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Tech Diplomacy: An Urgent Imperative as China Strengthens

Tensions between the United States and China have revealed an important threat to U.S. national security: the lack of a framework for American technology diplomacy. With U.S. science and tech leadership on the decline, it’s no longer certain that America will retain its global authority in defining the tech norms of the future.

Both nations understand that groundbreaking technologies such as robotics and artificial intelligence, among others, can improve their citizens’ lives and their economies. The U.S. traditionally has been a beacon of ideas and ideals about global progress, exporting its innovations to benefit other nations.

Under President Trump’s “America First” isolationism, however, America has abdicated these ideals. Meanwhile, China has invested much more heavily in recent years than the U.S. in frontier technologies, threatening America’s position as an innovation pioneer.

The Biden administration must substantially strengthen U.S. diplomacy in technology-related fields. The best way to ensure that the U.S. continues to lead global innovation in the context of a rising China is to make tech diplomacy a new priority.

Preserving the U.S. Innovation Model

The consequences of failing to understand this imperative could be severe. Consider the cautionary history of 5G, an emerging technology at the center of U.S.-China tensions.

In 2000, three U.S. firms—Lucent, Motorola, and Nortel—were the global leaders in telecom equipment, with approximately $100 billion in combined revenues. The dot-com bubble slashed their revenues and research capacity before they were all broken up or acquired, mostly by European competitors.

Meanwhile, China’s industry leaders forged ahead, with Huawei rising to first place, far ahead of Nokia and Ericsson, the leading Western providers of telco equipment. Today there are no U.S.-based suppliers of radio-access network infrastructure, a critical part of 5G networks underlying the next wave of IoT applications and the global wireless internet.

A study by the Boston Consulting Group warns that the U.S. semiconductor industry could suffer a fate similar to the American telecom sector. Last August, the Trump Commerce Department announced broad restrictions on commercial chip sales to Chinese companies, but did not carefully coordinate with U.S. allies on export controls.

The move threatens the semiconductor industry’s virtuous innovation cycle, which relies on global markets to fund massive investments in research and development. With access to those markets restricted, the industry may no longer deliver essential tech breakthroughs.

The BCG study lays out the potential consequences of banning semiconductor firms from selling to Chinese customers: such bans could translate into a loss of 18 percentage points of global market share for U.S. companies, and a reduction of 37% in the industry’s U.S. R&D investment capacity.

Adding complexity to the debate, new Chinese rules would allow corporations there to strike back at American companies that comply with U.S. restrictions on doing business with Chinese counterparts, and to sue for damages if they incur losses because of the U.S. laws.

The Biden administration must decide what to make of Trump-era restrictions on doing business with Chinese tech companies. But building a more cohesive approach to tech export control and protecting critical technologies will be challenging. One model could emerge through cooperation with the EU, which proposes establishing an EU-US Trade and Technology Council to protect critical technologies through common regulations.

Shoring-up Resilience

Diplomacy could also play an important role in building resilience throughout America’s tech supply chains.

For decades, American companies have outsourced significant portions of their manufacturing in the belief that it held little competitive advantage. But production processes are rapidly evolving, and the loss of production can quickly lead to the loss of any innovative edge.

While the U.S. is the global leader in semiconductor design, the lion’s share of chip manufacturing happens in Asia. Only 12% of chip manufacturing is done within the U.S., down from 37% in 1990. Even many chips that control U.S. intercontinental ballistic missiles are “made in Asia.” Taiwan alone manufactures over 20 percent of the world’s semiconductors.

These chips power Apple’s iPhones, Amazon’s cloud computers, U.S. military drones and Lockheed Martin’s F-35 fighter jets. Whether or not China succeeds — peacefully or by force — with its plans for a “reunification” with Taiwan, America’s dependence on that small island creates major vulnerabilities.

Manufacturing incentives could strengthen America’s chip-production capacity, shoring up supply chains and increasing national security. Last year’s onshoring deal with Taiwan Semiconductor Manufacturing Co., for building an advanced facility in Arizona, was the largest in U.S. history. Additionally, the recently enacted National Defense Authorization Act includes historic incentives that could finally reverse the troubling decline in U.S. semiconductor manufacturing.

