---Seth Berkley
America has the best universities in the world. Not just one or two of them, most of the best universities in the top 100 are from the U.S. Most of the new industries that have come out in the last few decades have also been in the U.S. In every field of research and development, we are either at the top or near the top. This is what enabled the U.S. to rise to the number one country in the world.
The Chinese, like all other nations, are playing catch up. The amount of money spent on research is $475 billion for China, versus $553 billion for the U.S. As seen from the graph below, the Chinese are steadily catching up to the United States on R & D spending. In the coming decades, they will spend significantly more then us. Obviously, having done this work for a very long time, the U.S. is still more productive and able to get more results, but the combination of more money spent and a world wide talent search will eventually bridge the gap and the output from the Chinese research will approach or even overtake ours.
In fact, according to the Nature Index 2019, this is already happening. China is now the number two country in research output. producing half of the research as the United States as of 2019, dwarfing the third place Germany. In 2016, just three years prior, China was producing 37% of the research output of the United States. so the volume and quality of the research is growing at the same trajectory as the research spending of China, but the productivity is a few years behind the spending.
The big spending on research by the U.S. has resulted in many new industries for the U.S. In many cases, other developed nations simply failed to even be followers. Japan did not create their own version of the online giants and smart phones. Looking into the future, we are no longer alone in doing research and development.
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| top ten nations in research output, Sourced from Nature. |
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| Change in output by country, Sourced from nature |
While the U.S. is excellent in basic research, it does not always mean that we get to keep the industries that sprung up as a result of the research. From the time the first transistor was created in 1947 by Shockley and company, it took many decades and a lot of work by a lot of companies to bring us to the state of the art semiconductor chips that we produce today. The production of the chips skipped over Mexico, crossed the Pacific Ocean, and landed first in Japan, then in Taiwan and South Korea. The design team and companies stayed in the U.S., but the leadership has changed through many hands. Many of the early pioneers have ceased to exist today. New industries for the coming decades will likely follow the same pattern. While the Chinese may not be as inventive as us, it is at the stages after the initial discovery that they excelled. With access to an equally large market as the U.S. at home, supported by their government, the speed in which new industries (to China) sprung up was mind boggling. It is very likely that no matter who invented the initial technology, in the intervening decades that it will take for the industry to develop into the giant scale like the semiconductor industry is today, leadership will quickly shift to China due to their ability to execute and their manufacturing prowess. This is the tragedy of not having a manufacturing base to capture the inventions. We were fortunate that until this point, no competitor were able to match our inventiveness, scale and entrepreneur zeal. That will no long be the case with the rise of China. When the need arises, the Chinese are capable of doing the research to be at the cutting edge today. Even the U.S. has recognize them as the leaders in hypersonic missile technology. They are the first to produce a quantum satellite and quantum radar. They are the first country in the world to start testing a ship mounted rail gun. On the civilian side, SenseTime was a leader in facial recognition technology. Huawei has now become the undisputed leader in 5G technology.
We see a few patterns over the past few years in terms of Chinese technological advancements. First, the few areas where they reach the cutting edge technology have been relatively recent. Second, these have all been in the areas of emerging technologies where no one had accumulated many years of technology lead. Most are still in the basic research stage. Contrast to other areas, where years of head start by Western firms have created formidable barriers of entry for Chinese firms. Aircraft turbo-fan engine is a prime example. Prior to the Chinese entry, it was controlled by a few firms in the world. All these firms guard their secrets jealously. There is no way for them to ramp up the learning curve quickly. Due to their military needs, the Chinese persisted for many decades. To this day, they still rely mostly on the Russians to provide them with military jet engines, though recently news have come out that their WS-10, an engine of eighties technology, has matured to the level that could be used by their military. Jet engines may well be one of the last areas to be conquered by the Chinese, but their ability to become the best in a few areas mentioned above shows they are quite capable of making progress on their own to blaze new trails. Finally, we see that currently, many of the recent success had military applications. This is no different to how the U.S. did it. DARPA, which was an entirely government funded entity, was originally created due to our need to create better weapons. They had been credited with many innovations which went on to create large civilian industries, including the internet.
Is there a way to stop them from their technological progress? This will be very difficult. Knowledge has a way of crossing boarders which could not be stopped. They are capable enough that they will be able to replicate something by simply knowing that someone else was able to create it. Though it was rumored that they hacked into U.S. networks to steal files for the making of the F-35, their J-20 was quite different then the F-35 in many respects. Their indigenous effort had created something that is competitive against F-35 and F-22. What is more, they did not create a clone. Having fully digested the principles that make a fifth gen fighter, they tailored the design to their own needs, which are different from the needs of the U.S. military. In contrast, the Russians, who had significantly more experience building fighter jets and an equally extensive spy network in the U.S., were unable to come up with something that could match our fifth gen fighters decades after we had come up with them. The approach of the Chinese, at least in the military side, is working to produce a lot of results during the last few years. They characterize the recent explosion of results as "geysers". In the future, it is reasonable to expect this approach to be replicated in the civilian side if this is not done already. Just as the U.S. had reaped a huge military spending dividend in the last few decades, we can expect the Chinese to get something similar. All these factors are completely within the control of the Chinese and we are not in position to change them too much. We reap more benefits to our country if we cooperate with them.
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