hour and a half.

>> we will hear from the director biotechnology programs and a senior fellow at the center for security in emerging technology will provide us with an analysis of china's system, research institute and universities and how they develop plans and technology. then we will hear from dr. jeffrey ding, professor of political science at george kent and will assess the ability of i'm reading with the staff wrote and i don't understand this. he will assess diffusion of technological advances and the

role that is supported by china's syndication system. thank you for your testimony. i know it's complex and i read it with great care but try to keep it to seven minutes because we ask a lot of questions. dr. shu, we will begin with you. >> thank you very much for the kind reception and thank you for this opportunity to contribute to this hearing. thank you for the opportunity to join online. i will present three major things, particularly humanitarian and social science research. they may seem paradoxical, this includes political cultures. there is a combination of centralization.

institutions in china have had an increasing degree of autonomy . the central government has power over important aspects of chinese education. for instance, in the importance of the national university program [indiscernible] the second paradox is about chinese research, particularly chinese humanitarian and social science research which demonstrates affiliations and intentions between internationalization and digitalization for the so-called chinafication. for thousands of years, humanities have been an ancient chinese scholarships. that started in the 19th century and then it started to turn to european sciences and establish

social science disciplines in western frameworks. nowadays, while china is the largest producer of the science and engineering publications in the world, the humanities and social sciences is not as prodigious. the research is still ongoing and is european dominated so we know the more than 90% of the research indexed by global databases are placed in english language but the main language for publication in chinese humanities and social sciences is still chinese. this means many of the knowledge produced in china is not visible in the world. for many years, the chinese government has been encouraging the going out of chinese humanities and social sciences research to make the chinese voices heard in the world. on the other hand, chinese humanities and social science research will never be completely internationalized

because unlike sciences, humanities and social sciences are much more rooted in local and national cultures and realities. in china, they have been lost in the debate and concerned about self colonization of chinese races and pushback toward westernization and policies have been emphasizing following chinese cultures, traditions and making impact on chinese society. the paradox is about freedom and autonomy. the chinese conflict between sharing knowledge freely in institutional and natural -- and national agendas contribute to their beauty. for thousands of years in ancient china, they see themselves as having responsibility to contribute to the society to ensure social

stability of the nation. predicated [indiscernible] but confucius learning highlights the importance of systemic freedom. not all of china embraces the confucius learnings. in china, academic freedom is paradoxical and can be seen more often in some cases but not others. innovation states influences but [indiscernible] such as the covid-19 pandemic but also the geopolitical tensions. for instance, there has been racial profiling among chinese scientists in recent years in united states. that has impacted chinese cooperation. to conclude, i would like to propose to things to be helpful

to learn more about the chinese learnings. i would argue that china knows more about the united states education research than the u.s. knows about china this is not only because of past influence of the u.s. but also that china has more interest to learn about and learn from the united states. then perhaps the other way around. there are large differences between the countries, there is common similarities. therefore, this highlights the importance of the commission's work here and it suggests the need for the u.s. government for people to have more capacity to understand chinese culture including the political culture [indiscernible] and whether to apply not only

the framework to understand china but understand china. secondarily, despite the challenges in the social sciences, regardless of how the u.s. china relationship is in the future, the two countries are undeniable -- undeniably the largest in the world with close ties. it will be a lot of opportunities for china and the united states if both starting -- both parties start cooperating with each other. as noted, academics can be influenced by national structures and institutional structures, they are not bonded. they can also work and collaborate internationally. it is possible to be mutually beneficial cooperation in those

countries. hopefully on the basis of mutual spect and equality. with this, i conclude my testimony and thank you very much for listening i look forward to the discussion. >> thank you. ms. pugliese. >> thank you for the opportunity to participate in today's hearing. i am currently the director of biotechnology programs at the center for emerging technologies at georgetown where i lead our biotechnology efforts and look at china and their key developments. i previously served as a counterintelligence officer for east asia and spent 20 years in the was government as an analyst. i believe this is essential to address the elephant in the room when we talk about china and the

assumptions. democracy is not necessarily innovative and china needs of western development model including venture capital that looks like errors in institutions like darpa and an independent economy and what we will talk about most of day is because of the education system and bureaucracy. this is more than a philosophical debate because whether the company, government or individual believes china is innovative or not impact the risk calculation that one makes on china. if you believe that your five or 10 years ahead or you will always out innovate them, you will make a different calculation. that relates to talent. my testimony today will address policies and programs china has put ice to grow its national innovation based especially human capital. in particular, i will discuss our systems are different and how the role of the state impacts and influences all

aspects of china's development. lastly, i will offer a lesson learned which includes how china's system is not the same and it takes a holistic approach to the development and technology blurring the lines between public, private, civilian and military at her policies and mitigation policies. we cannot get complete -- return on investment without innovation. giving scientists a problem to solve is not the same as giving them a solution. most of you have heard about the 1000 talent program. the goals are the same which is to acquire technological know-how needed to support

various programs and industries as well as train the next generation of scientists and technology. that's an important part is training the next generation. i provided that my written testimony but i'm happy to answer questions. as for the advantages and disadvantages of chinese higher education, support and realize what part of the education we are talking about. undergraduate education are less well-known. as each part will have a different impact on china's strategic goals in a previous panel talked a little bit about that. some advantages and china's system include the ability to set national curriculum and prioritize certain technology areas. second, the ability to mobilize all aspects of their infrastructure to meet the same goal and lastly, the political will to maintain sustained investment over time.

