US-China Tech Rivalry | How China will Surpass USA in Key 21st Century Technologies by 2030
In 1999, the U.S. National Academies of Science, Engineering, and Medicine reported that America would remain the single largest determinant of future knowledge as it remained in the 20th century in applying the yesterday’s science fiction technologies like animal cloning, talking electronic road maps, and powerful computers as small as a pack of cigarettes. Rereading that report today, the elephant in the room it missed was China. In the future envisioned by the conventional wisdom of the era, China hardly mattered. By 2010, this picture was beginning to change.
China had grown into a low-cost manufacturing site for multinational companies. Today, China’s rapid rise to challenge U.S. dominance of technology’s commanding heights has captured America’s attention. The rivalry in technology is main arena for competition with China as said by the former Director of CIA. China has displaced the U.S. as the world’s top high-tech manufacturer, producing 250 million computers, 25 million automobiles, and 1.5 billion smart phones in 2020.
Beyond becoming a manufacturing powerhouse, China has become a serious competitor in the foundational technologies of the 21st century including artificial intelligence, 5G, quantum information science, semiconductors, biotechnology, and green energy. In some races, it has already become Number One. In others, on current trajectories, it will overtake the U.S. within the next decade.
One of America’s most respected leaders in advancing and applying technology, Eric Schmidt, who led Google to become one of the world’s leading technology companies, has said that many Americans still have an outdated vision of China. In his assessment: “Unless these trends change, in the 2030s USA will be competing with a country that has a bigger economy, more research and development investments, better research, wider deployment of new technologies, and stronger computing infrastructure. To take stock of the state of the technology race, Belfer Center for Science and International Affairs of Harvard Kennedy School has published a report detailing the progress so far made by the U.S. and China in each key technology of the future. Lets review them one by one. Artificial Intelligence being most advanced technology is likely to have the greatest impact on economics and security in the decade ahead. The former CEO of Google Eric Schmidt states unambiguously: China is now a “full-spectrum peer competitor.”Indeed, China has already overtaken the U.S. to become the world’s
undisputed Number One in many fields of AI. In speech technology, Chinese firms are beating American firms in every language, including English. The world’s top voice recognition startup, China’s iFlytek has 700 million users, almost twice the number of people who speak to Apple’s Siri.
In financial technology, WeChat Pay’s 900 million Chinese users vastly outnumber Apple Pay’s 44 million in the U.S. While two-thirds of Americans still rely on credit cards, 90% of urban Chinese primarily use mobile payments, spending $150 on mobile platforms for every dollar Americans spend—in total $42 trillion in 2020. In facial recognition, there is no contest. The U.S. has essentially conceded the race because of concerns over individual privacy and deep reservations about how this technology could be deployed. Meanwhile, Chinese Sense Time and Megvii have developed cutting-edge applications like instantaneous facial recognition, which can identify individuals from China’s population of 1.4 billion in
seconds. Financial markets reflect these realities. Six years ago, two of the world’s twenty most valuable internet companies were Chinese; Today, seven are Chinese. Google, Amazon, Facebook, Microsoft, Baidu, Alibaba, and Tencent— the “Seven Giants of the AI age”—are split on either side of the Pacific. Of every ten venture capital dollars invested in AI in 2018, five went to Chinese startups; four to American firms.20 Of the world’s top ten most valuable AI startups, seven are American and three are Chinese.
IN 2021, China overtook the U.S. for overall AI citations, with a 35% increase from 2019. In AI’s hottest subfield deep learning, China has six times more patent publications than the United States. In 5G, according to the Pentagon’s Defense Innovation Board, “China is on a track to repeat in 5G what happened with the United States in 4G. Despite advantages in 5G standards and chip design, America’s 5G infrastructure rollout is years behind China’s, giving China a first-mover advantage in developing the 5G era’s platforms. With increases of up to a hundredfold in speed, fiftyfold in reliability, and tenfold in device connections, 5G promises to enable new use cases no one can even imagine today. Over the next 15 years, 5G will add an economy the size of India to the world, the lion’s share of which is on track to be in China.
China now represents the single largest 5G market in the world, with 5G connections in the country accounting for 87% of global 5G connections at the end of 2020. Indeed, nearly all key indicators support projections that China will dominate the 5G future. By the end of 2020, China had 150 million 5G users to America’s 6 million; 700,000 5G base stations to America’s 50,000; 460 MHz of licensed mid-band spectrum to America’s 70 MHz; and 300 Mbps in average 5G speeds to America’s 60 Mbps.
