The United States can be on a winning path by the middle of the decade if it can solve six challenges. The cumulative answer to how we address these challenges constitutes an agenda for restoring America’s competitiveness.
The first three challenges are foundational to how the United States pursues technology innovation – through a national process to identify and accelerate promising breakthroughs, a techno-industrial strategy that translates technology advantage into economic power and prosperity, and an American way of tech governance that supports innovation by accounting for risks and bolstering public confidence. Fundamentally, this represents a plan to shift the U.S. approach to tech competition from reactive and defensive to strong and agenda-setting. The last three challenges address the foreign policy, defense, and intelligence instruments of American statecraft that protect and extend national competitiveness in a global context. Technology competition is changing the geopolitical landscape; the tools to compete must adjust.
The chapters that follow elaborate on each element of this agenda to identify key issues within each that, if addressed, can change the competitive landscape in America’s favor.
Challenge 1: Harnessing the New Geometry of Innovation
How can we unlock and connect the expertise, will, and resources that exist throughout American society to build national advantages in critical technologies? The United States’ strengths across its commercial, academic, and government sectors are not oriented for international competition. Our proposed answer is a new public-private model – one that provides a focused strategy process for the United States to deploy in making informed judgments on national technology priorities and for creating action plans to accelerate the tech applications.
The United States cannot continue to shoot behind the target on the next critical technologies, such as biotechnology, smart manufacturing, and new energy production and storage. Without a national plan, the United States is set to address them in a piecemeal fashion, or only belatedly connect their impact to the future of geopolitics and democracy once the consequences are too obvious to ignore. This dynamic has led to ongoing, belated U.S. efforts to rebuild its microelectronics industry, prevent domination of global 5G infrastructure by companies backed by a rival state, and extend U.S. leadership in AI. In each case, the United States was caught flat-footed and had to respond to mitigate real strategic disadvantages. Across two presidential administrations, policymakers acted boldly in these three tech areas, but in reaction mode. We cannot confidently say that the United States is better positioned to proactively address “the next 5G.” Even if our awareness of the tech-national security nexus is heightened, unless something changes we will continue to play strategic tech whack-a-mole. Looking out to 2030, we must act soon to anticipate trends and get ahead of them. The competition for paradigm-altering general purpose technologies is intensifying and expanding to new areas.
In Chapter 1, we offer a new public-private model of cooperation that outlines an organized process for getting past listing important sectors to curating and resourcing investable options for technologies that can drive national competitiveness. First, the United States is home to some of the world’s best tech horizon scanners, and those nodes of expertise should be linked into a network to support national goals. They should be guided by an evaluation framework that systematically analyzes the significance of a given technology, whether U.S. rivals are positioned for advantage, and what needs to be done to improve the U.S. position. Second, identified key technologies require action plans that push beyond mere lists of important technology sectors to set concrete goals for investing in, incentivizing, and accelerating the development of specific capabilities. Third, public and private resources should be blended through resourcing mechanisms that can accelerate innovation and fill international competition gaps.
The United States lacks a hub to coordinate and undertake these activities. Several viable options exist — and are worthy of study — based on possible paths in the executive and legislative branches, as well as via new public-private arrangements. An entity, or combination of entities, dedicated to enhancing America’s technological competitiveness should serve three primary functions: coordinate both within the government and between public and private stakeholders, provide original analysis to support decision-makers, and operate as an action arm to implement action plans that move strategic technologies forward. All three functions need not sit under one roof. But establishing a lasting and integrated set of actors would best support long-term strategy across a multi-decade competition.
Over the past year, SCSP has prototyped the kind of technology evaluation process we are proposing by convening leading figures from across American society. Based on that work, our preliminary judgment, discussed in Chapter 7, is that AI, novel computing paradigms, and new networks will remain as battlegrounds between now and 2030, while biotechnology, new forms of energy generation and storage, and new manufacturing paradigms will join as must-win competitions. Within these and other fields, our early analysis has identified several specific and audacious technology goals that the United States should advance through an organized strategy.
This next wave of innovation will stitch together the physical, digital, and biotechnical realms. For example, AI is driving advances in drug discovery, chemistry, and fusion energy. Synthetic biology is expanding beyond health to transform sectors such as agriculture and materials. Computing may be transformed through neuromorphic, biological, and quantum methods. Next generation networks will shape the digital domain’s links with the physical and biotechnical, as 6G, blockchain, and quantum communications evolve. And breakthroughs in energy storage, such as new battery chemistries, and in energy generation, such as nuclear fusion, could revolutionize how we travel, how we build, how we compute, and how we protect our environment. The convergence of multiple general purpose technologies could lead to a broad reinvention of America’s manufacturing base.
