Battling with China over trade to control US AI, quantum, biotech sectors

Beijing has repeatedly shown the world that it is willing to use its dominance in supply chains as a weapon, and President Donald Trump had to defuse the recent dispute over rare earths during his recent trip to Asia. But rare earths are just a glimpse of the power China could have over the U.S. economy as we begin adopting the technologies of tomorrow.

Three technologies are emerging as particularly important to America’s national security over the next decade: artificial intelligenceQuantum computing and biotechnology. Just as China can now exert influence over U.S. production through rare earths, we are at risk of significant and growing Chinese influence over these foundational technologies.

In fact, American dependence on Chinese supply chains is already becoming clear. American leadership in AI depends on U.S. data centers continuing to have access to specialty chemicals, circuit boards and networking equipment from China. China controls critical inputs for quantum computing, including cooling devices, precision lasers and several vital minerals.

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Perhaps most worrisome, according to a recent study, China is the sole supplier of at least one key ingredient for more than a third of the nearly 2,000 drugs approved in the U.S., including amoxicillin, one of the most commonly prescribed antibiotics.

The United States still has strong cards in the game. The USA Private sector leads Global spending on research and development is the largest and most liquid in the world, and U.S. capital markets are able to finance ambitious projects. America’s talented workforce, from machinists to STEM researchers, is well-positioned to build critical supply chains and benefit from the return.

However, unlocking these benefits requires creative incentives. Our new one report Details how to do it. The United States must act now and bear the costs to reduce risk to critical supply chains or it may pay a much higher price later if tensions escalate. Building on the Trump administration’s progress on rare earths, the U.S. government should incentivize domestic production of several dozen critical raw materials for semiconductors and data centers, including various chemicals and hardware components, as well as key materials for quantum computing and biotechnology, such as refrigerators and medicines.

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Government measures for mobilization are also required private investment to quantum computing and biotechnology. The Department of Defense should use its procurement power along with contract milestones to create demand and competition to deliver a viable quantum computer that is powerful and reliable enough to solve real-world problems faster than today’s best supercomputers. Incentivizing private investment in bioproduction centers across the country would help smaller companies bring new technologies to market by co-financing shared production infrastructure and easing regulations for expansion.

While economic security begins at home, America is not alone in this race. The European Union, Japan and South Korea have pledged investments that could help strengthen U.S. manufacturing and critical supply chains. When the U.S. government stores key drug ingredients or critical minerals, it should turn to trusted markets. Several allies have capabilities that could help accelerate and expand new sources of critical minerals, as demonstrated by the framework recently adopted by the United States and Australia.

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We know from our own experience that the U.S. government can leverage all of its tools for today’s era of economic warfare and position itself to compete with technologies that are not yet available. U.S. agencies and departments are often too isolated to have a complete view of today’s vulnerabilities or the risks that are just beginning to emerge. Establishing an Economic Security Center would strengthen government coordination, improve technical expertise and deepen partnerships with the private sector.

There is strong bipartisan support for strengthening critical supply chains and significant progress to build on. We must maintain this momentum to ensure that the American economy can compete and thrive in this new age of technology.

James D. Taiclet is chairman, president and CEO of Lockheed Martin and co-chair of the Council on Foreign Relations Economic Security Task Force.

Justin Muzinich is CEO of Muzinich & Co. and co-chair of the Council on Foreign Relations Economic Security Task Force. From 2018 to 2021 he served as US Deputy Secretary of the Treasury.