Is China Winning the Innovation Race?
Flags of America and China illuminated by light bulbs with a question mark between them.
Over the past two millennia, Chinese ingenuity has spawned some of humanity's most consequential inventions. Without gunpowder, guns, bombs, and rockets; without paper, printing, and money printed on paper; and without the compass, which enabled ships to navigate the open ocean, modern civilization might never have been born.
Today, a specter is haunting the developed world: Chinese innovation dominance. And the results have been so spectacular that the United States feels its preeminence threatened.
Yet China lapsed into cultural and technological stagnation during the Qing dynasty, just as the Scientific Revolution was transforming Europe. Western colonial incursions and a series of failed rebellions further sapped the Celestial Empire's capacity for innovation. By the mid-20th century, when the Communist triumph led to a devastating famine and years of bloody political turmoil, practically the only intellectual property China could offer for export was Mao's Little Red Book.
After Deng Xiaoping took power in 1978, launching a transition from a rigidly planned economy to a semi-capitalist one, China's factories began pumping out goods for foreign consumption. Still, originality remained a low priority. The phrase "Made in China" came to be synonymous with "cheap knockoff."
Today, however, a specter is haunting the developed world: Chinese innovation dominance. It first wafted into view in 2006, when the government announced an "indigenous innovation" campaign, dedicated to establishing China as a technology powerhouse by 2020—and a global leader by 2050—as part of its Medium- and Long-Term National Plan for Science and Technology Development. Since then, an array of initiatives have sought to unleash what pundits often call the Chinese "tech dragon," whether in individual industries, such as semiconductors or artificial intelligence, or across the board (as with the Made in China 2025 project, inaugurated in 2015). These efforts draw on a well-stocked bureaucratic arsenal: state-directed financing; strategic mergers and acquisitions; competition policies designed to boost domestic companies and hobble foreign rivals; buy-Chinese procurement policies; cash incentives for companies to file patents; subsidies for academic researchers in favored fields.
The results have been spectacular—so much so that the United States feels its preeminence threatened. Voices across the political spectrum are calling for emergency measures, including a clampdown on technology transfers, capital investment, and Chinese students' ability to study abroad. But are the fears driving such proposals justified?
"We've flipped from thinking China is incapable of anything but imitation to thinking China is about to eat our lunch," says Kaiser Kuo, host of the Sinica podcast at supchina.com, who recently returned to the U.S after 20 years in Beijing—the last six as director of international communications for the tech giant Baidu. Like some other veteran China-watchers, Kuo believes neither extreme reflects reality. "We're in as much danger now of overestimating China's innovative capacity," he warns, "as we were a few years ago of underestimating it."
A Lab and Tech-Business Bonanza
By many measures, China's innovation renaissance is mind-boggling. Spending on research and development as a percentage of gross domestic product nearly quadrupled between 1996 and 2016, from .56 percent to 2.1 percent; during the same period, spending in the United States rose by just .3 percentage points, from 2.44 to 2.79 percent of GDP. China is now second only to the U.S. in total R&D spending, accounting for 21 percent of the global total of $2 trillion, according to a report released in January by the National Science Foundation. In 2016, the number of scientific publications from China exceeded those from the U.S. for the first time, by 426,000 to 409,000. Chinese researchers are blazing new trails on the frontiers of cloning, stem cell medicine, gene editing, and quantum computing. Chinese patent applications have soared from 170,000 to nearly 3 million since 2000; the country now files almost as many international patents as the U.S. and Japan, and more than Germany and South Korea. Between 2008 and 2017, two Chinese tech firms—Huawei and ZTE—traded places as the world's top patent filer in six out of nine years.
"China is still in its Star Trek phase, while we're in our Black Mirror phase." Yet there are formidable barriers to China beating America in the innovation race—or even catching up anytime soon.
Accompanying this lab-based ferment is a tech-business bonanza. China's three biggest internet companies, Baidu, Alibaba Group and Tencent Holdings (known collectively as BAT), have become global titans of search, e-commerce, mobile payments, gaming, and social media. Da-Jiang Innovations in Science and Technology (DJI) controls more than 70 percent of the world's commercial drone market. Of the planet's 262 "unicorns" (startups worth more than a billion dollars), about one-third are Chinese. The country attracted $77 billion in venture capital investment between 2014 and 2016, according to Fortune, and is now among the top three markets for VC in emerging technologies including AI, virtual reality, autonomous vehicles, and 3D printing.
