The new report uses unusually stark language in describing the danger posed by China’s rapid advances in critical technologies such as AI, quantum computing, 5G communications and synthetic biology. In a section titled, “What Does Losing Look Like?” it describes a series of significant consequences for the United States should it fail to meet the Chinese challenge. Among the catalog of horrors:
“China dominates the economy of the future and captures trillions of dollars’ worth of value generated by the next wave of technologies.” “China uses its techno-economic advantage for political leverage. Nations — including U.S. allies — reliant on China’s tech swing into the PRC’s political orbit.” “Authoritarian regimes sell the case that they are masters of the modern world.” “An open internet is compromised.” “The U.S. military’s technological edge erodes. The PRC annexes Taiwan.” “The PRC cuts off the supply of microelectronics and other critical technology inputs.”
The report’s authors summarize the catastrophic outcome: “In total, this picture amounts to the unraveling of the order the United States and the democratic world built after World War II and a serious challenge to U.S. prosperity. The United States and other democracies would become economically dependent, losing their engines of prosperity and freedom of action in the world. … Even if only some of this came to pass, the world would be a darker place for the United States and democracy.”
Frightening technology scenarios like this have become increasingly common over the past decade, and they might overstate the extent of China’s advantage. Chinese economic growth is slowing; its tech sector has been shaken by poorly planned government intervention, and its deteriorating demographic position might not support the “China Dream” of dominance that President Xi Jinping has often advanced. But even so, Schmidt told me in a recent interview, China remains “focused on the deeper technologies,” such as AI, that will command the future.
The bleak report doesn’t just summarize the costs of losing. It argues the United States will, in fact, lose this race without changes in government policy to focus attention better on the technology challenge. “The United States still has no process or person responsible for achieving technology advantage,” the report says. “The U.S public-private ecosystem has vast competitive strengths, but they are un-gathered. America needs a plan for mastering the new geometry of innovation to compete.”
William M. “Mac” Thornberry, a former Republican congressman from Texas who was one of four advisers assisting Schmidt, stated the challenge bluntly in an interview: “If we continue on the current path, we lose.” The report, he says, is intended to explain to Americans, “Here’s what losing looks like to you, individually.”
Essentially, the report argues for national “industrial policy” focused on technology, much like the recently passed legislation to support the semiconductor industry in the United Studies. Schmidt argued that the Chips and Science Act, on its own, won’t be sufficient to reclaim the United States’ lead in technology. “China has a Chips Act every year,” Schmidt contended, through continuous government funding for critical projects.
The Schmidt report is the latest wave of a campaign for greater public and private funding in key technologies. Critics have argued that such directed funding for technology would subsidize already profitable companies such as Google and other tech giants. In that sense, critics contend, Schmidt and the other representatives of the tech sector are advancing their industry’s interests, at a time when there are other powerful claims for government support.
The report counters that there’s need for investments that will benefit all Americans by sharpening the nation’s competitive edge and protecting its values. In the technology competition with China, the report argues, “at stake is the future of free societies, open markets, democratic government, and a world order rooted in freedom not coercion.”
In a foreword to the report, former secretary of state Henry Kissinger sounds a “Back to the Future” note. He writes that the report is modeled on a similar bipartisan project he directed in the 1950s, when the U.S. faced a Soviet Union competitive threat. The aim, back then, was to “explain the issues facing our country that may have been hard for the government to tell the American people.”
Whether America is actually losing the technology race against China is hard to say. The value of this report is that it reminds us how severe a price the United States would pay if optimism about its AI future proved to be wrong.