The rising role of tech companies in great power competition cannot be overstated. Many large firms, especially internet giants, have arguably more influence on what happens in U.S. foreign policy than do countries where the U.S. has embassies. A State Department that adopts a multi-stakeholder approach — engaging with the private tech industry as well as partner nations — will be critical for enhancing U.S. interests, at home and abroad.

Connecting the Unconnected

Just as with foreign policy, tech diplomacy starts at home. However, it also plays out on the world stage, where China has invested significantly more than the U.S. in shaping the global information infrastructure, and with far more deliberateness.

China’s Belt & Road Initiative has rapidly expanded to digital infrastructure, in cooperation with dozens of countries. China assists its exporters, including tech companies like Huawei, in strengthening its partner nations’ high-tech capabilities. In Africa, China already provides more financing for information and communications technology than all multilateral agencies and leading democracies combined.

Chief among U.S. concerns is that China is rapidly exporting surveillance tech, which authoritarian regimes may use for political repression. The U.S. State Department issued voluntary guidelines for American exporters of surveillance capabilities “to prevent their product or services from being misused by government end-users to commit human rights abuses.” The EU has also been working on toughening export controls on surveillance tech used outside the continent.

The reality is that some nations desperately need cheap, quality technology to expand wireless phone and broadband coverage. And China has recognized and responded to that need, subsidizing infrastructure build-outs in many countries through loans that restrict tech purchases to Chinese firms.

Some experts, including a group co-founded by former Google CEO Eric Schmidt and Jared Cohen, CEO of Google subsidiary Jigsaw, have proposed new strategies to advance technological statecraft. In order to support global tech infrastructure build-out that is consistent with liberal values, they propose an “International Technology Finance Corporation” modeled on the International Finance Corporation. They also advocate the creation of a “T-12” grouping of “techno-democracies” that would help such countries more effectively compete with China. An outgrowth of such an initiative, they say, might be a global standards-setting body.  

But Steven Feldstein, a senior fellow in the Democracy, Conflict, and Governance Program at the Carnegie Endowment for International Peace, believes that if big powers created a “Technology 10,” or a “T-12”, it would fail to properly represent or assist parts of the world that are key battlegrounds of digital competition, like Southeast Asia, Africa and Latin America. A simpler first step, Feldstein suggests, would be to repair “broken ties between old allies” to revitalize U.S.-EU cooperation.

From Space to Earth

Space is another “frontier” where military and diplomatic efforts are urgent, especially to counter China. The space race is increasingly competitive and ironing out norms of behavior in space will require a multilateral diplomatic approach. Just this week, the New York Times reported on China’s strides in space weaponry and the challenge that poses for the U.S.

At a time when China is rapidly expanding its Digital Silk Road strategy to space infrastructure, the expansion of U.S. satellite constellations, such as SpaceX’s Starlink, could also help ensure that countries along the Digital Silk Road and around the world have a global broadband connectivity option from a free and democratic country. China and the U.S. could also very well find themselves racing to provide the first truly-global text-based emergency alert system using satellites as space-based cell towers for Earth.

China won’t wait to continue its fast rise. The Secure World Foundation contends that by isolating China from existing multilateral cooperative efforts in space, the United States has in fact “pushed China to launch its own space capabilities.” As a result, China’s soft-power advantages are growing, through space partnerships in Latin America and Africa — areas the U.S. has long ignored. For instance, China launched the first satellites for Ethiopia and Sudan, and owns a satellite and space control station in Argentina. Thirty countries have also agreed to utilize the BeiDou Navigation Satellite System, the Chinese Global Positioning System.

The Biden administration has a unique and urgent opportunity to craft a comprehensive tech diplomacy framework. The appointment of Tarun Chhabra into the newly created position of Senior Director for Technology on the National Security Council is an important first step toward executing a national technology strategy.

In The Hill, Martijn Rasser and Megan Lamberth also recommend “creating a State Department office to initiate and manage bilateral and multilateral technology alliances with like-minded partners.”

For this sort of whole-of-government approach to work, the Biden administration will need more diplomats with a technology background. These new techno-diplomats will be essential to America’s future.

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Laetitia Garriott de Cayeux is a technologist, entrepreneur, and executive. She serves as an advisory board member of the Truman National Security Project and is also a member of the Council on Foreign Relations.

One Response to “Tech Diplomacy: An Urgent Imperative as China Strengthens”

  1. Stephen Good says:

    Good article.

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