the disadvantages include a rigid approach to curriculum and teaching the highly stratified educational system and lack of traditional academic freedom.i want to emphasize the criticism of china's care educations -- of china's current education system doesn't realize that factors can be true or untrue depending on what you're talking about. the top tier is fostering military modernization and economic development. the lower tier can struggle. they are not mutually exclusive. i will now turn to the issue of the level of interconnectedness and china's s&t system. it's more connected and holistic than the u.s. system. china still has challenges in this area and our next panel will talk more about that but it has made efforts to address this and its ability to conduct multidisciplinary research and application. i will outline a few here for explanation of my written testimony with the first is

china's system which is laboratories overseen and co-litigated titian co-located with universities. a new policy establishes industrial clusters. these are integrating researchers, developers and government entities in many focus on ai perhaps china's most well-known policy to do this interconnectedness is its military civil fusion. china says it will use any knowledge or technology it acquires for its military but increasingly, we see them focus on things that are not part of his military like artificial intelligence, biotechnology so how do they incentivize the researchers. they use policies and programs to provide the demand signal certain technology areas. scientists are given hard

problems to solve. the chinese government supports and invests in these areas often times with longer timelines and small return on investments. 5g, batteries and dna sequenc 5g, batteries, dna sequencing capacity are examples of these. china's approach may prove unsustainable in the long-term but can impact a competitor us and hurt us interests. i leave the committee with the following thought. first, china's policies and plans former way for the development of talent and emerging technologies that can form the foundation for future growth and military modernization that beijing controls. it is not really our today and certain fields but the rate of change we should focus on and that building of capacity. talent and robust education system is essential. innovation comes from doing the research. if we don't train our students,

technicians, researchers and invest in the tools of discovery we will not be able to keep pace. finally china's policies are challenging for the us and its allies, most policy measures are tactical, not designed to counter an entire system that is structurally different. i want to thank the committee for continuing, these are hard conversations that we as a nation must have if we are going to protect and promote us competitiveness and future development that reflect our values. we have to think about our national innovation base and the talent that supports it in terms of the greatest value to the nation as opposed to the lowest cost. china will gain the advantage in technology competition of we don't identify those areas where national security at market forces diverge and take proactive measures to compete, so thank you very much. >> thank you.

>> thank you, distant wish commissioners and staff are having me here and inviting me back. sometimes i don't get invited back to things so i don't know what to make of that but it is good to be back and hope to be back in the future. second thing -- sorry. second thing i'm grateful for is, especially the staff, for inviting me to talk about this forthcoming paper that's coming out in the review of international political economy about china's diffusion deficit and it is very rare for academics to get interest in their papers before they come out and also after they come out so it is all downhill from here in terms of future papers but i'm grateful and excited to talk about it. i will talk about four things, first is explaining what i mean by innovation versus diffusion capacity especially when it comes to why we even care about

china's human capital, why we care about china's technological capabilities and how we assess technological capabilities and why china is facing a diffusion deficit which i define as a wide gap between her ability to produce new technologies and its capacity to spread them across a lot of capacities. third, i will talk about the role of education with some examples from emerging technologies like ai. i will begin by saying discussions about scientific and technological capabilities are often obsessed with which state creates new to the world innovations, who comes out with the first big idea. my argument is we should spend a lot more time and emphasis on a country's diffusion capacity, its ability to spread and adopt

and spread them across a lot of processes and i think this distinction is really important for general-purpose technologies, technologies economists have identified as historical engines of growth, things that can permeate the economy like electricity or computers or artificial intelligence. it doesn't matter as much which state produces the first electric dynamo. it matters much more which state electrifies their economy in a more sustainable and effective way. doesn't matter which state uses the first computer, it matters which state computerized is its entire economy. doesn't matter which state produces the first chat gpt or the first major breakthrough in artificial intelligence. it matters which state makes its economy intelligent. my argument is technological

capabilities matter when we think about assessing rising powers because the key part of why it matters is which country can sustain proximity growth in the long run. if you look at the historical patterns, the countries that became the leaders and power transitions that occurred, they occurred through the mechanism of one rising power sustaining economic growth at higher rates, they became the economic leader first with innovations in the steam engine and other technologies, germany and the us challenged rick nash leadership in those areas with innovations in electricity but they became economic rivals first and then the economic power translated into political and military leadership. if we think about the rise and fall of great powers in the us china competition in emerging