These developments have fueled a buoyant techno-optimism in China that contrasts sharply with the darker view increasingly prevalent in the West—in part, perhaps, because China's historic limits on civil liberties have inured the populace to the intrusive implications of, say, facial recognition technology or social-credit software, which are already being used to tighten government control. "China is still in its Star Trek phase, while we're in our Black Mirror phase," Kuo observes. By contrast with Americans' ambivalent attitudes toward Facebook founder Mark Zuckerberg or Amazon's Jeff Bezos, he adds, most Chinese regard tech entrepreneurs like Baidu's Robin Li and Alibaba's Jack Ma as "flat-out heroes."
Yet there are formidable barriers to China beating America in the innovation race—or even catching up anytime soon. Many are catalogued in The Fat Tech Dragon, a 2017 monograph by Scott Kennedy, deputy director of the Freeman Chair in China Studies and director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies. Among the obstacles, Kennedy writes, are "an education system that encourages deference to authority and does not prepare students to be creative and take risks, a financial system that disproportionately funnels funds to undeserving state-owned enterprises… and a market structure where profits can be made through a low-margin, high-volume strategy or through political connections."
China's R&D money, Kennedy points out, is mostly showered on the "D": of the $209 billion spent in 2015, only 5 percent went toward basic research, 10.8 percent toward applied research, and a massive 84.2 percent toward development. While fully half of venture capital in the States goes to early-stage startups, the figure for China is under 20 percent; true "angel" investors are scarce. Likewise, only 21 percent of Chinese patents are for original inventions, as opposed to tweaks of existing technologies. Most problematic, the domestic value of patents in China is strikingly low. In 2015, the country's patent licensing generated revenues of just $1.75 billion, compared to $115 billion for IP licensing in the U.S. in 2012 (the most recent year for which data is available). In short, Kennedy concludes, "China may now be a 'large' IP country, but it is still a 'weak' one."
"[The Chinese] are trying very hard to keep the economy from crashing, but it'll happen eventually. Then there will be a major, major contraction."
Anne Stevenson-Yang, co-founder and research director of J Capital Research, and a leading China analyst, sees another potential stumbling block: the government's obsession with neck-snapping GDP growth. "What China does is to determine, 'Our GDP growth will be X,' and then it generates enough investment to create X," Stevenson-Yang explains. To meet those quotas, officials pour money into gigantic construction projects, creating the empty "ghost cities" that litter the countryside, or subsidize industrial production far beyond realistic demand. "It's the ultimate Ponzi-scheme economy," she says, citing as examples the Chinese cellphone and solar industries, which ballooned on state funding, flooded global markets with dirt-cheap products, thrived just long enough to kill off most of their overseas competitors, and then largely collapsed. Such ventures, Stevenson-Yang notes, have driven China's debt load perilously high. "They're trying very hard to keep the economy from crashing, but it'll happen eventually," she predicts. "Then there will be a major, major contraction."
"An Intensifying Race Toward Techno-Nationalism"
The greatest vulnerability of the Chinese innovation boom may be that it still depends heavily on imported IP. "Over the last few years, China has placed its bets on a combination of global knowledge sourcing and indigenous technology development," says Dieter Ernst, a senior fellow at the Centre for International Governance Innovation in Waterloo, Canada, and the East-West Center in Honolulu, who has served as an Asia advisor for the U.N. and the World Bank. Aside from international journals (and, occasionally, industrial espionage), Chinese labs and corporations obtain non-indigenous knowledge in a number of ways: by paying licensing fees; recruiting Chinese scientists and engineers who've studied or worked abroad; hiring professionals from other countries; or acquiring foreign companies. And though enforcement of IP laws has improved markedly in recent years, foreign businesses are often pressured to provide technology transfers in exchange for access to markets.
