Pillar 3 Overview
Growing geostrategic competition with China demands asserting American influence on the global stage. China seeks to overtake America’s leadership role—across economic, military, and social spheres—and is proactively working to define the rules of the road for the second half of the century and building the economic and strategic alliances to underpin its dominance. The United States must robustly engage on the international stage to collaborate with strategic allies to counter adversaries and secure America’s leadership position at the helm of the world order.
There are four key Pillar 3 topics of competitiveness, under which we have identified eight specific recommendations. The four topics include:
The United States can promote liberal free market principles and U.S. competitiveness by exercising American soft power through international economic, scientific, and security institutions and arrangements, including those that develop rules for the 21st century global economy and standards for emerging technologies. However, China has moved aggressively to assert influence over these international institutions, and shape emerging global technology standards in its favor. Through its global development and infrastructure initiatives, China seeks to undercut U.S. influence around the world by building a cadre of allied countries friendly to its geopolitical, economic, and national security goals. China is increasing its control of ports worldwide, and locking-down supplies of minerals in other countries that are crucial for emerging technologies and the transition to clean energy. These include graphite and rare earth minerals for which the United States is 95-100 percent reliant on Chinese imports, putting U.S. technology and energy advancements at risk. China’s efforts are well-resourced, state-led, and strategic, viewed as an integral part of international competition and its quest to become the leading global superpower and shaper of a new world order.
Even U.S. allies in Europe have promulgated regulations designed to disadvantage U.S. competitors and raise their costs of doing business in the EU, including regulations on data privacy, digital markets, antitrust and, most recently, on artificial intelligence. U.S. firms have been fined billions of dollars for breaching these rules, and some U.S. firms withdrew from the EU market finding it too cumbersome and too costly to comply. The United States needs to exercise a more muscular role in the international arena to promote and protect U.S. competitiveness, and counterbalance China’s global ambitions.
China is the world's largest investor in other countries—providing funding to build infrastructure such as roads and railways, energy supplies, and telecommunications. Through these efforts, China has expanded its influence globally, posing significant challenges to U.S. economic, political, and security interests. Through its Belt and Road Initiative, China invested $679 billion on infrastructure projects in nearly 150 countries, between 2013 and 2022, while the United State spent $76 billion on similar global infrastructure projects.
The United States must take a more aggressive approach to technology statecraft, in partnership with U.S. allies, including:
This is an urgent time as other nations are developing regulations for artificial intelligence, data use and cross-border data flows, digital services, 6G, quantum, autonomous systems, biotechnology, synthetic biology, cyber security, and foreign direct investment in critical technology sectors. The Department of State should provide strong support and financial backing to enable U.S. industry standards organizations to play a robust role in international standards-setting organizations
As multiple technology revolutions unfold and take center stage in the global economy, the protection of U.S. intellectual property (IP) rights becomes ever more critical. Since these technologies are dual use, they will be central to national security as U.S. defense will depend on the same technologies and industries that secure U.S. economic prosperity.
Due to their prime role in economic and military leadership, these technologies are prime targets for industrial espionage and IP theft. America’s most formidable strategic competitor—China— has engaged in the largest and most sophisticated theft of IP in the history, targeting IP, technology, and research from nearly every U.S. industry, from biotech and AI to aviation and agriculture. They target companies, from start-ups to the Fortunate 100, for trade secrets and IP, and universities for cutting edge research and development. The threat is in cities and rural areas all over the country.
Advanced technology is expensive to develop and takes time. So, instead of investing and taking the time to develop it, China’s strategy in many cases is to steal it. In the past few years, perpetrators were caught trying to steal trade secrets from leading U.S. companies on: aircraft wing designs, a prototype microchip used in aerospace and defense applications, ground-based and aviation turbine technology, battery manufacturing processes, a process to make specialized foam used in submarines, valves used in oil and gas drilling, and genetically modified seeds.
