On 5 March, the Hudson Institute’s Dan Patt spoke to a panel featuring four other speakers, including Defense Innovation Unit Director Michael Brown and Air Force Lieutenant General Gen. S. Clinton Hinot. The topic at hand: “Competing with China through Budget Agility”.
The central point made by Director Brown was that Sino-American competition is centered around a tech race in which America must stay ahead. In key areas like autonomous vehicles, 5G or biotechnology the race is pretty even. One of the most important things which can be done to make America more competitive in this fight is increasing budget flexibility.
It is undeniable that China has been stealing a huge amount of foreign technology. Even genetically modified rice from Kansas didn’t escape the clutches of Chinese espionage. Nevertheless, that doesn’t mean China hasn’t been innovating at home. American-style tech development and investment architecture featuring elements such as tech parks and venture capital are no longer foreign to China and Director Brown was quick to highlight that there has been a great deal of success in coordinating joint efforts between the PRC’s academia, government and private sector.
Perhaps it is wise to consider Kai-Fu Lee’s argument from his famous book “AI Superpowers” which underlines China’s ability to innovate through optimization. Sure, maybe social media isn’t a Chinese invention but few would argue that the WeChat infrastructure, heavily optimized for a Chinese user base, is inferior to Facebook or Instagram. For the Chinese user, the former is much better suited for the online culture which has developed in the People’s Republic. Western tech companies try to make their products one-size-fits-all and the gives their Chinese counterparts room to build on their achievements. Moving away from the domestic market, this means that Chinese innovators may be especially good at improving upon stolen tech.
To win the tech race, Director Brown point out that America needs speed. Speed that will allow for quick acquisition and implementation of groundbreaking technology which may give the country an important advantage over its competitor. The most important change that needs to happen to achieve this is budgetary flexibility.
The Pentagon currently operates on a yearly budget which does not allow defense officials to shift funding from one area to another. According to Brown, this is not the way to successfully innovate. Much more flexibility is needed. Moreover, the current budget cycle which sees years pass between projects starting and their final results actually being implemented is just as outdated. Shorter cycles and deadlines inspired by the private sector are the way to go because, in Brown’s words, “It’s a completely mismatched system for what the competition with China calls for”.