In the battle for technological supremacy between the United States and China, America has “dropped the ball” in funding basic research, according to former Google CEO Eric Schmidt.
And this is one of the main reasons why China has managed to catch up.
Dr Schmidt, who is currently chairman of the US Department of Defense Innovation Council, said he believes the US is still ahead of China in technological innovation, for now.
But let the gap narrow quickly.
“There is a real focus in China on invention and new AI techniques,” he told the BBC’s Talking Business Asia program. “In the race to publish newspapers, China has now caught up. ”
China replaced the United States as the world’s leading publisher of science and engineering research in 2018, according to data from the World Economic Forum.
This is important because it shows how much China is focused on research and development compared to the United States.
For example, Chinese telecommunications infrastructure giant Huawei spends up to $ 20 billion (£ 15.6 billion) on research and development – one of the highest budgets in the world.
This R&D helps Chinese tech companies to advance in key areas such as artificial intelligence and 5G.
Dr Schmidt attributes the narrowing of the innovation gap between the United States and China to the lack of funding in the United States.
“The United States has been the clear leader in R&D my whole life,” said the former boss of Google. “The funding was equivalent to around 2% of the country’s GDP. Recently, R&D has fallen to a lower percentage than there was before Sputnik. ”
According to the Information Technology and Innovation Foundation, a U.S. technology lobby group, the U.S. government is now investing less in R&D than the size of the economy than it has for more than 60 years.
This has resulted in “stagnant productivity growth, lagging competitiveness and reduced innovation”.
Dr Schmidt also said that the technological supremacy of the United States has been built on the backs of international talent allowed to work and study in the United States – and warns that the United States risks falling behind if this guy talent is not allowed in the country.
“This high-skill immigration is crucial for US competitiveness, global competitiveness, building these new businesses and so on,” he said. “America doesn’t have enough people with these skills. ”
The United States has been embroiled in a technological cold war with China, and in recent months has stepped up its anti-China rhetoric.
This week, he revoked the visas of 1,000 Chinese students he said had military ties, and accused Chinese tech companies of acting as agents of the Chinese Communist Party – claims Beijing and those companies reject.
The Trump administration has also taken steps to block Chinese tech companies like Huawei and Chinese apps like TikTok and WeChat, saying they threaten national security.
Beijing said it was “naked harassment,” and Dr Schmidt said the bans would mean China will be even more likely to invest in its own domestic manufacturing.
Dr Schmidt says the right strategy for a US-China relationship is what is called a “rivalry partnership” where the United States must be able to “work with China, while also competing with them.”
“When we are rivals, we are tough, we keep going. We’re competing, we’re trying to get an advantage – real competition – that the United States can do well, and China can do well. But there are also many areas where we need to be partners. “