technologies through this lens of which country can add to technology at scale, which countries can build a better diffusion capacity i think that reorient the framework by which we evaluate scientific and technological capabilities. so again, we are trying to measure whether china's capacity to innovate differs strongly from its capacity to diffuse technology at that scale and i argue this sort of diffusion deficit does exist. by a lot of measures that are more related to innovation capacity china is among the world leaders, the quality of their top universities is very high, quality of their top three firms in terms of r&d expenditures is very high. we've seen more science and technology phds than the us in terms of the highest leading

talent, and there's no doubt in certain emerging technologies like ai china will produce major breakthroughs. they have strong firms in this space. what my analysis shows is when you look at how these breakthroughs are translated and diffused throughout the entire economy there's a much bigger gap. this requires a focus more on the linkages between those frontier firms, to the small and medium-sized firms that need to adopt what is coming out of these frontier firms so my method of doing this was to take the global innovation index which has a lot of different science and technology indicators, sort them by which ones were closer to innovation capacity and which ones are closer to diffusion capacity and look at china's global ranking this and on the innovation capacity index china is much closer to the us rankings. on the diffusion capacity index

there's a huge gap and i think we see this with the diffusion of information technologies such as low cloud computing adoption rates. third parties to look at the role of education in all of this and i think in china's case, there is overemphasis on r&d, chinese policymakers have been very effective at meeting r&d targets, much less effective in terms of meeting education targets. if you compare china's public expenditures on education as a ratio of gdp, that figure is lower than the corresponding figures for brazil, malaysia, mexico, and south africa, newly industrialized continents. we see the opposite when it comes to support for r&d and breakthrough innovation, china is much higher than those other countries. i also bring some data on the breadth of education institutions that can train

every day engineers. in the ai field, one measure of universities that have at least one researcher that has published in the leading ai venue china was home to only 29 universities that match that standard, the us accounted for one hundred 59 such universities. i'm not looking at the best and the brightest talent, not that concerned about universities producing the most cutting-edge innovations in ai, just the universities that can provide a baseline of quality ai engineering, there's a huge gap between the us and china. i'm cognizant of time, so i will point you to the three recommendations i have and i look forward to the discussion. >> thank you very much. carolyn bartholomew, we will start with you. >> thanks to our witnesses. trying to figure out where to

start. in a lot of ways, your testimony takes us into the elephant in the room which is freedom of speech, is innovation possible in a context like the chinese system as we understand the chinese system but i want to make sure i understand, you said there was a gap in the ability to diffuse and i am presuming who does that gap benefit and not a big gap in innovation and i would have thought it was the other way around. maybe i am misunderstanding something. explain that to us. >> thank you for the question. i think when i am looking at innovation capacity, i am interested in which companies can produce the innovations, the countries that have the best chance but with a lot of

metrics, metrics, r&d spending, highly cited publications, a lot of people cite in the space, even exceeding the us in some of these innovation capacity indicators. when i say there is a gap, china performs less well on diffusion capacity indicators that runs counter to conventional wisdom. sometimes we look at what is happening in mobile payments or high-speed rail and extrapolate to say china can adopt anything at scale. much harder to do so for things that are necessary for businesses to become more productive. the examples in my written testimony include things like cloud computing adoption. are businesses using computers? are they online? what's the adoption rate of those technologies, use of industrial software to automate certain processes, china is lagging far behind the us.

for me, that diffusion capacity is much more important because historically the rise and fall of great powers is centered on which country can sustain productivity growth in the long run and have technologies adopted across a lot of businesses and that scale is driving productivity growth. >> can i ask what you think? sounds like he is slipping the basic understanding. >> perhaps our understanding has been wrong. >> i think two questions, whether or not they can actually create, do the research, have new -- innovations, things that are new to the world and how to translate that. and some of the areas i talked about, the new policies around industrial clusters, things the

chinese government is doing to bridge that gap. because we see step-by-step, very different skill levels. often times i talk about innovation you need to break down, are we talking basic research, applied research, commercialization, or putting it into a weapon system. those are really different things are really different skills so being able to translate all of the investments in r&d into the commercial space to drive different parts of the economy and how that differs from, okay, are we talking about things that take a longer timeline, or things that translate into specific companies. not sure if that answers your question but it is both sides of the coin so we need to put

in place the different parts to be able to capture them. >> i was interested to hear about the confusion in the intellectual approach. my sense is with the implementation of xi jinping's thought it is permeating universities and people have less freedom to think or speak about what they are thinking so can you talk about what sectors the confucius tradition is still alive and universities? is it in poetry? is in science? where do you still see it? >> i think doing different political things in china, the

extent of freedom is necessary, and the limitations and restrictions are more often in this case and i think humanities and social sciences may embrace more about the conditions or not necessarily, the intention to contribute to nationbuilding so many of the same institutions, if academics make policy recommendations and policy recommendations are assigned by governments at these levels, that would be considered as important in the basic output for institutions so that is more to humanities and social sciences research and also exists with natural

scientists as well. but also in the recent testimony, not only about confusion value but how education in china is about this part of the government and national not just controls but influences. >> thank you very much and thank you to the cochairs of the hearing. >> bob borochoff. >> in reading testimony from the 3 of you i got very excited because i could start with what you just said and ask all of you your analysis. it is related to the first

