MW Let's make America great in technology again - because it's losing its lead

By Paul Brandus

While the Trump administration slashes funding for science and technology, China races ahead

"Is the United States now trying to lose the technology race with China? It certainly seems to be."

That's the first line in a recent analysis of the U.S.-China high-tech rivalry from one of the world's leading think tanks - the Australian Strategic Policy Institute $(ASPI)$.

The analysis, published in February and based on an August 2024 ASPI report, warns that while the United States slashes funding for science and technology, China is surging ahead with research into critical technologies that will determine 21st-century security and economic dominance. According to ASPI's Critical Technology Tracker, Beijing outpaces the U.S. in what it calls "high-impact research" in 57 of 64 critical areas.

Here's one high-profile example: Chinese electric-vehicle maker BYD (CN:002594) recently developed a system to charge its vehicles in just five minutes. That's about the time it takes to fill up a typical automobile gas tank - and it's several times faster than any Tesla charger.

But that's just EV batteries. Earlier this year, China stunned the artificial-intelligence world with its release of DeepSeek, which became an immediate rival to OpenAI's ChatGPT and other large-language model (LLM) platforms. You might recall that in the hours after DeepSeek's debut, shares of computer chip-making giant Nvidia $(NVDA)$ plunged 17%, a sign of just how disruptive DeepSeek's entry into the market was viewed.

Read: Microsoft is quietly integrating DeepSeek's technology. What that means for AI stocks.

Nvidia's struggles this year mirror those of the other so-called Magnificent Seven stocks, which also include Apple $(AAPL)$, Alphabet $(GOOGL)$ $(GOOG)$, Amazon.com $(AMZN)$ Meta Platforms $(META)$, Microsoft $(MSFT)$ and Tesla $(TSLA)$. Even after the U.S. stock market's recent rebound, these tech leaders are off to their worst start to a year since 2022, according to Dow Jones Market Data.

The fact that these Big Tech shares had been at nosebleed levels is one reason for the pullback. But President Donald Trump's tariff spat with China and his on-again, off-again talk of "terminating" Federal Reserve Chair Jerome Powell (a power that a U.S. president legally does not have) add further uncertainty and anxiety. Which helps explain why Trump has softened his threats against both China and Powell in recent days (and which helps explain the stock-market's rebound).

National security, economic strength and technological prowess are one and the same. China understands this.

But valuations and see-saw behavior from a lame-duck president are one thing. The bigger worry is China, which is churning out more scientists, engineers and mathematicians than the U.S. is producing.

China appears to have a laser-like focus on dominating not just AI, but 6G communications (5G is already so yesterday), aerospace, semiconductors, cybersecurity, pharmaceuticals, robotics, biotech and more. National security, economic strength and technological prowess are one and the same; you can't have any one of them without the other two. China understands this. Does the U.S.?

More: As investors await trade deals, Trump says he'll 'be nice' - but not 'if it takes too long'

China skeptics say the country will soon go the way of Japan, which in the 1980s looked like it was about to overtake America. Anything's possible, but while the skeptics wait, let's return to the ASPI's Critical Technology Tracker, which recently showed China ahead of the U.S. in 57 of 64 "high-impact research" areas.

The shift over the past two decades has been dramatic. "The U.S. led in 60 of 64 technologies in the five years from 2003 to 2007," the report says, "but in the most recent five years (2019-2023) is leading in seven. China led in just three of 64 technologies in 2003-2007 but is now the lead country in 57 of 64 technologies in 2019-2023, increasing its lead from our rankings last year (2018-2022), where it was leading in 52 technologies."

Moreover, China is the only country to ever land a spacecraft on the mysterious far side of the moon, and plans to land astronauts there as well. China has far bigger ambitions: It wants to become the first nation to land astronauts on Mars. The United States does too, and the race is on. Can America compete - and what will it say about who will be the world's technological - and thus economic - leader?

Read: America's economy will survive Trump and his tariffs. The biggest loser may be Trump himself.

China also has beaten America to the punch with highly accurate hypersonic missiles that can fly at five times the speed of sound and change course along the way. American security analysts call them "carrier killers" because of the threat they pose to U.S. naval forces. The Pentagon, various reports say, is racing to catch up.

Electric vehicles. AI. Moon landings. Hypersonics. There's much more, but ask yourself whether breakthroughs like these sound like China is going the way of 1980s Japan.

Ask yourself if American dominance, which perhaps to its peril the world has taken for granted, still really exists. Ask yourself if the U.S. government's current obsession with cutting research and development, firing scientists and engineers, turning away promising foreign students, and denigrating the basic ethos which helped America beat the Soviets, is prudent. And while you're at it, think about this: What future DeepSeek-like shocks could rattle Americans' faith that their country will always be No. 1?

Also read: How America can modernize its power grid without breaking the bank

More: Trump is taking us back to the slow-growth, high-inflation 1970s - or worse

-Paul Brandus

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May 01, 2025 07:45 ET (11:45 GMT)

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