Many of China's top tech entrepreneurs—including Ma, Li, and Alibaba's Joseph Tsai—are alumni of U.S. universities, and, as Kuo puts it, "big fans of all things American." Unfortunately, however, Americans are ever less likely to be fans of China, thanks largely to that country's sometimes predatory trade practices—and also to what Ernst calls "an intensifying race toward techno-nationalism." With varying degrees of bellicosity and consistency, leaders of both U.S. parties embrace elements of the trend, as do politicians (and voters) across much of Europe. "There's a growing consensus that China is poised to overtake us," says Ernst, "and that we need to design policies to obstruct its rise."
One of the foremost liberal analysts supporting this view is Lee Branstetter, a professor of economics and public policy at Carnegie Mellon University and former senior economist on President Barack Obama's Council of Economic Advisors. "Over the decades, in a systematic and premeditated fashion, the Chinese government and its state-owned enterprises have worked to extract valuable technology from foreign multinationals, with an explicit goal of eventually displacing those leading multinationals with successful Chinese firms in global markets," Branstetter wrote in a 2017 report to the United States Trade Representative. To combat such "forced transfers," he suggested, laws could be passed empowering foreign governments to investigate coercive requests and block any deemed inappropriate—not just those involving military-related or crucial infrastructure technology, which current statutes cover. Branstetter also called for "sharply" curtailing Chinese students' access to Western graduate programs, as a way to "get policymakers' attention in Beijing" and induce them to play fair.
Similar sentiments are taking hold in Congress, where the Foreign Investment Risk Review Modernization Act—aimed at strengthening the process by which the Committee on Foreign Investment in the United States reviews Chinese acquisition of American technologies—is expected to pass with bipartisan support, though its harsher provisions were softened due to objections from Silicon Valley. The Trump Administration announced in May that it would soon take executive action to curb Chinese investments in U.S. tech firms and otherwise limit access to intellectual property. The State Department, meanwhile, imposed a one-year limit on visas for Chinese grad students in high-tech fields.
Ernst argues that such measures are motivated largely by exaggerated notions of China's ability to reach its ambitious goals, and by the political advantages that fearmongering confers. "If you look at AI, chip design and fabrication, robotics, pharmaceuticals, the gap with the U.S. is huge," he says. "Reducing it will take at least 10 or 15 years."
Cracking down on U.S. tech transfers to Chinese companies, Ernst cautions, will deprive U.S. firms of vital investment capital and spur China to retaliate, cutting off access to the nation's gargantuan markets; it will also push China to forge IP deals with more compliant nations, or revert to outright piracy. And restricting student visas, besides harming U.S. universities that depend on Chinese scholars' billions in tuition, will have a "chilling effect on America's ability to attract to researchers and engineers from all countries."
"It's not a zero-sum game. I don't think China is going to eat our lunch. We can sit down and enjoy lunch together."
America's own science and technology community, Ernst adds, considers it crucial to swap ideas with China's fast-growing pool of talent. The 2017 annual meeting of the Palo Alto-based Association for Advancement of Artificial Intelligence, he notes, featured a nearly equal number of papers by researchers in China and the U.S. Organizers postponed the meeting after discovering that the original date coincided with the Chinese New Year.
China's rising influence on the tech world carries upsides as well as downsides, Scott Kennedy observes. The country's successes in e-commerce, he says, "haven't damaged the global internet sector, but have actually been a spur to additional innovation and progress. By contrast, China's success in solar and wind has decimated the global sectors," due to state-mandated overcapacity. "When Chinese firms win through open competition, the outcome is constructive; when they win through industrial policy and protectionism, the outcome is destructive."
The solution, Kennedy and like-minded experts argue, is to discourage protectionism rather than engage in it, adjusting tech-transfer policy just enough to cope with evolving national-security concerns. Instead of trying to squelch China's innovation explosion, they say, the U.S. should seek ways to spread its potential benefits (as happened in previous eras with Japan and South Korea), and increase America's indigenous investments in tech-related research, education, and job training.
"It's not a zero-sum game," says Kaiser Kuo. "I don't think China is going to eat our lunch. We can sit down and enjoy lunch together."
In this week's Friday Five, research on a "smart" bandage for wounds, a breakthrough in fighting inflammation, the pros and cons of a new drug for Alzheimer's, benefits of the Mediterranean diet with a twist, and we've learned to recycle a plastic that was un-recyclable.
