INDUSTRIAL REVOLUTION
INTRODUCTION:
I’d like to express my gratitude to Chairman Sullivan, Ranking Member Markey, and the great members of the Committee for giving me the chance to testify at today’s hearing on the China challenge and initiatives to increase American competitiveness and resiliency. I shall concentrate my remarks, as requested, on three topics. I’ll start off by talking about Beijing’s challenge to American technological supremacy and its goals to rule what it frequently refers to as the “Fourth Industrial Revolution.” Second, I’ll go over some of the difficulties that the United States has in reshoring or diversifying supply chains that are currently headquartered in China, as well as in maintaining its position as the world’s technological leader. Finally, I will make policy suggestions for the United States that Centre on a few major categories of effort: obtaining information, coordinating government efforts, and immigration Restructuring business and financial incentives; Cooperation with like-minded stakeholders; and Basic science. As we enter what some refer to as a “superpower marathon” with China, it is believed that these policies would increase long-term U.S. resilience and competitiveness.
I. CHINA’S OBJECTION TO US GLOBAL LEADERSHIP IN TECHNOLOGY
For the majority of observers, it is becoming more and more obvious that China is undertaking an aggressive, state-backed campaign to usurp the United States as the world leader in technology. Geopolitical factors are also influencing this effort in addition to commercial ones. Beijing is of the opinion that the struggle over technology goes beyond who will control specific markets. It also pertains to which nation will be in the best position to rule the world.
Technology and economic interchange have frequently been viewed through a political prism by Chinese officials, notably as a means of fostering or avoiding dependency, enhancing China’s “comprehensive might,” and establishing order. This viewpoint seems to have roots in the Party’s nationalist past, as well as its Leninist and mercantilist traditions. One explanation for China’s “century of humiliation,” which lasted from the Opium Wars to the establishment of the People’s Republic of China in 1949, is that it was unable to compete with the industrialised West and Japan in terms of “wealth and power.” Therefore, the quest of “wealth and power” has traditionally been associated with technological advancement, whether it was China’s pursuit of strategic weapons under Mao Zedong’s rule or its drive to attain what his successor Progress in science and technology was referred to by Deng Xiaoping as the “fourth modernization”; both initiatives were purposefully framed as means of enhancing China’s power. The publications of the Chinese Communist Party show that geopolitics is once again at the forefront as China envisions a new era of technological transformation.
Seizing the Fourth Industrial Revolution is one of China’s goals.
According to the Chinese Communist Party, the globe has begun to experience “huge transformations not witnessed in a century.” A shift in the power dynamics between the United States and China lies at the heart of these shifts, and one major force behind that shift is the advent of a new wave of technological innovation, frequently referred to as the “Fourth Industrial Revolution” by Xi Jinping and others.
The Chinese Communist Party has accepted the idea of a “Fourth Industrial Revolution,” despite the fact that it was first proposed by the World Economic Forum in 2015. In a speech from 2018, Xi Jinping argued: “From the mechanisation of the first industrial revolution in the 18th century, through the mechanisation of today’s society, the Communist Party of China. According to Xi Jinping’s 2018 speech, each phase of “disruptive technological innovation” has influenced history, starting with the mechanisation of the first industrial revolution in the 18th century and continuing through the electrification of the second industrial revolution in the 19th century and the informationization of the third industrial revolution in the 20th century.
The next ten years will, in large part, determine who leads the next industrial revolution, according to China’s authorities. The next 10 years will be a crucial decade, according to Xi, as a new wave of technological revolution and industrial upheaval – including biotechnology, big data, quantum information, and artificial intelligence – is gaining momentum. They would result in “earth-shattering transformations” and provide a “essential chance to promote leapfrog development,” enabling China to skip over antiquated infrastructure and surpass rivals. [5]
China’s leaders have used the slogan “catch up and surpass” for a long time to characterise their goals in terms of technology, with the West and the United States being considered as the key standards. However, according to some Chinese observers, recent groundbreaking technical advancements have made this seemingly impossible ambition truly attainable. The Fourth Industrial Revolution might produce the same “great divergence” that preceded earlier industrial revolutions, in which some nations and early adopters advanced past competing competitors, with historical repercussions for international politics. A lot of commentaries and think tank articles seem to imply that surpassing the United States in high technology would put an end to its era of global leadership and presumably usher in one of Chinese leadership, even though Party officials are typically circumspect in describing China’s ambitions in this way.
