CHIPS won’t be enough; America will need more to stave off China’s technological challenge

On Aug. 9, President Biden signed the CHIPS and Science Act. The bill  provides  $52 billion to support semiconductor manufacturing through subsidies and tax credits while providing $200 billion to support scientific research in emerging technologies like quantum computing and artificial intelligence. The bill is the final product in a long line of negotiations  designed  to beef up the United States’ manufacturing and technological capacity in preparation for competition with China.  

In Washington, both parties have heralded the CHIPS and Science Act as a major win. President Biden  called  it a bill to ensure “the world’s leading innovation happens in America.” Many Senate Republicans, led by Senate Minority Leader Mitch McConnell (R-Ky.), also  supported  the bill, even over the vocal opposition of many right-wing members of the conference. In an ever-divided Washington caught in bitter infighting, the CHIPS and Science Act has managed to sneak through with surprising bipartisan backing. 

Washington, however, should be careful of celebrating too soon. The CHIPS and Science Act is an excellent step in the right direction — but for America’s investments in science and technology to end here would be a major mistake. While the $280 billion package will greatly  boost  America’s domestic research and semiconductor manufacturing capacity, it alone will likely be insufficient to sustain the United States’ technological advantage through decades of competition with an increasingly powerful China. 

In 2018, China announced the Made in China 2025 (MIC 2025) Initiative. Made in China 2025 was a state-led effort to  invest  billions into key emerging technologies like artificial intelligence and biopharmaceuticals while boosting China’s domestic high-tech manufacturing until 70 percent of China’s critical technology parts are sourced domestically. In essence, Made in China 2025 was Beijing’s attempt to reach for global technological leadership,  bypassing  the technological edge long held by the United States and its allies. 

The launch of Made in China 2025 prompted immense global alarm from companies and governments worldwide, many of whom fear the consequences of China gaining a technological edge over the United States. Military analysts  fear  that a technologically-rejuvenated Chinese military might take bolder, more aggressive steps against Taiwan or in the South China Sea, increasing the risk of miscalculation. Companies  worry  that Chinese government investments in scientific research would strengthen domestic Chinese technology firms, giving them a technological and commercial advantage to outcompete American firms in China and abroad. Many policymakers also  fear  that the use of new Chinese technology products in American or allied systems might lead to potential cyberattacks or espionage. 

The backlash to Made in China 2025  prompted  Beijing to stop using the term, but while China abandoned the plan’s semantics, Beijing never  abandoned  the plan itself. Since 2018, China has continued to prime the pump, investing billions into high-tech manufacturing,  including  an enormous $1.4 trillion announced in 2020. Beijing is also busy  increasing  its annual funding for scientific research and development, which now ranks just below the United States in terms of its gross annual funding for scientific research.  

Aside from financial capital, Beijing is also eager to expand its advantages in human capital and data collection. China has a population four times the United States and  graduated  far more STEM PhDs than the United States in the last several years. Beijing is also keen to  recruit  senior scientists of Chinese origin via its Thousand Talents Program, which provides funding for such researchers to leave the West and return to China. It has also used China’s vast surveillance apparatus to  collect  enormous amounts of data, enabling it to make significant leaps in machine learning and computer vision research. Together, these efforts highlight China’s drive to gain global technological primacy, which risks severe technological, economic, and political consequences for the West. 

Against this challenge, the CHIPS and Science bill alone is inadequate. Through financial metrics alone, the bill’s science funding pales compared to the huge investments China continues to make each year. Furthermore, the bill’s focus on semiconductors, while laudable, leaves out the raw materials used to  make  semiconductors and other key critical technology components — rare-earth elements. Supply chains for rare earth elements  are  heavily dependent on China, reflecting a major national security risk as tensions between Washington and Beijing rise. 

Thus, for the United States and its allies to sustain their technological lead through decades of competition with China, important reforms are needed. From a financial perspective, America must increase its investments in scientific research in emerging technologies like biotechnology and artificial intelligence. Grant applications in such fields  are  already highly competitive, and such an increase could support a new wave of researchers to bolster American innovation. America’s leaders should also use subsidies and tax credits to boost domestic production of the key rare-earth minerals used in technology products. Such efforts  would  help secure American technology supply chains when tensions with Beijing make traditional supply chains from China far riskier. 

America’s leaders must also try to match China’s advantages in human capital and data collection. From a human capital perspective, the United States  must  take steps to overhaul its broken immigration system, especially by  expanding  available visas for high-skilled immigration and  simplifying  regulations for international students studying in the United States to become American citizens. Many of these international students are  educated  at top universities paid for by American taxpayers and eagerly want to stay — but America’s bureaucratic and ever-backlogged  immigration system threatens to drive these high-skilled immigrants and their scientific talent abroad, enriching other nations instead of the United States. America’s leaders should also foster partnerships between research institutions and technology companies to expand researchers’ access to data while  investing  in the development of Privacy-Preserving (PP) technologies to ensure such data collection does not compromise individuals’ privacy. 

Of course, the CHIPS and Science Bill is still a valuable piece of legislation. But sustaining America’s technological advantage is a marathon, not a sprint. The United States must make the reforms needed for it to compete for decades to come — otherwise, the CHIPS and Science Act might be remembered as little more than a band-aid for a gaping wound. 

Sergio Imparato is a Lecturer on Government at Harvard University, where he teaches Grand Strategy in International Relations and U.S. Foreign Policy. He is the author of “The Sovereign President” (Pisa University Press, 2015; in Italian), a study on the personalization of presidential politics in foreign affairs. Sarosh Nagar is a researcher in the Department of Government at Harvard University. His research analyzes the role of development assistance and economic interdependence in American and Chinese foreign policy in Asia. His work has been published in numerous peer-reviewed journals and magazines, including the Harvard International Review, the Journal of the American Medication Association (JAMA) Oncology, the American Medical Association Journal of Ethics, and more.