Signage is displayed atop a building at the Huawei Technologies Co. headquarters in Shenzhen, China, on Wednesday, May 22, 2019. Huawei is seeking about $1 billion from a small group of lenders, its first major funding test after getting hit with U.S. curbs that threaten to cut off access to critical suppliers. Photographer: Qilai Shen/Bloomberg
US companies have been effectively banned from doing business with Huawei but building walls is not the answer © Qilai Shen/Bloomberg

Silicon Valley is belatedly waking up to the fact that China systematically extracts the most advanced technology from the west, using both legal and nefarious means.

So far, the US and European response has been entirely defensive. The US government tightened up laws last year to make it tougher for China to invest in our most advanced technologies. Germany and the UK are also increasingly wary of Chinese investment.

The US is drafting new export controls so American companies cannot sell cutting edge tech to China. In May, the Trump administration effectively banned US companies from doing business with Huawei. And the FBI is frightening university administrators and technology companies with tales of Chinese spies.

Some of this was long overdue and positive — but just building walls to protect western technology won’t fix the problem. Our companies belong to a global web of innovation, and breaking it will hobble the most advanced of them.

To compete with China, the west does not need to define the Chinese people as the “enemy” or close itself off from the world. We need a positive, offensive strategy to compete with China. It might look something like this.

Going it alone is foolish. The US has the option to push back with its European, Japanese and Indian allies against unfair Chinese technology trade practices. This would be far more effective than arguing with everyone at once.

Most importantly, the west must create the norms and standards that shape new technologies. The US led similar efforts successfully after the second world war, creating the International Atomic Energy Agency for nuclear power, the World Health Organization, and later the Internet Corporation for Assigned Names and Numbers.

Imagine a “Tech 10” group of countries that set global ethical standards for artificial intelligence and digital privacy; and worked on norms for biotech to prevent dangerous gene-editing experiments on humans. And it is imperative, too, to create international norms to govern cyberwarfare while the west still has the edge in these areas. China would not be excluded, but it would have to rise to the high standards set globally.

European and US government research budgets should rise by billions of dollars to support innovation. While numbers are hard to compare, China is spending around 8.7 per cent of its government budget on research and development, while the US government spent less than 3 per cent in 2016. In Europe the proportion is similarly low.

Western science education must also improve. In 2018, the OECD ranked China 10th in the world in student mathematics, science and reading scores, while the UK ranked 23rd and the US a measly 31st.

On immigration, rather than banning China’s best minds from studying in the US and Europe (as the Trump administration has considered), the west should crack down hard on anyone actually caught spying, while welcoming those who don’t.

The private sector must grow up. Silicon Valley is fighting the US government at every turn, but in fact the two need each other. Pioneering tech companies such as Fairchild Semiconductor, Varian and others co-operated with the federal government. Contrast that with the recent public spat between Google and the Pentagon over a basic visual recognition artificial intelligence project. Within reason, US companies should become patriots again, instead of fixated on becoming unicorns.

There is no need to be frightened of China. If we defend our innovation system and steer the values of technology in the right direction, we will have created a fair playing field. We might then even be able to co-operate with China in fruitful ways. Let’s get started.

The writer is co-founder and principal of RiceHadleyGates, a consulting firm

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