Of the five major 5G equipment providers, two are Chinese; zero are American. Over the past two decades, China’s national champion Huawei has gone from 0% market share in telecommunications infrastructure to becoming the world’s leading supplier of 5G equipment, with 28% market share while former American national champions Lucent and Motorola crashed from 25% in 2000 to 0% today. China is already pioneering cutting-edge 5G applications, including smart factory systems, digital twins for industrial applications, and the world’s first 5G-enabled remote surgery. Where the 4G era saw Apple i-Phones, Google Android OS, and Microsoft Holo Lens connecting users to the tech ecosystem, 5G is poised to be dominated by Huawei networks offering ubiquitous connectivity for Xiaomi smartphones, Tencent smart city solutions, and Baidu robotaxis. In quantum computing, quantum communication, and quantum sensing— three consequential subfields within quantum information science traditionally led by American researchers—China is catching up and, in some cases, has already overtaken America.
Pioneered 30 years ago, QIS is a field long seen in the scientific community as a potential catalyst for revolutionary advances in science and technology involving large computations, much faster communication, and precision measurement. Governments have only recently recognized that national security threats once considered hypothetical are becoming possible. Indeed, threats like the ability to crack existing encryption to steal state secrets, the creation of fully secure lines of communication, and sensors so precise that they could liberate operational platforms from their reliance on space-based positioning systems may not be as far off as previously thought.
Unlike prior technological revolutions that took place when China was still a poor country, China’s meteoric rise has provided it with the funds and manpower to potentially lead this field. It is said China is father of quantum. In 2014, the U.S. and China were tied in the number of quantum-related patents, and in 2015 China was second only to America in annual spending on quantum technology research. But by 2018—two years after China launched a “megaproject” aiming to make breakthroughs in QIS by 2030—China passed the U.S., filing more than twice as many patents and accounting for 52% of all quantum patents.
Today, China is spending four times more than the U.S. on QIS. In December 2020, only one year after Google’s 53-qubit Sycamore superconducting quantum computer achieved quantum supremacy, China reached the same milestone. That month, a photonic quantum computer created by the University of Science and Technology of China reached quantum supremacy “10 billion times faster” than Google for certain calculations in physics. And only six months later, a team led by Pan Jianwei again made headlines with a new quantum processor, Zuchongzhi, which usurped Google’s Sycamore as the world’s most powerful superconducting quantum computer by solving a problem 100 times more challenging than the one solved by Google’s Sycamore. China’s milestones in quantum communication are impressive.
In 2016, China launched Micius, the world’s first quantum communication-enabled satellite. Shortly afterward, Chinese scientists created a record-breaking quantum communication link between satellites and an earth station separated by more than 745 miles. And in January last year, China announced the creation of the world’s first integrated quantum communication network spanning a total distance of over 2,800 miles, longer than the distance from New York to Los Angeles. One expert expects Chinese government and military communications will go black in as little as two to three years, meaning the U.S. would no longer be able to listen in.
Compared to quantum computing and communication, quantum sensing is a relatively mature field where real-world capabilities are already emerging. This is particularly important for military capabilities, where quantum sensing has the most direct applications, including the ability to nullify stealth technologies and radar jamming. According to a 2019 report by the Institute for Defense Analyses, of all the publications on quantum sensing, China ranked third in average citations per paper after the U.S. and Europe. However, in publications from just the last five years, China ranked first in citations per paper and total publications on quantum sensing. As a core element to many everyday technologies, including AI, computers, automobiles, and more, semiconductors are an essential general-purpose driver in the U.S.-China tech competition.
The U.S. retains its dominance of the semiconductor industry that it has had for almost half a century, but this position has been gradually eroded by domestic underinvestment and rising overseas competition. Although the U.S. still leads in chip design and semiconductor manufacturing inputs, its
share of semiconductor fabrication has fallen from 37% in 1990 to 12% today. Meanwhile, China’s decades-long campaign to become a semiconductor powerhouse has yielded significant results in recent years. Although “the Mainland is not yet a competitor,” as assessed by Taiwan Semiconductor Manufacturing Company founder Morris Chang, China has narrowed its gap in semiconductor production and design to just one to two generations behind lead players. Over the next decade, China will become the world’s largest semiconductor producer in mature technology nodes, and in 15 years’ time they’ll be able to do it all by themselves. With a three-fold increase in its share of global semiconductor consumption from less than 20% in 2000 to 60% in 2020, China’s growing domestic demand has provided both market and national security incentives to expand its push into the semiconductor industry. China’s national champion in semiconductor fabrication, Semiconductor Manufacturing International Corporation, has consistently ranked among the top five foundries over the past decade, and its breakthrough N+1 7 nanometer processes in 2020 means that its advanced fabrication capabilities now rival Intel’s.