question carolyn bartholomew asked. and small companies and i have lots of experience with this, there are always innovators and all over america we've seen incredible innovation where somebody comes out with something that eventually leads to tremendous growth. i don't know if you created the term diffusion capacity but in growing my businesses, the various ones we had, we call that ability to execute and i think what this comes down to is i have seen, we have all seen incredible innovations. an algorithm that led to the cell phone, he founded qualcomm but you know what happened to qualcomm was got purchased by another company because there was a limit to what he could execute. he made $120 billion, an incredible amount of money but the people who ended up

dominating the cell phone business were not qualcomm, it was apple if you ask anybody in the world. the guy who invented the personal computer started compaq. it is gone, somebody else is doing it. there is a saying in businesses as they grow, that it is better to be the settler than the pioneer. the question is i think there is a little dissonance between what the two of you are saying, not that you disagree but i take great solace in what you are saying if true because if you are correct, it's going to be hard to become executors. my question for all of you is is it your perception that they don't have the ability to execute or is it your perception that maybe they haven't yet done it? what we saw america due during world war ii when there was

true danger to the whole country was became incredible innovators and executors, we did that and i wonder if that is not what is occurring in china. i want your opinions. >> i think to bounce off your point of is there disagreement or not, i think part of it is we are talking about different things. lot of her written testimony and testimony today was also specifically talking military civil fusion and military capabilities. i mostly focused on economic productivity growth. a lot of things might just be we are emphasizing different things. i think for me, your point is correct that we need both innovation capacity and fusion

capacity, to have both the innovation and execution. right now i am trying to derive a bunch of different indicators that would let us measure and assess fusion capacity, one of those is you have a lot of connective tissues that allow ideas to go back-and-forth between universities and firms, one indicator of that is in the ai space, how many hybrid publications do you have? publications that have at least one author from the business world and one author from the university world and how close are those ties? the us leads china by more than double on that metric. your pointing out where we need to go to assess innovation and diffusion capacity. i think we just underemphasized the latter. >> in my spoken testimony i emphasize something slightly different but it is also, to

the comment about the change over time. if we were having this hearing, those who heard me speak on this topic before, we were talking about innovation capacity, we still talk about that. what we've seen china do, putting in place the building blocks for that innovation capacity, trying to put in place building blocks for diffusion capacity so that's partly a new construct that call industrial clusters where we see universities, companies, states owned being put together research institutes as a way to kind of re-creating a bell labs situation where people are thinking thoughts, flying those thoughts. i would also venture to say finding indicators of what that's going to look like is

also challenging. it gets to the question of do we look at market economy indicators for nonmarket economy? i would venture to say that we have to be careful when we do that because success can mean something very different and look very different and the emphasis earlier was on getting some of those innovations focused on military modernization, what is lost in the conversation between military and civil fusion is often times as much pushing lessons learned and capabilities from the military, we've seen some of those success stories such as batteries is a great example of that. >> thank you very much.

>> i will wait until the end, arron friedberg. >> thanks very much. you focused on our core question in all of this, for a long time people in the west, in the united states thought china had to become like us in order to be effective. but what we have seen so far is the ccp system has been able to retain political control while at the same time becoming more innovative in various ways. the question is what are the implications for the long-term? there might be a way of reconciling differences between the two which have to do with the time horizon. are talking about the long-term productive capacity of the economy over decades or centuries and in the near to

medium term, even a system which might be less efficient and less innovative than ours can still cause considerable challenges. so i'm interested in your views on that but let me start by asking basically what, if anything could the ccp regime do to improve its capacity for fusion and absorption with the changes be profound and structural and require different political arrangements or is it just a matter of adjusting policies here and there? >> thank you for the question. i benefit from your work on power assessment and training these ideas, great to hear from you. to your point about why do we care about technological capacity and the timeframe for

these issues, one of the reasons i want to make an intervention in this area is there's a key debate among policymakers, which power has time on it side, the us or china? another key question is who has the best chance for technological leadership in the next 10 or 20 years? if you talk to people who implemented the october 2022 chip controls on china they were saying we are doing these actions because we view this as a long-term competition. if your mindset is actually the us is very well-positioned in the long-term decades down the line, that might make the status quo a defensible option which is what i'm trying to emphasize in my testimony. i think i agree to your point

that a china that doesn't catch up to the us fully can still pose a lot of problems. there's a lot of research to that extent and that is important to highlight. i'm trying to answer a different question. in terms of what the ccp can do to improve its diffusion capacity. the aspect of it that is structural is planned economies are not good at diffusion, they are not natural acting, there's no natural mechanism for diffusion. we saw that with the soviet union which was pumping out more phd graduates than the us, quick to produce the first implementation of something, very slow in terms of diffusing because they weren't a market economy. that's very much the biggest structural impediment to what degree china regresses toward a centrally planned economy and