Some Chinese officials tie IP rights to Chinese market dominance. For example, the president of the Supreme People’s Court wrote in a 2021 essay that the courts should serve the CCP and its industrial policy goals, while President XI stressed in a June 2022 statement the need for China to allow no delays in breaking through the “chokehold” of critical core technologies. The theft of U.S. IP must be an integral part of the resolution of broader trade, security, and foreign policy issues with China.
In another form of IP infringement, counterfeit products can put the health and life of Americans at risk. A counterfeit microchip malfunction in a military system could lead to system failures that could put warfighter lives and missions at risk. Counterfeit jackets manufactured in China were sold to the U.S. government to be worn or carried by Airmen in the U.S. Air Force. Some of these products lacked crucial features endangering the health and safety of the military personnel who wore them. More than 13,000 counterfeit jackets were visible to night vision goggles and nearly 16,000 of them lacked flame-resistant hoods. Counterfeit pharmaceuticals could put lives at risk. In FY 2023, top countries of origin for counterfeit pharmaceuticals seized at the U.S. border in Fiscal Year 2023 were India, Singapore, and China. U.S. brands are the most popular targets for counterfeiters of medical products.
A company’s competitiveness, even its survival, may depend on the ability to protect its IP. IP theft costs U.S. companies hundreds of billions annually and reduces U.S. companies’ returns on investment in R&D and innovation. U.S. jobs are at risk. In 2019, 33 percent of U.S. employment, or more than 47 million jobs, were directly supported by IP-intensive industries. That year, IP-intensive industries accounted for $7.8 trillion in U.S. GDP.
Institutions like the World Bank and IFC play critical roles in financing development in the Global South. Increased American representation could steer these organizations toward promoting alternatives to China’s Belt and Road Initiative (BRI), emphasizing transparent governance and sustainable financing over debt-driven dependency. By increasing the American presence, the United States can build coalitions with like-minded developing countries supported by these organizations, countering China's strategy of securing influence through vote-buying and bilateral economic coercion.
By decoupling, the United can mitigate risks of intellectual property theft and supply chain vulnerabilities. This ensures that critical technologies, such as semiconductors and AI, remain secure from potential exploitation by China’s military-industrial complex. Expanding partnerships with allies and emerging nations in Africa, Latin America, and Asia diversifies supply chains for critical minerals, rare earth elements, and manufacturing inputs. This further reduces reliance on China, which has monopolized these resources to exert geopolitical leverage. And, considering dual-use technology-related partnerships with and investments in China, encourage U.S. private companies to weigh the value of the protections and benefits they receive from U.S. national security, cyber security, and intellectual property protection.
U.S. science, technology, and innovation infrastructure must have robust cyber security to protect research results and technology advancements from U.S. strategic competitors, particularly China, which the U.S. intelligence community assesses as the most persistent cyber threat to the United States, and its use of intellectual property theft to fast-track indigenous science and technology development.
Federal funding for R&D represents a significant investment by the American public. Cybersecurity measures ensure that this investment is not squandered through data breaches or cyber-attacks. China has relied heavily on cyber-espionage to shortcut its technological development and compete with advanced economies. Robust cybersecurity measures deny access to sensitive research, slowing China's technological progress and preventing it from achieving dominance in key industries.
to review foreign investments in VC funds, private equity, and start-ups in frontier, dual-use technology,
such as A.I. quantum, advanced semiconductors, cybersecurity, biotechnology, and space.
Other nations around the world—friend and foe alike—are utilizing innovative policies, partnerships, and models to supercharge their innovation ecosystems. We should not seek to mimic the government-controlled models of other countries, but we should learn from successful models abroad and adapt them to U.S. contexts.
Increasing the presence of American individuals in international research and educational programs fosters a deeper exchange of knowledge, strengthens collaborative ties, and enhances the nation's global leadership in innovation. Encouraging American participation in global programs provides a counterbalance to China's increasing presence in international research initiatives, reducing its ability to dominate and shape global scientific priorities.
