The Challenge and Necessity of US-China Technology Cooperation

Despite rising tensions, the United States and China must find a way to foster cooperation and mutually beneficial collaboration. This will take increased transparency, new bilateral agreements, and active efforts to combat technological protectionism.

Xiaoli Jin
March 12, 2020

With rising frictions between the United States and China in the field of science and technology, few may still remember the great accomplishments achieved when the United States and China cooperated in the field of technology over the past 40 years. During the rapprochement in the 1970s, cooperation in technology spanned over fields like energy, health, basic research in physics and chemistry, and civil industrial technology, among others that could easily be considered sensitive areas by current standards. Academic exchanges also thrived: the U.S. National Institute of Standards and Technology has hosted thousands of Chinese scientists since the 1980s. The U.S. National Science Foundation also sent U.S. scholars to conduct scientific research in China.

Yet in recent years, this collaborative ethos has been increasingly replaced by mistrust. The U.S. urged its allies to stop purchasing 5G infrastructure and equipment from China’s technology crown jewel, Huawei. Renowned scholars were sanctioned for involvement in technological research sponsored by the other nation’s government. Some people may view the deterioration of the U.S.-China technology exchange simply as a trade-off between national security and innovation. However, the contesting philosophies of  technological protectionism and globalism is the more fundamental issue at play. This paper discusses the past, present, and future of US-China technology cooperation in three dimensions.

1.)  Why has technological cooperation deteriorated?

2.)  How is reviving cooperation beneficial to both countries?

3.)  Is it possible to restore trust against the backdrop of U.S.-China competition?

Why has U.S.-China cooperation in technology deteriorated?

The reasons for deterioration lie in the rapid development of technology in both countries. On the one hand, China’s technological capacity has been advancing rapidly. Harvard Economics Professor Richard Freeman accredited China with 36 percent of global scientific articles in 2016 and 37 percent of citations to scientific articles in 2013, which is two times more than China’s share of global population or GDP. The time to turn research into commercial applications has also shortened. In November 2019, China had already launched 5G services in 50 cities. The companies that run 5G services are none other but China’s three state-run telecom giants--China Mobile, China Telecom, and China Unicom--reinforcing the United States’ concerns that Chinese government is closely involved in China’s cutting-edge technologies.

On the other hand, technology has also developed by leaps and bounds in the United States. In the past, only a few high-stake, dual-use technologies would spark national security concerns. In addition, these technologies often had military applications. Yet as technological applications proliferated and interfaced pervasively with people’s everyday lives, even dating applications can now collect personal data that warrants regulators’ concerns. Increasingly, the United States finds itself vulnerable in many new technological fields that were not formerly considered sensitive.

Most fundamentally, U.S.-China technology cooperation has shifted from unilateral to bilateral. In the past, the U.S. was typically the provider of capital and technological know-how while China was the receiver. For the United States, technological assistance to China was partly an exercise in science diplomacy. Since the U.S. surpassed China in technological capacity by a wide margin, exchanging technology assets for diplomatic objectives made political sense for the United States. Moreover, in the past, U.S.-China technological cooperation was often rolled out in formal settings. Cooperation usually took place between government agencies or government-affiliated research institutions, which enabled the U.S. to control the extent of the technological knowledge that was transferred to China.

In recent years, however, China has started exporting capital and talent to the United States as well. Chinese technology giants Alibaba and Baidu established Artificial Intelligence research labs in California, where they collaborated with U.S. scholars and institutions. Chinese companies poured capital into U.S. technology companies. In the first quarter of 2014 alone, Chinese investors struck high-tech deals worth over six billion dollars, including the takeovers of Motorola Mobility and IBM’s x86 server unit. With the rise of Chinese talent and capital, the exchange of technological know-how between the United States and China now takes place among private businesses and between individuals: an exchange that is impossible for the United States to fully control.

The changing nature of technological cooperation has made both countries reconsider the political costs and benefits. Meanwhile, as nationalist sentiments rise on a global scale, technology has become a convenient medium to strike a political point. Hence, it comes as no surprise that backlash against U.S.-China technological cooperation gradually comes to the mainstream. Technological protectionism has temporarily prevailed against technological globalism.

