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Show me the money

22 April 2021 By Gina Chon

The United States needs to put its money where its mouth is when it comes to competing with China. A Senate plan to boost American investments in artificial intelligence, 5G and other advanced technologies has echoes of Beijing’s five-year economic roadmap. But it still leaves America about $360 billion behind on research and development spending, relative to GDP.

Washington finds rare bipartisan ground in its anti-China sentiment. On Wednesday, Democratic and Republican lawmakers introduced a bill that would put money into a renamed National Science and Technology Foundation for research in biotechnology, robotics, quantum computing and other areas. Senate Majority Leader Chuck Schumer wants to fast-track this plan and others.

U.S. R&D spending has been falling over time. In the 1960s, the government spent more than 2% of GDP on it, culminating in the first humans landing on the moon. In 2020, the country spent about $140 billion, including defense, which amounts to almost 0.7% of GDP. China doled out $378 billion, or 2.4% of GDP, including private spending that is guided by the government.

In recent years, the U.S. private sector has also filled the spending gap. But large Chinese tech companies like Alibaba invest billions, too, and the Chinese government has more control over this corporate spending. Meanwhile, U.S. companies are more self-interested and can’t be counted on to serve the national interest over the long term.

China’s ramped-up spending is paying off. Last year, the country overtook America in technical journal citations for artificial intelligence research. Chinese Premier Li Keqiang said in March that the government would increase R&D funding by 7% per year from 2021 to 2025 as part of its next five-year plan. The latest U.S. congressional push would add only $20 billion a year over five years to high tech R&D. The U.S. National Science Board estimates China will invest over $200 billion a year more in R&D than the United States by 2030.

More money could go a long way. Grants have helped launch many major Silicon Valley companies, including a Digital Library Initiative grant of $4.5 million in 1994 that helped Google founders Larry Page and Sergey Brin put together their prototype for what became the giant search engine. Funding from the foundation also aided Qualcomm, security software firm Symantec and the development of magnetic resonance imaging, or MRI technology.

As Beijing is laser-focused, American policymakers need to pay up to compete. Without financial commitment, U.S. technological innovation could fall behind.


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