to what extent liberalization continues apace. >> do you have thoughts on that? i would be interested want to what extent do you think china's success in moving forward and becoming more innovative has had to do with their continued access to our system in technological a innovative system and what would be the consequences of that access on their ability to be innovative in the future. >> i think i'm going to attempt to respond. i think with the comments about being centrally planned, there are areas and industries where being able to follow the longer timelines makes a difference and i think we saw that with 5g but i think different technology areas have different characteristics and drivers and

in areas that lack legacy. i would put biotechnology in that is a good case study. we've seen it developed over the last week two decades of leaders in that field and areas that touch on every aspect of development from doing the research, reducing capacity, increasing lean moving up the value chain to the point where researchers and entities at hospitals all over the world that are dependent on the services. we have to really look industry by industry to see where this is being implemented better than others or more completely than others? estimate comment, how does access to the us system, the

talent piece is important in that area. in some ways the chinese government still does view universities and our own research institutes as that entry point to the us innovation system and that is a capacity piece, from my own experience of being in labs that individuals who had training outside, train their students very differently, they have different questions and you see returnees having that impact but you also see changes in how chinese scientists are trained, something as simple as, here we take for granted undergraduates go off and do research projects. that was not always the case. that's the case now with top-tier universities in china. the tacit knowledge, learning

how to do things, getting training especially phd postdoctoral level does have that impact on strategic programs. >> thanks very much. >> commissioner goodwin? >> thank you, madam chair. i want to talk about intellectual property rights in the robust system of protections can have on this notion of technology diffusion and china's efforts to address the diffusion deficit as you refer to it. obviously intellectual property protections provide incentives for businesses and researchers to invest in research and development and protections in turn presumably help to presume a tape this knowledge.

through licensing and so forth. there system, the prc's approach, the chinese, is party's approach is a little different. and we hear about a lot of restrictions on licenses for foreign entities and foreign researchers and foreign ip owners, certainly formalized technology transfer requirements and incentives as outright theft. does this approach to intellectual property actually undermine their efforts to become truly innovative and address the diffusion deficit? >> i think this is a really good example to show that sometimes there is a trade-off between innovation capacity and diffusion capacity. if you just take an imaginary country and think about what level of intellectual property

rights protection they would ideally want, if you set it really high, that will encourage more innovation, that one company that can capture monopoly profits, the first to come up with this intellectual property. if you set it very low, that is all about whenever a new innovation comes it can spread as fast as possible and will encourage more diffusion capacity. you are always trying to find a balance, to what extent can we manage this trade-off? how open do we want information to flow in the economy and how much do you want to incentivize the groundbreaking innovation for the initial pioneer to capture some profits? i think we have seen, to take it back to the specifics, we have seen china has -- chinese government has realized that dynamic you talked about which

is having overly lax intellectual property rights protection might not incentivize enough innovation so they tried to move to reform and boost their intellectual property rights but obviously there are still a lot of issues related to cyber espionage, legal acquisition of intellectual property rights and that is still a very important issue. >> you touched on it but tension as they try to approach, what policy changes they might make to address this deficit, in is there in tension to incentivize new world innovation versus this threat in addressing technological diffusion deficit as you put it? how do they strike that balance? >> oftentimes it is not

necessarily that there is one person has a rational calculator looking at what's best in national interest debating between different options but one area where you see the tension i mentioned in the testimony is the government has the that it has to divide its resources, tension and political capital to different areas and spend more on research and develop and and less on education. so a broad-based education strategy. there is that trade-off. >> thank you. >> commissioner hal berg? >> thank you so much. my question, i would like to build on a question raised by

commissioner goodwin, your testimony sheds light on the fact that china's technological advancement is from hundreds of talent programs aimed at leveraging talent from overseas. you mentioned a recent publication identified 59 state key labs or 10% of personnel, 304 individuals, my question for you is to what extent would you attribute china's technology advances to its acquisition, harnessing of its overseas talent versus training of its indigenous workforce versus ip theft? >> i think s&p growth is the product of all 3. if you look at policies and programs china has put in place over the last few decades it tells a story. if we go back to the early 2000s, or late 90s you see some

initial talent programs put in place and pushing especially in new areas so ai, biotechnology materials, those kinds of things and it has happened simultaneously. it is not if or that, it is both. we have a talent program to see more investments in universities and at the same time entire institutes, university departments being stood up that are entirely staffed by returnees then change and train the next generation of scientists so it is a little bit of both. the ip theft, almost all the central government programs incentivize technology

acquisitions, some about, we've written about legal, illegal, extralegal, a lot happens in the gray area and so it has been part of the growth but at the same time there is a domestic investment in these different technology programs so we can't attribute it all to theft or all to that indigenous investment. >> thank you. do you have reactions for that? >> sorry. my general reaction to what? >> to those comments? >> i agree, i think. the talent programs have been

an effective channel for china to access foreign talent. my hot take on this is this is what countries do, the us in their best and brightest in german universities at the end of the nineteenth century because that is where the best chemicals research was happening a lot of us returnees set up chemical engineering institutions in the us. it is not surprising to me that is happening but the role of the state is something that is unique and that's important to highlight the role of these talent plans and especially arrangements that require chinese students to go back and work in china for x number of years after work experience abroad. that stands out for me as unique from the normal development pattern of how countries rise.