Why is reviving technological cooperation beneficial to both United States and China?

The United States and China should not let technological protectionism persist, as cooperation has proven valuable to both sides. These benefits are evident whether cooperation is organized through government-sponsored programs or through private companies and individuals.

The U.S.-China Clean Energy Research Center (CERC) is a quintessential example of the value of technology cooperation through government-sponsored programs. Initiated at the presidential level in 2009, CERC aims to achieve a large-scale adoption of energy efficient buildings backed up by cutting-edge technologies. Through the collective effort of and researchers in the United States and China, CERC has launched high-tech products including daylight redirecting windows, trilogy integrated heat pumps and co-axial ground heat exchangers that are reported to consume 14 to 30 percent less energy than conventional products. In addition, CERC also published multiple copyrighted software applications and are on the path to file joint intellectual properties on behalf of research teams from both countries. CERC is just one example of the vast potential that U.S.-China cooperation can unleash, especially in fields that concern both countries. As acknowledged in a U.S.-China Economic and Security Review Commission report, the U.S. gained research access to important facilities in China and communicated with China’s leading scientists through various scientific initiatives. Needless to say, China also obtained a great amount of technological experience and know-how by collaborating with the United States.

The two countries have only more to gain when their technology cooperation is carried out on a business-to-business or individual-to-individual level. The U.S. Bureau of Labor Statistics estimates a need for approximately one million more Science, Technology, Engineering, and Mathematics (STEM) professionals than the U.S. currently produces to retain its own preeminence in technology. And over the years, China has consistently been the leading source of STEM students enrolled in the United States. Moreover, surveys of U.S. National Science Foundation shows that 90 percent of Chinese scholars still work in the U.S. ten years after receiving their doctoral degrees in STEM. These scholars power innovation in Silicon Valley, expediting the creation of technological applications that benefit millions of people in the United States. The benefit of cooperating with the United States on a business-to-business or individual-to-individual level is also obvious for China. For instance, through joint ventures, medical companies in the United States have brought innovative treatments to China’s vast healthcare market that cover a wide array of complex diseases like influenza, diabetes, and hypertension.

How do we restore trust in technology cooperation against the backdrop of U.S.-China competition?

Restoring U.S.-China technological cooperation will benefit the people of both countries. As the U.S.-China relationship is currently characterized by tension and mistrust, leaders in each country need to firmly express their determination to restore cooperation with their counterpart. They must co-develop strategic solutions to achieve this shared goal.

First, the U.S. and China need to identify common interests, search for shared problems, and capitalize on existing relationships in those areas.  For example, as Professor Lan Xue at Tsinghua University and Denis Simon at Arizona State University suggested, the Integrated Gas-steam Combined Cycle field could be a potential opportunity to expand ties between the two countries. In this field, China appears to have the strongest technology in coal-gas transformation, while the United States ranks first in the world in steam turbine technology. The two countries could share their technological advantages to achieve a win-win outcome.

Second, the U.S. and China need to enhance bilateral agreements that address pressing issues like intellectual property protection. Such agreements should contain clear protocols that guide the handling of sensitive data, specify the process of transferring technical knowledge, and establish corresponding auditing procedures.

In addition, each country needs to do its part to address the other party’s core concerns. As scholars from the Asia Society recommended, China has to further unleash its private sector and give businesses more freedom to make investment decisions that are unconstrained by the government. If China is willing to take bold steps to empower its private enterprises, the United States will be less concerned about the politicization of Chinese investments. Meanwhile, U.S. regulators should evaluate foreign investments in technology sectors based on the investors’ compliance history rather than their nationality. While all the aforementioned suggestions are by no means easy to achieve, each small step in the right direction can go a long way to make technological exchanges between the United States and China more transparent and open.

History reveals that technological protectionism and globalism often take turns to dominate the mainstream political narrative. While neither is categorically better than the other, most would agree with that rapid innovations needs a certain level of collaboration to sprout. As the world awaits the two great powers to bring more technology advancement to mankind, it behooves the United States and China to continue close cooperation.

Xiaoli Jin is an associate at Keystone Strategy. She is a prospective member of Harvard Law School’s Class of 2024. She has previously been published in YaleGlobal.