Today, China is an innovation powerhouse, overtaking the U.S. in critical technology sectors, including advanced manufacturing, consumer drones and electric vehicles. China’s gains should stir Washington to intensify its own efforts to strengthen science and technology development in the U.S.
But recent proposals to cut federal research and development funding and reduce personnel at federal science agencies would do the opposite, undermining the U.S. innovation advantage over China.
The stakes for U.S. innovation policy are high. Whereas a decade ago top American experts argued that China’s political system precluded innovation, all indicators suggest that today, China is a more agile, savvy, and well-resourced technological competitor than ever before.
In Nature’s rankings of global research organizations, China is responsible for an ever-increasing share of STEM publications in prestigious journals. Chinese companies are leaders in various emerging technologies: CATL in advanced batteries, DeepSeek in AI, and Huawei in 5G, for example. Across a variety of metrics for innovation — including STEM graduates, patents and R&D spending — China is catching up to the U.S.
For decades, Beijing has made reducing the technological disparity between China and the United States a central policy goal. To close this gap, Beijing has repeatedly implemented reforms to more closely fashion China’s science and technology institutions after those of the United States.
In 1986, for example, China established the National Natural Science Foundation of China, the inspiration for which came from the U.S. National Science Foundation. In 2010, this Chines agency created a biomedical research division modeled on the U.S. National Institutes of Health. And in 2014, the it introduced “indirect costs” into its grant administration to better support the development of Chinese research institutions, something it learned from the NIH and other U.S. science agencies.
Beyond reforms to China’s basic research ecosystem, Beijing has invested tremendous resources in an effort to replicate key features of the U.S. innovation ecosystem. Over the last two decades, the Chinese government has increased government expenditures on research and development ten-fold, to support the development of universities, research institutes, and technology companies that can compete with their American counterparts.
Recognizing that the U.S. university system and commercial ecosystem make it a far more attractive destination for the world’s top scholars and entrepreneurs, the Chinese government has sponsored recruitment programs like the Thousand Talents Plan. To offset the strength of U.S. financial markets, Beijing approved the establishment of the STAR market, a NASDAQ-style stock exchange designed to help Chinese technology companies raise capital.
If imitation is the sincerest form of flattery, China’s actions confirm that the U.S. innovation ecosystem remains a core strength in the technological competition between Washington and Beijing — one that the United States should not give away willingly.
But the U.S. innovation advantage over China is eroding. U.S. federal support for science and technology development has failed to keep pace with China’s rapid progress over the last quarter-century.
Over the last month, Trump administration officials have begun to implement a series of policies that, absent additional, parallel measures to bolster support for American science, could undermine the White House’s objective of advancing U.S. leadership in critical and emerging technologies.
The National Science Foundation dismissed 10 percent of its staff on Tuesday and announced plans to lay off up to half of the agency’s staff by May. Over the last week, NASA laid off 10 percent of its workforce, and the National Institutes of Health and Food and Drug Administration dismissed nearly 2,000 employees.
NIH has proposed capping the reimbursement rate for indirect costs on NIH grants at 15 percent. Indirect costs help pay for a wide range of costs, including the upkeep of lab facilities and shared core facilities, procuring necessary chemicals and paying utility bills, for example.
These policies are already hurting U.S. science — top universities are scaling back graduate student admissions and pausing new hires in response to the NIH funding freeze.
These measures are only the latest in a trend of weakening U.S. investment in science. Federal research and development funding as a percentage of GDP is at a 25-year low, and last year the NSF’s budget was cut by 8 percent.
In the U.S., private industry — not the federal government — is responsible for an increasing share of research and development funding. While important, industry research tends to focus on projects with clear, immediate commercial applications, whereas federal funding often supports high-risk research with high-reward potential.
While reforms targeting inefficiencies within federal agencies are necessary, the Trump administration should weigh these cuts against their potential impacts on long-term U.S. science and technology competitiveness.
U.S. federal agencies are instrumental in promoting the United States’ innovation advantage over China. The internet, GPS and CRISPR are just a few examples of critical technologies that were originally developed with support from federal agencies.
Federal funding is also indispensable for U.S. universities, a powerful tool for U.S. technological competitiveness. The U.S. university system simultaneously advances cutting-edge research, drives technology commercialization and trains future generations of researchers and technology entrepreneurs. American universities also attract many of the world’s most talented young people to the country, the vast majority of whom are highly motivated to stay in the country after graduating.
Global leadership in critical and emerging technologies hinges on scientific talent. Here, Washington also plays a critical role.
Federal funding, over half of which comes from NIH and NSF, supports 83,000 graduate students in science and engineering, including more than a quarter of all science and engineering doctoral students. The Department of Homeland Security facilitates study and work opportunities for talented individuals from around the world, granting visas and issuing green cards to allow non-U.S. citizens to study and work in the U.S.
Policies that cut U.S. funding for research or directives that limit talent inflows will almost certainly undermine future scientific progress.
To be sure, reforms are needed to keep up with the pace of China’s advancements in science and technology fields. For example, barriers to commercialization continue to slow technology transfer from universities to industry. Moreover, Congress’s annual budget cycle is ill-suited to fund ambitious, large-scale science projects that are implemented over many years.
Taking a page from China’s playbook, Washington should play a stronger, more proactive role in channeling investment towards high-priority technologies critical for national security.
Regardless of the solutions, one thing is clear: Without sustained federal support, the United States will continue to lose ground to China. U.S. policymakers must avoid this own goal and instead embrace a long-term vision for promoting the U.S. innovation advantage amidst sustained technological competition with China.
Cole McFaul is a research analyst at Georgetown University’s Center for Security and Emerging Technology.