The conflict between the United States and China is increasingly being driven by technology, according to a wide range of Chinese analysts. According to Jin Canrong, a renowned professor of international affairs and dean at Renmin University, “China and the United States will start competing for the fourth industrial revolution in the next ten years.” Another well-known academic and professor at Nanjing University, Zhu Feng, claims that “scientific and technology capabilities have become an important indicator of a country’s complete strength, and it has also become the major battlefield for great power conflict.” And countless more well-known academics share the same views.
A reliable and ostensibly anonymous editorial published on the website of the Central Party School publication Study Times around two months after Xi’s 2018 speech on the Fourth Industrial Revolution provides a typical discourse on the geopolitical stakes of technology rivalry. When the second industrial revolution began, “the United States seized the dominant power of advanced productivity from Great Britain and jumped into position as the world’s number one industrial power, laying a solid foundation for establishing global hegemony.” Britain had previously “seized the opportunity of the first industrial revolution,” which had given it an empire. After that, “the third industrial revolution originated in the United States,” which grasped it and increased its “total strength” to lay the groundwork for American hegemony. China is now aware a chance to use what it sees as a superior system to emulate Britain and the United States, grasp a new economic revolution, and rise to become the most powerful state in the world.
The advantages that China believes it has over the United States are as follows:
China believes it is in a strong position to compete with the United States in the Fourth Industrial Revolution and that it has four key advantages: significant R&D investment; superior institutions and industrial policies supporting China’s ambitions; manufacturing prowess and centrality to global supply chains; and a more robust operation to set the global technology standards that may determine the future of key industries.
First, in developing its own strategy for basic science research, China has drawn on lessons from American past. Beijing understands, as did the United States in the past, that the market and the private sector cannot fully support such research; the public must do so. China has made huge investments. Despite having a smaller economy than the United States, according to estimates from the National Science Foundation, China spends about the same overall on research and development. According to some estimates, China’s government-funded R&D already exceeds federal R&D spending in the United States. Additionally, there are noticeable variations in the Fourth Industrial Revolution’s core technologies. China spends about $2.5 billion a year, which is a little amount but is projected to be more than ten times what the United States spends in a sector with important strategic and economic potential. Beijing also intends to spend an additional $10 billion to create the National Laboratory for Quantum Information Sciences in addition to this yearly expenditure. Similarly, estimates from Georgetown’s Center for Security and Emerging Technology show that China invests at least as much on artificial intelligence as the US and perhaps more.
II. COMPETITION PROBLEMS FOR THE US IN RESHORING, DIVERSIFICATION, AND TECHNOLOGY
Despite a growing political consensus that the United States’ resilience, competitiveness, and security have been undermined by the loss of its manufacturing and technological leadership, efforts to halt these trends encounter a variety of difficulties.
Reshoring Industry Challenges and China Diversification Issues
Several developed nations are starting to “reshore” manufacturing that is now being done in China or to diversify supply networks to reach markets elsewhere. One of the first to do so was Taiwan, which launched a vigorous campaign to entice Taiwanese manufacturers who were presently in China back to Taiwan in an effort to create what it dubbed a “non-red supply chain.”
Others have done the same. Japan has spent $2 billion on initiatives to bring production back to Japan or diversify it throughout Southeast Asia, subsidising the exodus from China for 87 enterprises. Similar debates about the potential for reshoring or industry diversification are taking place among top officials in the EU as well. Of course, the US is also looking into a number of tools to encourage reshoring and supply chain diversification, such as low-interest loans, corporate tax breaks, a special fund, and plans to cover 100% of a company’s reshoring costs.
RECOMMENDATIONS FOR U.S. POLICY, PART III
1. Data Collection for Economic Strategy
The U.S. Congress should think about establishing a body that can audit the nation’s supply chain and design stringent reporting specifications for business. China has shown a willingness to exert pressure on other nations using its central position in contemporary supply chains. The United States won’t be in a good position to oppose or support friends opposing these attempts if it has a less sophisticated understanding of international supply chains than China. Furthermore, as the recent epidemic has demonstrated, the federal government frequently is unaware of how dependent certain crucial industries (such as the pharmaceutical industry or the production of personal protective equipment) are on imports from China and other nations until it is too late. Consequently, the The United States requires accurate data on supply chains within and between industries.