>> but would you attribute in equal measure the efforts of the government to grow technical, indigenous workforce as well as acquisition of overseas talent to the results it has been achieving in technology? >> i don't know. i don't have a stance on the exact balance, but i would agree that all of those components play an important role. i think one thing that is interesting is ip protection, illegal acquisition of ip has fallen off the agenda from a policymaking standpoint which speaks if i were to wager a guess, putting more weight on china's indigenous innovation capacity rather than the reliance on foreign acquisition

but that would just be my guess. >> thank you. i yield the balance of my time. >> thank you. commissioner price. >> you made the statement when talking about chinese policy and plans that it is not where we are today but the rate of change is. can you comment on what you think the rate of change is? >> i think my comment for that is it is looking at okay, what are the policies and programs they are putting in place today that will impact these shortcomings. doctor ding's paper looks at policies that emphasize how we

move technology out of the lab into that commercial space and there's a lot of discourse around all these investments in r&d, how to translate into commercial success because we've seen they've had a lot of success in the military area but how do we then use those things to drive the economy and that will vary over the different technology areas whether it is lack of legacy areas such as biotechnology and other batteries, materials as opposed to things as chip said, there's a long history before that. >> thank you very much. i want to go to your policy recommendations because i'm taken with anything that starts by saying keep calm especially

your first answer and third. can you address those briefly on what you are thinking? >> thank you for this opportunity. i think for me, i come from a policy debate background. policy debate, one side defense a plan and the other side defend the status quo and for me, with my option one. i'm defending the status quo. if you agree with my assessments that china faces a diffusion deficit and china is not poised to overtake the us as a scientific and technological superpower the status quo becomes a more defensive policy. sometimes, it is important to have these debates because this goes against conventional wisdom and some ideas that circulate around in the city and i think we overstate china's test scientific and

technological capabilities and i made an argument about respect and that points towards if the us is well-positioned, back to arron friedberg's question, if the us is well-positioned in his great power competition, the status quo becomes a more defensible option. the third policy option is taking this lens of innovation versus diffusion and translating it to what we emphasize in technology policy. if you look at any us government technology policy and scroll down to the first bullet point of policy recommendations it is always invest in more r&d and that is probably a good thing but it's not the only thing that matters when it comes to an ecological competitiveness. for me it's about investing in technology diffusion institutions, applied technology centers dedicated field services, different voucher systems that encourage adoption of new techniques by small businesses and if you

circle back down to the educational realm, not just about investing and researching universities, building a wider pool of talent investing in community colleges to support a wider talent base for ai talent so i think that was the thrust of my recommendation in the third bucket, taking that innovation comparison and saying how does that translate to a more effective technology policy for the us? >> thank you. and you talk about the need for education exchange and a better understanding each other. are you talking about the traditional education exchange, study abroad types of program or are you looking at anything different or innovative to help ensure populations understand each other? >> thank you for the question. to me, to be understanding they

need to have 5 traditional ways. exchange and mobility -- a few years, for china's extent, china, the united states, this to nations, china students going abroad and the largest population for international students in the united states, not the other way around. in additional ability, there's potentially more cooperation for exchanges along this, what has been happening and influenced by geopolitical tensions in the last few years. and innovations that could be

issues in language, many information about china or knowledge about china in english may not tell the complex story or full picture of the message. it may be helpful to be able to have more translation across languages and have more academics or people in the united states who can understand chinese language and chinese culture and chinese society to be able to facilitate such communication because nowadays in china, university, particularly every student speaks english so that means the english-speaking world is more accessible to china, and the other way around. >> thank you. commissioner? >> thank you.

thanks to our witnesses for excellent statements. professor, if i can follow up on the same line of questioning, i submit you can keep calm and still act. i would submit even if the status quo is in our benefit for now, it is not a static status quo, the trajectory can still be of some concern but your last point is the risks of overreacting or an anticipated negatives associated with acting to prolong this diffusion, deficit, or whatever it might be but what did you have in mind? what would your concerns be of overreaction? what does overreaction look like to you. >> that is significant question. i think in terms of overreaction, things that i am

drying on our the historical case study with us assessments of soviet union scientific and technological capabilities and in those cases there were things like this illusory notion of a missile gap, when you have tensions between great powers the risks of overreaction are things like inadvertent escalation. when there is a crisis and you are very worried about another country's capabilities, that might lead to a high risk of escalation. i think one thing that for me another risk of overreacting is if the us pivots too strongly to almost a containment strategy, that, one thing we almost understate now is the

risk of a week china might be even more great for us national interests, potentially pushing china's economy too far down could lead to diversionary war on the part of china, could lead to more unstable situations in the south china sea. those are some of the things i see in terms of misperceptions and miscalculations potentially spiraling to conflict escalation. >> thank you. >> thank you for your submission. i like the way you describe the nature of the challenge, the system overall can have difficulties, challenges, deficits in terms of innovation but certain areas of excellence or focus that are targeted and can result in the kind of innovation with direct