Challenge 2: Restoring the Sources of Techno-Economic Advantage
How do we ensure that the United States remains the world’s most dynamic, competitive, and resilient economy in the 2020s? America’s advantages across its innovation ecosystem, workforce, and financial sector mean the economic competition should be America’s to lose. Today, however, the erosion of American manufacturing combined with the PRC’s techno-economic advance has triggered anxiety that the American system lacks resilience and cannot convert its advantages into national power. As Chapter 2 elaborates, to stay ahead, the United States needs a techno-industrial strategy that increases economic output and fills economic and national security gaps.
Despite holding advantages across key economic fundamentals, the United States is falling behind in advanced industries.1 Government inattention has led to companies outsourcing much of their manufacturing to East Asia, resulting in an imbalanced U.S. economy with advantages in software but vulnerabilities in manufacturing. The United States is losing the ability to produce critical technology inputs and remains reliant on supply chains that run through or dangerously close to its main strategic rival.
Secure access to critical technology inputs is a cornerstone of national competitiveness. Leverage over the raw materials, production capacity, and know-how required to build components of digital networks, high performance computers, defense systems, electric vehicles, and virtually every other significant piece of modern technology is a freshly appreciated source of power. The location of hardware manufacturing, once an afterthought in a globalizing world focused on software innovation, is becoming critical to strategic competition.2 The CCP’s strategy is to capture the entire value chain of key inputs, including permanent magnets, batteries, and semiconductors, to reduce its own strategic vulnerability and build leverage to exercise abroad. In such a world, ceding lower levels of the value chain means accepting serious strategic risk unless the locations and supply chains for the critical technologies can be secured.
To address these vulnerabilities, the United States must double down on its strengths. “Industrial policy” is a fraught label, but targeted government intervention can fill critical gaps and provide public goods when the market falls short. Building digital infrastructure and strengthening the American workforce, for example, can create a path for technologies to diffuse across the economy, unleashing private sector innovation and boosting economic output. Public-private partnerships can help the United States address its supply chain vulnerabilities and preserve financial leadership by unlocking innovation in digital finance.
Investment at home is not enough. Beijing’s systematic technology theft and massive government support for strategic industries have destroyed the idea of a level playing field, leaving firms in the United States and allied countries at a disadvantage. Inadequate guardrails on capital flows and the export of dual-use technologies mean America and its allies are funding and supporting the PRC’s technology ambitions and military modernization. Pushing back is a necessary step towards restoring democratic techno-economic advantage.
Ultimately, the question is which system is better organized to convert economic fundamentals into enduring national advantage. This calls for a five-part techno-industrial strategy to ensure a more prosperous and resilient U.S. economy. The first and second elements are investing in digital infrastructure and developing a tech-savvy workforce, including by attracting talent from abroad. Third is building manufacturing capacity for critical inputs. Fourth is preserving U.S. global leadership in finance, including by leveraging innovations in digital finance. Finally, the United States needs to wield its economic and financial might to curb the PRC’s techno-economic malpractice.
Challenge 3: An American Approach to AI Governance
How can we develop a technology governance regime that protects the rights of individuals and still unlocks the power of innovation to improve society? All societies are searching for models of technology governance that enhance global competitiveness by propelling innovation while also accounting for risks and vulnerabilities. The EU is building a regulatory framework. China is pioneering a techno-authoritarian model. The search for an American model, outlined in Chapter 3, takes place in this global context.
Tech disruptions have impacted the relationship between state and citizen, introduced novel governance dilemmas, and enhanced the vulnerabilities of open societies to external threats. Public concerns about these challenges need to be addressed for the United States and other democracies to fully capitalize on broad societal benefits that the tech revolution promises – to improve public health, for example, or to better manage the environment. Prevailing in a contest of political systems requires finding greater consensus, within and among democratic states, on how to resolve the democracy dilemmas of the digital age.
The digital revolution is challenging foundational principles of America’s constitutional system of government – especially privacy, free speech, and equal protection. Modern business models that thrive on personal data have prompted intense concerns about how that data is controlled and traded, yet numerous proposals for national legislative frameworks have stalled. New surveillance and facial recognition technologies are enhancing the investigatory powers of the state, yet clear restrictions and guidelines have been piecemeal. The question of online content moderation remains mired in disagreement over approaches to intermediary liability. And while the turn to automation is improving efficiency across many sectors, algorithms are appearing to reinforce human decision-making biases in contexts as wide-ranging as hiring, home loan approvals, and health care. The prospect of further policy paralysis on all of these fronts risks eroding public trust and hindering innovation.
