Increased Industry Support, Attention to Emerging Tech Sectors Needed to Counter China's Tech Rise, ITIF Says

The U.S. should introduce support measures for U.S. technology industries that are “too critical to fail,” especially those competing for market share with China, the Information Technology and Innovation Foundation said in an April 13 report. As the Commerce Department seeks to restrict sales of emerging technologies to counter Chinese technology theft (see 2004010007), Congress should task the administration with expanding funding for research in those key fields -- including robotics, artificial intelligence and semiconductors -- and target it to “maximize commercialization” of the technologies in the United States. Congress should also support an “industrial investment bank” to increase advanced production in the U.S. and “encourage” the relocation of critical technology production from China to the U.S., the ITIF said.

The foundation argues that “advanced traded sectors” -- such as semiconductors and motor vehicles -- are “critical” to the U.S.’s overall trade performance and deserve increased attention from lawmakers. Those sectors account for 60% of U.S. exports, the report said. If those sectors are strengthened, the U.S. will be better able to respond to “external threats to supply chains,” such as pandemics or actions from other countries to “exert leverage” over the U.S., the report said.

Congress should create an “advanced, traded-sector unit” within the Commerce Department -- involving the Bureau of Industry and Security -- to develop “specific, sector-based strategic assessments,” the report said. That unit should coordinate with the Committee on Foreign Investment in the U.S. and provide input on U.S. export control decisions. Through the unit, industry can provide insight on the “most important technical challenges” they are facing so the U.S. can support their “critical industry and technology competitiveness.”

The unit would also pinpoint “key sectors” in which the U.S. “cannot afford to lose competitiveness” -- including aerospace, biopharmaceuticals, instruments, semiconductors, machine tools and software -- and identify “critical firms” that the U.S. “cannot afford to lose.” These “too-critical-to-fail” companies would include “many large” U.S. technology firms producing critical technologies, the ITIF said. But the foundation also argued that the list should include smaller and mid-sized companies making “specialized technologies.”

Increased collaboration with trading partners is also important as the U.S. tries to sustain its technological advantage over China, the report said. All U.S. technology programs, including export controls, should be “aligned with our allies” to increase the probability that the U.S. will maintain its technology sector advantages. “Given the complexity of the existing and emerging technology system, even an economy as large as that of the United States cannot hope to be a global leader in all key technologies,” the ITIF said. “But it can hope that, collectively, America and its allies are leaders.”

But a U.S. approach that only involves diplomatic pressure and export controls is “unlikely to work,” the ITIF said. “The only hope for ensuring the United States continues to lead in advanced technology industries is for Congress and the administration to embrace ... a robust industrial strategy that focuses on technologically advanced traded-sector industries,” the report said. The report, “The Case for a National Industrial Strategy to Counter China’s Technological Rise,” is by Robert Atkinson, ITIF founder and president.