application and the monetary space and the like and that is a useful way to think about this omma but i sensed in your statement your assessment of the trajectory, china can do this with all these challenges and problems it has, the trajectory they are on if i heard you correctly is it should be of great concern to the united states that we are not doing things to thwart this targeted innovation, don't want to put words in your mouth but however you described it. am i capturing your statement correctly? and if so, what would the key things be in your mind in terms of dealing with military fusion, thwarting that innovation model. is it the talent program are cracking down on that? what would it be? >> i'm not as pessimistic but

it is looking at what are those key pieces china is putting in place that won't drive today's industries but the industries of the future so that gets at those facilities, looking at capacity building and those in essence take time to play out. a lot of things we are talking about today are the result of policies they put in place 10 or 20 years ago. especially the talent programs, not to say they are 20 feet tall, that's never what i am saying or that we need to contain -- it's a question, especially in the some of these new industries that are going to drive the future, things we can't even think about right now, the focus is do we want some of these new technologies developed with our values or china's or do we want to

control these areas and especially when we talk a lot about ai, biotechnology, thinking through okay, phenotype for what genes do and how that can be used for good and drive medicine and how do we deal with the changing climate and other areas and the flipside is how technologies can be used in the hands of another territory in government in ways we find consistent with our values so it is kind of thinking through those investments, not just the amount of money but thinking strategically about what are the tools of discovery, how do we continue to grow? if we just run in place china is not running in place so thinking through how to foster the talent and it is not just

at the phd level and i was taken with earlier comments. what does it mean to have a technically proficient workforce, that's not just phds but coming back to the buyer manufacturing, jobs that you don't need a phd and sometimes even a bachelors degree for but you do need a level of technical proficiency and how do we build that resiliency into our own system as well as thinking through what are those technology areas we don't want to be dependent? >> thank you. i probably have an hour of questions that i will squeeze into a short time, this is very helpful. good to see you, thank you for your prior service. you still have a lot of fans in

your former places you served. so i share their good wishes. i want to challenge a bit of this. mr. ding, my first visits to china were in the mid 80s, you talk about diffusion. i think of this as adaptation, and system integration. at that time i visited beijing where the cars were being pushed around by four workers on a dolly because they didn't have integrated manufacturing. i visited the mcdonnell douglas, now part of boeing, where aircraft were being produced and we were teaching china how to integrate and i would argue how to adapt, and

in part, how to enable diffusion. so i think i guess my questions go to not about your question about are we trying to contain, my concern is are we enabling, the administration appears ready to do an outbound in basement screening mechanism, something this commission has supported in concept because of what types of us capital is going to support adaptation, diffusion, whatever you want to call it. you are on the receiving end of talent programs where gaps in chinese capabilities were often being filled by us capabilities through the education systems,

acquisitions like complete jeni makes back in 2012, 2013. china has every right to expand its economy, what are we doing to advance the ccp's goals, but also supplying the capabilities, integration enhancements, and allowing huawei into the market early on with its pricing techniques, gave them diffusion capabilities, keeping a blind eye to the standard-setting approach that china was pursuing. i'm going to stop. what is your response to that?

are we enabling china, what steps should we be taking if any? do you want to start? >> let me say two quick things. one is the question is, this is not a 2 player game which if we stop enabling, or we stop connections to china, other countries will fill in and that is important to understand, that we are not doing a two player game, we have to calculate whether cutting off access to china just allows other countries, other firms to fill in the gap. the second is to compete in a world of globalized innovation networks, you sometimes have to enable other countries at the same time you benefit from them

enabling you. so it is hard for companies to compete on the global scale without access to talent around the world, china has one of the strongest talent bases in science and technology so that is why us firms are trying to tap into that talent base of for me it's not a question of can you keep -- can you cut off china access from the us innovation, how do you keep the us environment as open as possible knowing every now and then you have 2 let some flies in but you will run faster than the other side. >> i don't see a lot of chinese entities doing research in the united states but the amount of us r&d spend and participation still is high, covid set it back but our staff did a paper-based on commerce data looking at the rate of spend on r&d but it continues to

increase by us multinationals in china but i don't think it is a 2-way street. >> the multinationals spending money on research in china are not doing it out of charity, to help china but because they think that is best for their business and their firms to be competitive. research in asia helps china's innovation base and helps microsoft greatly and if you look at talent flow that brings a lot of people who become fellows at microsoft research asia in beijing and brings them to the us innovation ecosystem as well so they are not doing out of charity. it's a 2-way street for them. >> that's okay. >> thanks. a really difficult question and i think it comes to looking at do we treat china as a neutral actor. the hope was china as it got

richer and more capable that it would change and acquiesce to global norms of commerce. and that is not what we have seen. back to the questions of ip. it can be, they can put in place the support for their own developments and companies at the same time, not respect the technology or apply them as equally to foreign firms and in some cases what we are seeing so understanding the need to foster that competitors come - competitiveness without protecting western ip. but it comes down to transparency and reciprocity and benefits and a lot of companies make that deal that they have 2 compete, they have to be in the china market and make concessions they wouldn't