The Friday Five covers five stories in research that you may have missed this week. There are plenty of controversies and troubling ethical issues in science – and we get into many of them in our online magazine – but this news roundup focuses on scientific creativity and progress to give you a therapeutic dose of inspiration headed into the weekend.
Listen on Apple | Listen on Spotify | Listen on Stitcher | Listen on Amazon | Listen on Google
Here are the promising studies covered in this week's Friday Five:
- Research on a "smart" bandage for wounds
- A breakthrough in fighting inflammation
- The pros and cons of a new drug for Alzheimer's
- Benefits of the Mediterranean diet - with a twist
- How to recycle a plastic that was un-recyclable
Matt Fuchs is the editor-in-chief of Leaps.org. He is also a contributing reporter to the Washington Post and has written for the New York Times, Time Magazine, WIRED and the Washington Post Magazine, among other outlets. Follow him on Twitter @fuchswriter.
Sexually Transmitted Infections are on the rise. This drug could stop them.
Cases of gonorrhea, chlamydia and syphilis soared last year, but researchers are finding that a drug known as doxy seems to reduce the number of infections.
Sexually transmitted infections (STIs) are surging across the U.S. to 2.5 million cases in 2021 according to preliminary data from the CDC. A new prevention and treatment strategy now in clinical trials may provide a way to get a handle on them.
It's easy to overlook the soaring rates of gonorrhea, chlamydia, and syphilis because most of those infections have few or no symptoms and can be identified only through testing. But left untreated, they can lead to serious damage to nerves and tissue, resulting in infertility, blindness, and dementia. Infants developing in utero are particularly vulnerable.
Covid-19 played havoc with regular medical treatment and preventive care for many health problems, including STIs. After formal lockdowns ended, many people gradually became more socially engaged, with increases in sexual activity, and may have prioritized these activities over getting back in touch with their doctors.
A second blow to controlling STIs is that family planning clinics are closing left and right because of the Dobbs decision and legislation in many states that curtailed access to an abortion. Discussion has focused on abortion, but those same clinics also play a vital role in the diagnosis and treatment of STIs.
Routine public health is the neglected stepchild of medicine. It is called upon in times of crisis but as that crisis resolves, funding dries up. Labs have atrophied and personnel have been redirected to Covid, “so access to routine screening for STIs has been decimated,” says Jennifer Mahn, director of sexual and clinical health with the National Coalition of STD Directors.
A preview of what we likely are facing comes from Iowa. In 2017, the state legislature restricted funding to family health clinics in four counties, which closed their doors. A year later the statewide rate of gonorrhea skyrocketed from 83 to 153.7 cases per 100,000 people. “Iowa counties with clinic closures had a significantly larger increase,” according to a study published in JAMA. That scenario likely is playing out in countless other regions where access to sexual health care is shrinking; it will be many months before we have the data to know for sure.
A decades-old antibiotic finds a new purpose
Using drugs to protect against HIV, either as post exposure prophylaxis (PEP) or pre-exposure prophylaxis (PrEP), has proven to be quite successful. Researchers wondered if the same approach might be applied to other STIs. They focused on doxycycline, or doxy for short. One of the most commonly prescribed antibiotics in the U.S., it’s a member of the tetracycline family that has been on the market since 1967. It is so safe that it’s used to treat acne.
Two small studies using doxy suggested that it could work to prevent STIs. A handful of clinical trials by different researchers and funding sources set out to generate the additional evidence needed to prove their hypothesis and change the standard of care.
Senior researcher Victor Omollo, with the Kenya Medical Research Institute, noted, “These are prevention interventions that women can control on their own without having to seek or get consent from another person,” as is the case with condom use.
The first with results is the DoxyPEP study, conducted at two sexual health clinics in San Francisco and Seattle. It drew from a mix of transgender women and men who have sex with men, who had at least one diagnosed STI over the last year. The researchers divided the participants into two groups: one with people who were already HIV-positive and engaged in care, while the other group consisted of people who were on PrEP to prevent infection with HIV. For the active part of the study, a subset of the participants received doxy, and the rest of the participants did not.
