- Over the last years, geopolitical tensions between the US and China have spilled over into innovation cooperation between the two countries, most notably in the high-tech sector.
- Most visibly, the US has extensively used export and investment controls to reduce the outflow of advanced technology products to China. China has responded with an acceleration of its long-standing efforts towards technological self-sufficiency and catch-up in critical technologies.
- These dynamics extend down to ground-level projects, where a “decoupling” of research cooperation is quietly happening. Data from China’s ‘Intergovernmental International S&T Cooperation’ fund, distributed through the Ministry of Science and Technology (MOST), suggests that China is cutting research funding for US projects. Instead, China seems to diversify research cooperation and funding to smaller partner countries. China also announced to leverage BRI relationships to foster an ‘Innovation Community’.
- On the US side, the Department of Justice in 2018 started the ‘China Initiative’ to criminally pursue researchers with undisclosed connections to the Chinese government. Chinese researchers also face visa issues and tighter scrutiny in the US. Universities, such as MIT, Stanford and Princeton, have cut their relationship with Chinese companies.
- Ultimately, a decoupling of research cooperation will hurt the innovation power of both countries. The IMF calculates that a tech decoupling could lead to a drop of 4% and 3% of GDP for China and the US respectively until 2030. Meanwhile, third countries can potentially benefit from increased research cooperation with China, as it seeks to diversify away from the US.
Sinolytics is a European consulting and analysis company focused on China. It advises European companies on their strategic orientation and concrete business activities in China.