make another places. but it also comes down to is a level playing field when our companies are researchers are competing with those that are supported by a nationstate that don't have to make market based decisions because they have those. or on the flipside, they don't get access to the market in china the same way or the market excess is used to gain technology and the tacit knowledge and to look back at okay, great example of this. .. around the development cycle. in areas related to genomics research, recently there are papers being published in western journals where the sequences are not being published. there is a statement, a caveat that this is not a loud, the chinese government does not allow the export of its own genomic data or the sequencing

information. we are not sharing so we are not sharing it. we are givingg you a summary of that but that's not, those are not collaboration. so it's a slippery slope i think. and working with our friends and like-minded and allies because it faces same challenges as other companies have to compete and sometimes on an unlevel playing field so it's like how do we work together to ensure that competition, fairness, that's really what it comes down to. >> thank you. dr. ding, i looked at this period of 90 with a very factors it does seem very ict had h. my question is does this diffusion index or this theory

of diffusion index applied to aerospace, material size, biotech, agriculture science, energy production beyond the ict realm? >> yeah, i think what i would say is the reason why i focus on ict. ict come information communications technology, is just adoption of computers by businesses.ss those are things are going to affect every single industry. what happens in the ict field affects aerospace. it's going toin change out anything related to aerospace production, services is going to function. and innovation aerospace is not going to change out the ict field operates. that's the difference between a general-purpose technology and an industry where your only concerned about marketeers. general-purpose technologies like ict have the ability to usher in at all countries to sustain productivity growth in the long run. that's why focus on ict.

i i think you see some of the hammocks potentially another field but why a focus on computers, admission communications technologies, this'll be relevant for ai which is what everyone is talking about now, the potential for ai is not because people are going to make a bunch of profits on the ai industry. it's going to get ai's going to transform out aerospace is done, how all these other fields will be done. so having used diffusion capacity indicators for this particularap technology field is really important. >> just a follow up on that. i mean, going your recommendations or your recommendation about technology diffusion institutions that are governmentha sponsored, is thera historical track record of that being successful at least in the united states? i can see the argument for as well as historical examples of u.s. government investment in basic research. but moving to the application of foundational technologies or revolutionary technologies, i'm not aware of historical examples

of that they being needed. in fact, it might be a drag on our private sector driven system of decentralized firms, discovering and refining use cases and then expanding it where it actually produces value. is there a historical precedent and is this a good idea is basically what i'm asking? >> the most important government policy for use technological capacity in history was the moral act, and it expanded the amount of land-grant universities in the late 19th 1h century and many of thosesi land-grant universities focused on just engineering education, technical education, broadening the base of mechanical engineers, chemical engineers in u.s. at the time. and in that historical period, germany, britain, they were producing more nobel prize winners than the u.s. there were capturing the

majority of publications and patents, cutting edge innovations and chemicals and all these other fields. u.s. was far from the scientific frontier but the u.s. became the world's most productive economy and that period because i think they develop a wider engineering base that was connected to scientists, connecting scientists and entrepreneurs and developing a wide base of engineering skills related to general-purpose trends like mechanization and spread of interchangeable manufacturing in the u.s. so for me i think there are historical antecedents to some of these pushes that i am making. >> and the still existing land-grant colleges are nodded to to the coming kind of foundational technology or whatr term you want to use? >> yeah. i think we have institutions in place. i think part of it is there's

always going to be a lag between new technologies and a different institutions can catchlo up. so the role for the government, for me, is to what extent can it step in and help with that lag, where the skills are still racing up to with the technology is going. >> thank you. >> do you want to add something? no? i thoughtd in you were -- >> i can if you want. >> i thought you were raising her hand. >> no,ho no. if you were turning to me. he was so -- [laughing] >> so i would just as i think there are a lot of historical examples of our government investmenter has driven the diffusion. i mean, we can go back to that time period the dr. ding was just talking about with agriculture, because looking at

some of those first investment in agriculture and bringing that back to be planted here in the u.s. but i will jump to more recent times. we will look at the manhattan project, look at the space program. those were all massive programs and the spinoffs from those resulted in all kinds of different industries. and we look at still the investments international l laboratories and the technology that comes out of that that is actually created and other examples that are split up into small companies. i don't think we can underestimate the impact that those investments have and that foundational pieces. >> right. >> maybe there's a definitional not issue but question here, what is basic research and what is applied, right? so anyway. thank you. >> the. >> at the risk of annoying my colleagues, has we're about to

go on a lunch break, i will submit questions for the record. they willbm focus on what skills you see a really important at these labs. because this is an education and training hearing, and so i will look forward to questions for the record on those issues. so with thatis i think we will take a 30 minute break and be back for the final panel. i don't know, it's in the schedule how longch we are allowed. and thank you very much. the witness really helpful and informative. i learned a great deal. thank yout l, all. [inaudible conversations] [inaudible conversations] [inaudible conversations]

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