Given the vulnerabilities of open societies to external interference, some of these governance challenges also present national security problems. Competitors are exploiting digital dependence across society through cyber-attacks, data harvesting, and sophisticated disinformation campaigns. Democracies are especially vulnerable due to their openness, decentralized approach to connectivity and digital governance, absence of centralized infrastructure protection, patchwork rules on data privacy and security, commitment to the free exchange of information and ideas, and tolerance for strategic competitors’ companies to operate relatively freely in our digital realm.
For AI, which presents the most consequential and far-reaching governance challenges in the near term, four principles should guide the American approach. First, the United States should take a sectoral approach because the risks and opportunities of AI are inextricably tied to the context in which it is used. Second, the United States should rely primarily on existing regulatory agencies, which have experience incorporating rules for new technologies. Third, governance should focus on high consequence use cases. Finally, in addition to regulatory guardrails, the United States should utilize robust non-regulatory approaches to governance.
These principles should inform an agenda focused on several priority areas for governance. Data privacy rights are critical to a digital future aligned with democratic values. We need to forge a new consensus on the pre-digital legal concept of a reasonable expectation of privacy. Facial recognition concerns should be tackled through targeted use-case restrictions. We need to operationalize the principle of mitigating unwanted bias in AI systems and ensure there are options for recourse when systems prove unfair. We need better ways to anticipate socio-technical consequences of AI systems prior to their use. And social media platforms need a multifaceted approach to mitigate disinformation.
Tackling this agenda can make room for greater attention to ensure that promising tech breakthroughs are marshaled to improve lives more broadly. This promise can be seen in tech solutions for more effective government — smart cities, better and safer transportation, and efficient social services. The promise is evident in human health and environmental stewardship. Consider recent AI-driven advances in personalized and precision medicine, gene therapy, vaccine discovery, drug design, and cancer screening. Or advances in environmental solutions, including optimized crop management, reduction of plastic waste, and experiments with fusion energy. If we consider the wide application of AI across sectors, effective U.S. leadership in AI and data governance is imperative to shaping our society in 2025 and after. The lessons we learn from governing AI will set precedents for governing other emerging technologies as well.
Challenge 4: Remaking U.S. Global Leadership in the Age of Tech Competition
How can we preserve an open international order, underpinned by respect for sovereignty and trusted digital infrastructure, that meets the aspirations of the widest number of people and is still guided by democratic values? Chapter 4 traces technology’s place at the heart of the long-term contest between democracy and authoritarianism. The PRC is pursuing a methodical approach to build technology spheres of influence from which it can coerce political preferences. Its strategy rests on controlling the global digital backbone, providing useful platforms and services, and setting international tech standards. The United States and its allies must marshal the resources and diplomatic efforts to compete across the world so nations have real choices about their futures.
The Internet is now as significant as any piece of physical geography – democracies will need to double down on technological solutions and technical standards-setting that support an open, interoperable, and secure Internet against PRC-led authoritarian efforts to close off digital borders and extend the surveillance and censorship power of the state. The protection of digital freedoms is intertwined with the physical pipework beneath it. The world’s digital infrastructure is the new key to global influence. Whoever controls the digital infrastructure that moves and stores data determines the security of data flows, the global centers of economic prosperity, and the values of the society that it connects. Democracies must organize and cooperate to build secure, trusted, and resilient wireless networks (especially 5G and its successors), cables (both terrestrial and undersea), operating systems, data centers, and the digital apps, software, and platforms that support everyday governance, commerce, and life.
Most nations do not want to choose between the United States and the PRC nor see their choices as part of a contest between democracy and autocracy. The alignment of these “swing states” in the larger rivalry, which can tip the balance of winning to one or the other, will be determined by their own multi-layered definition of national interests. A winning strategy requires convincing much of the world that secure, trusted digital technologies serve their own interests, not only the United States’ and its allies’ geopolitical goals, and that authoritarian tech is a threat to their sovereignty. And it involves ensuring cost-effective and quality alternatives exist.
No democratic nation – not even the United States – can win this competition on its own. We will need to develop techno-industrial strengths within a cooperative alliance agenda, recognizing that the technology competition is not simply about economic advantage but also a national security challenge that affects us all. The United States will need to leverage the strength of the technology platforms that the dynamic private sector brings to the competition. And we will need a U.S. Government that is organized to pursue a foreign policy to win the tech competition. Success hinges on the United States’ ability to overcome the advantages in scale and speed of national action that the PRC system brings to the tech competition. As the competition intensifies and we enter a more bifurcated world, the United States will need to construct a new relationship with the PRC to mitigate the risks of escalation that includes continued engagement with its citizens.
Challenge 5: The Future of Conflict and the New Requirements of Defense
In the face of military rivals employing new technologies and operational concepts to gain advantage, how can the United States ensure a favorable global balance of military power, and uphold its defense commitments in the event of an aggression? A strong military deterrent to keep the peace is a necessary precondition for pursuing a positive agenda. Chapter 5 sketches the interplay of new technologies and traditional geopolitical rivalry that are producing a dangerous set of international conditions.