While China is still dependent on semiconductor imports to meet 85% of domestic demand, these recent achievements disprove the decades-long conventional wisdom that China’s semiconductor industry cannot catch up. Indeed, based on best judgment, China is only “one to two years behind the U.S. and Taiwan” in chip design and “five years behind Taiwan’s TSMC” in fabrication. Biotechnology is the development of new technologies derived from discoveries in the life sciences, encompassing diverse categories like genomics, biochemistry, molecular biology, and more. Looking towards this future, the U.S. is the undisputed leader in biotech, but China is competing fiercely across the full biotech R&D spectrum, and in some instances even winning.
Over the past two decades, China has vaulted to the top ranks of biotech basic research. From 2007-2017, China’s biotech publications increased by 20% annually, with the second most publications after the U.S.103 In 2019 and 2020, China overtook Germany and the U.K. respectively and now ranks second in the Nature Index for high-quality life sciences research, increasing its annual output by 9% over the past year. Notably, its research output has exceeded America’s in multiple areas, including in Crispr-modified crops and transgenic plants. China also produces the most biotech patents annually, increasing its global share from 1% in 2000 to 28% in 2019 while the U.S. share dropped from 45% to 27%.
In biomedical patents, China’s annual growth rate of 16% far exceeds America’s 3%, and in cell therapy patents China leads in both total patents and growth rate. After acquiring U.S.-based Complete Genomics in 2013, Chinese genomics giant BGI is now the world’s largest genetics research center and can sequence human genomes for a record-breaking $100 which 6 times less expensive than its competitors and 100,000 times cheaper than the cost in 2000. The most prominent testament to China’s biotech success is CAR T-cell therapy, which modifies T cells for use in immunotherapy and has shown promise in cancer treatment. In the race to harness GREEN ENERGY, the U.S. has been the primary inventor of new technologies over the past two decades, but China has taken the lead in manufacturing and deploying those technologies, allowing it to dominate multiple links of the green energy supply chain.
Indeed, as energy geopolitics expert Daniel Yergin stated, “In green energy, China has already reached the ‘Made in China 2025’ goal of a dominant role in this century’s new industries. The expansion of green energy in the global energy mix promises to be as disruptive in the 21st century as oil was in the 20th century. Financial markets already reflect these realities: clean energy investments reached $500 billion for the first time last year and will total $16 trillion over the next decade. China has sprinted ahead of the U.S. and other countries to dominate the key links of the green tech supply chain, including equipment manufacturing, raw materials, and energy storage.
workshop of the world, China is now the dominant manufacturer of equipment for generating renewable energy. From producing less than 1% of solar panels in 2000, China now supplies 70% of solar panels globally. By comparison, in a stunning reversal, America’s share fell from 30% in 2000 to less than 1% today. Four of the world’s top ten wind turbine producers are Chinese and control 40% of the global market, versus 12% for the U.S. These advantages in manufacturing have positioned
China as the largest producer of solar and wind energy, with more than three times the capacity of the United States in solar and two times in wind. In these new elements, China has a near-monopoly over several of the key inputs necessary for solar panels, batteries, and other green tech, including chemical lithium with 50% of global production, polysilicon with 60%, rare earth metals with 70%, natural graphite with 70%, cobalt refining with 80%, and rare earths refining with 90% of global production. And where China lacks resources domestically, it has secured them overseas. Chinese companies own 8 of the 14 largest cobalt mines in the Democratic Republic of the Congo accounting for 30% of global output and a 51% stake in the world’s largest lithium reserve Meanwhile, the U.S. imports 40% of its lithium, 80% of its cobalt, and 100% of its graphite.
It could take 20-30 years just for the U.S. to catch up with China in sourcing raw materials. In energy storage, Bloomberg’s New Energy Outlook estimates that China controls 80% of battery raw material refining, 77% of cell capacity, and 60% of battery component manufacturing. Its assessment states that “Chinese manufacturers, like Catl, have come from nothing to being world-leading in less than 10 years,” while the “U.S. languishes in sixth place in 2020.”
Over the next ten years, nearly 75% of new lithium-ion battery plants will be built in China. And as the world’s largest producers of hydrogen, China and the E.U. both lead in green hydrogen development— the two collectively spend $2 billion annually in R&D, more than ten times the US Department of Energy’s $150 million annual allocation. In sum, although the U.S. has led the past half-century of technological innovation and still retains dominance in several other technological fields, China has emerged as a serious peer competitor in the foundational technologies of the 21st century and is likely to be leader in these by end of this decade.
The applications of these technologies will be transformative in arenas from intelligence and military power to economic growth and governance.
2022-01-24 18:38