The researchers intentionally chose to do the study in a population at the highest risk of having STIs, who were very health oriented, and “who were getting screened every three months or so as part of their PrEP program or their HIV care program,” says Connie Celum, a senior researcher at the University of Washington on the study.
Each member of the active group was given a supply of doxy and asked to take two pills within 72 hours of having sex where a condom was not used. The study was supposed to run for two years but, in May, it stopped halfway through, when a safety monitoring board looked at the data and recommended that it would be unethical to continue depriving the control group of the drug’s benefits.
Celum presented these preliminary results from the DoxyPEP study in July at the International AIDS Conference in Montreal. “We saw about a 56 percent reduction in gonorrhea, about 80 percent reduction in chlamydia and syphilis, so very significant reductions, and this is on a per quarter basis,” she told a later webinar.
In Kenya, another study is following a group of cisgender women who are taking the same two-pill regimen to prevent HIV, and the data from this research should become available in 2023. Senior researcher Victor Omollo, with the Kenya Medical Research Institute, noted that “these are prevention interventions that women can control on their own without having to seek or get consent from another person,” as is the case with condom use, another effective prevention tool.
Antibiotic resistance
Antibiotic resistance is a potentially big concern. About 25 percent of gonorrhea strains circulating in the U.S. are resistant to the tetracycline class of drugs, including doxy; rates are higher elsewhere. But resistance often is a matter of degree and can be overcome with a larger or longer dose of the drug, or perhaps with a switch to another drug or a two-drug combination.
Research has shown that an established bacterial infection is more difficult to treat because it is part of a biofilm, which can leave only a small portion or perhaps none of the cell surface exposed to a drug. But a new infection, even one where the bacteria is resistant to a drug, might still be vulnerable to that drug if it's used before the bacterial biofilm can be established. Preliminary data suggests that may be the case with doxyPEP and drug resistant gonorrhea; some but not all new drug resistant infections might be thwarted if they’re treated early enough.
“There are some tradeoffs” to these interventions, Celum says, and people may disagree on the cost of increased resistance balanced against the benefits of treating the STIs and reducing their spread within the community.
Resistance does not seem to be an issue yet for chlamydia and syphilis even though doxy has been a recommended treatment for decades, but a remaining question is whether broader use of doxy will directly worsen antibiotic resistance in gonorrhea, or promote it in other STIs. And how will it affect the gut microbiome?
In addition, Celum notes that we need to understand whether doxy will generate mutations in other bacteria that might contribute to drug resistance for gonorrhea, chlamydia or syphilis. The studies underway aim to provide data to answer these questions.
“There are some tradeoffs” to these interventions, Celum says, and people may disagree on the cost of increased resistance balanced against the benefits of treating the STIs and reducing their spread within the community. That might affect doctors' willingness to prescribe the drug.
Turning research into action
The CDC makes policy recommendations for prevention services such as taking doxy, requiring some and leaving others optional. Celum says the CDC will be reviewing information from her trial at a meeting in December, but probably will wait until that study is published before making recommendations, likely in 2023. The San Francisco Department of Public Health issued its own guidance on October 20th and anecdotally, some doctors around the country are beginning to issue prescriptions for doxy to select patients.
About half of new STIs occur in young people ages 15 to 24, a group that is least likely to regularly see a doctor. And sexual health remains a great taboo for many people who don't want such information on their health record for prying parents, employers or neighbors to find out.
“People will go out of their way and travel extensive distances just to avoid that,” says Mahn, the National Coalition director. “People identify locations where they feel safe, where they feel welcome, where they don't feel judged,” Mahn explains, such as community and family planning clinics. They understand those issues and have fees that vary depending on a person’s ability to pay.
Given that these clinics already are understaffed and underfunded, they will be hard pressed to expand services covering the labor intensive testing and monitoring of a doxyPEP regimen. Sexual health clinics don't even have a separate line item in the federal budget for health. That is something the National Association of STI Directors is pushing for in D.C.
DoxyPEP isn't a panacea, and it isn't for everyone. “We really want to try to reach that population who is most likely going to have an STI in the next year,” says Celum, “Because that's where you are going to have the biggest impact.”