The character of warfare is changing. Already, we are in a new era of persistent cyber, economic, and information conflicts below the level of overt combat that risks bringing us closer to direct confrontation. Emerging technologies are changing the range and specificity of effects, enabling the microtargeting of individuals, and qualitatively changing the way we communicate, perceive our environment, and make decisions.
The PLA has closely studied the “American way of war” which they refer to as “informationalized warfare.”3 The United States was the first mover, giving it an unmatched military-technical advantage that lasted from the end of the Cold War to now. Both China and Russia have been intent on achieving military-technical parity with the United States in this style of warfare, and they have largely succeeded. This will make any future American power projection operation far riskier and will undercut our conventional deterrent posture.
The application of new technologies to conflict and changes in the military balance of power have engendered doubts about the U.S. military’s capacity to maintain its defense commitments, and with it the credibility of the U.S. deterrent. This can create a window of vulnerability in which rivals will be tempted to employ military force to achieve their objectives. China is actively seeking to harness new defense technologies to erode or surpass the U.S. military’s capabilities. This challenge is compounded by the brittleness of America’s own defense industrial base, the gradual nature of the U.S. military’s transition from legacy capabilities to cutting-edge systems, and the struggle to adopt novel operational concepts. These dynamics have produced a growing threat to peace and stability in the Indo-Pacific, the most strategically critical region of this century.
The United States should respond neither with despair nor hubris. We retain significant military-technological advantages that we can continue to leverage. Demonstrated experience in joint operations, empowerment of warfighters at the lowest level, hardened expeditionary logistics for contested environments, cultivation of both traditional and new allies and partners, and maintenance of a highly professional military – to name a few – remain critical U.S. advantages that China will struggle to replicate quickly, if at all.
To improve America’s military position, we outline a new competitive approach – which we call the Offset-X strategy – which would help the United States circumvent China’s military advancements and concepts of operation, restore America’s ability to more freely project power in the Indo-Pacific, and position the United States to honor its commitments to the stability of the region. This approach centers around several areas of focus, including distributed and networked operations, human-machine collaboration, human-machine teaming, primacy in software-centric warfare, resilience, and greater technological interoperability and interchangeability with allies and partners. Through these initiatives, the U.S. military will be better prepared and positioned to outsmart, outpace, outmaneuver, and – as necessary – outgun the People’s Liberation Army.
Challenge 6: Intelligence in an Age of Data-Driven Competition
How can the United States win the race for actionable insight in an information-rich and geopolitically-competitive world? Out-knowing authoritarian rivals is a critical advantage in strategic competition. Chapter 6 describes how the U.S. Intelligence Community (IC) will have to master emerging technologies to deliver relevant and timely insight to decision-makers, and augment its efforts by focusing on foreign technology developments shaping military, economic, and political trends.
Today, the IC is still transitioning between countering terrorism and supporting geopolitical competition. For the next decade, the rivalries with China and Russia, more than any other security problems, will shape what U.S. leaders ask of intelligence agencies, and how intelligence officers must operate to collect and process information consumers need.
Digital technologies are rapidly changing the intelligence environment. As foreign adversaries and private companies gain new capabilities, U.S. intelligence organizations risk falling behind. Intelligence collection has become harder. The rapid advancement of adversarial capabilities at a global scale jeopardizes the IC’s long-term effectiveness. As the PRC builds out digital infrastructure globally, U.S. intelligence will more frequently operate in environments where Beijing will have visibility into their physical and digital trails. Many pertinent insights reside within the private sector. Policymakers are turning more frequently to commercial companies to deliver. Once-unique capabilities, like geospatial and signals intelligence, have been commercialized. Private companies are often better positioned to exploit AI and other technologies for their products.
The IC’s ability to rise to the occasion will hinge on whether it can adapt to the new technological era through digital transformation; leverage a dedicated, tech-driven, open source organization to support U.S. decision-making; create new capacities to capture and master foreign economic, financial, and technological intelligence; and counter foreign threats in the information domain.
1. Robert D. Atkinson, The Hamilton Index: Assessing National Performance in the Competition for Advanced Industries, Information Technology and Innovation Foundation (2022).
2. Taiwan is the center of the microelectronics universe, making it a fulcrum of techno-economic competition. The Netherlands, because of one company producing exquisite ultraviolet lithography equipment critical to the most advanced chips, is a chokepoint in the PRC’s ambitions and a unique source of Western advantage.
3. Informationalized warfare combines guided weapons of exceptional range and accuracy and the “battle networks” that provide them with precision targeting information. The Chinese refer to battle networks as “operational systems,” and see future warfare against large peer competitors as an era of “systems confrontation.”