alarm over the U.S. ability to invent, innovate and build next-generation technologies here. But the U.S. high-tech trade deficit surpassed $200 billion for the first time ever in 2022, and Congress has missed funding targets for science agencies by billions of dollars. Meanwhile, overseas investments in China and elsewhere continue to ramp up. It’s vital that the United States remains on its front foot, making the necessary investments to ensure long-run competitiveness.

For these reasons, our leaders must tread cautiously as they negotiate a final fiscal deal.  The recent budget plan passed by the Republican-controlled House represents a terrible mistake. Speaker Kevin McCarthy (R-Calif.) has used the U.S.’s approaching debt limit deadline as a bargaining chip with President Joe Biden in an effort to secure the House budget plan’s proposed cuts.

The plan, known as the Limit, Save, Grow Act, seeks to impose blanket spending caps that would likely reduce federal research and development (R&D) investments by an estimated $442 billion over the next decade. While fiscal responsibility is undeniably important, such severe and haphazard measures would eviscerate our ability to compete in science and technology and inadvertently bolster the rise of China. Congress and the White House need to avoid making this mistake.

Our rivals have no such compunctions about maintaining their momentum. In March, the Chinese Communist Party (CCP) held its yearly "two sessions" meeting — referring to the coming together of China's principal political bodies, the National People's Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) — during which they not only confirmed Xi Jinping's third term as president but also introduced a set of new policies and government appointments. During this meeting, Xi emphasized the importance of self-reliance in science and technology as a strategic goal to combat Western influence. Meanwhile, the Central Committee revealed plans to restructure the Chinese government to better position China's national innovation system for driving advancements in both commercial and dual-purpose military-civilian technologies.

This latest initiative underscores two decades of unwavering CCP commitment toward indigenous innovation, calibrated specifically to outflank its Western competitors like the United States. And it’s getting results: a recent analysis by the Australian Strategic Policy Institute found that China now leads in 37 out of 44 critical technology areas globally, while Chinese production of high-value patents in the global marketplace has increased by 400% over the past decade.

To be sure, the competitiveness challenge goes well beyond China. The United States is no longer the most research-intensive economy in the world: that honor belongs to Israel and South Korea, while we’ve dropped to seventh. The most recent Bloomberg Innovation Index, a global ranking, dropped the U.S. out of the top 10.

Other industrial powers like Germany continue to prioritize high-tech strategy and investment. It is now more urgent than ever for America not to relinquish its advantage through short-sighted reductions in R&D investment just as our primary geopolitical contenders mobilize additional resources.

Last year’s CHIPS and Science Act sought to address some of these strategic issues, and it’s already yielding results in the form of surging private-sector semiconductor investment around the United States. But there are still several important steps on the table. For instance, this legislation created a new network of microelectronics science centers at the national labs and other institutions, to pursue multidisciplinary research that will undergird the next generation of microchips. This work is critical for both economic and national security needs. But the centers still have to be funded. Appropriations so far have already missed the CHIPS and Science agency funding targets by billions, and the secretary of Energy has warned that further cutbacks under the House budget plan could lead to the reduction of thousands of scientists at the national labs at exactly the time support should be ramping up.

The irony is that Xi himself has previously emphasized the importance of America’s national labs as indispensable for the development and innovation of science and technology, while laying out how the CCP views R&D as the primary driver for growth.

Federal investments are coming in several other critical technology areas, including quantum information science, orbital manufacturing and robotics, as well as fusion energy. And at a time when Congress must think about the impact of artificial intelligence (AI) enabled automation on middle-skilled jobs, investments in workforce and STEM education will be particularly important. China already produces double the number of STEM master's degree recipients as America, and it is projected to graduate twice as many STEM Ph.D. candidates by 2025. CHIPS and Science sought to significantly augment federal STEM support, including by creating new programs to give scientists entrepreneurial exposure, but again, it all has to be funded. The House plan would make that impossible.

To effectively mitigate emerging threats from foreign rivals, Congress must weigh the long-term impact of its fiscal policies on technological competitiveness — and at this pivotal juncture, retreating from vital R&D investment would be utterly indefensible. Instead, American leadership must double down on its commitment to economic growth, national security and global stability. The U.S. can do so by judiciously allocating funds, sustaining the science and technology base, cultivating public-private partnerships, as well as forging innovative alliances in the geopolitical arena. American political leaders need to come together on a policy that makes it a priority to compete with China, which eagerly seeks to impose its rules of engagement in the realm of tech dominance.

Divyansh Kaushik is the associate director for emerging technologies and national security at the Federation of American Scientists, where his focus areas include the strategic competition between the United States and China.

Matt Hourihan is associate director of R&D and advanced industry with the Federation of American Scientists, where his focus areas include R&D investment policy, novel research models, energy and space innovation.