America is losing its greatest strength: human capital

We are entering a new era of great power competition, a strategic contest between the US and China. Aggressive industrial policies by the US aimed at winning back industries or at least leveling the playing field, US investigations of scholars at American universities for links to Chinese institutions, and the Select Committee recently convened to assess Sino-US strategic competition,[1] all send strong signals about the threats that China poses to America’s global position. But we should consider whether they are unintentionally sending the wrong message about American ideals, and whether they threaten the core values that made America the magnet for the best and the brightest talents from around the world since the nation’s founding.

When US Attorney General Merrick Garland, an alumnus of my high school, was asked at his confirmation hearing why he wanted to serve the country, he talked about how the US had protected his grandparents who fled anti-Semitism and persecution, and how he wanted to give back to the country that shielded them. I grew up in the same community as Garland. My parents had left China at the end of World War II, and after the Communist takeover of the mainland, they decided not to return. They told me later that they didn’t think I would have survived, and they were undoubtedly right. Like Garland, I feel the US has been extraordinarily good to me, offering opportunities limited only by how hard I was willing to work.

Growing anti-China rethoric

There are many complaints about China from Western companies and governments, particularly the US, but also increasingly other nations. Not “playing by the rules” that we expected them to, when they started taking advantage of the Western-led global trading order – technology transfer through mandatory joint ventures, subsidies to Chinese companies that made it impossible for others to compete -- we hear these all the time. Increasing US-China tensions have also fueled anti-China rhetoric in the US. I once visited a multi-billion-dollar factory in China, and asked why it was located in this particular city. I was told that the company built factories where they received the largest subsidies. In this particular case, the level of Chinese subsidy was so high that even the most efficient Korean manufacturer of that product told me they could no longer compete. I also once interviewed a manager at one of China’s largest battery and electric vehicle manufacturers, and he recounted for me how the American company he used to work for had really put them into the battery business because it needed to meet domestic content rules in order to sell its products in China. He knew because he worked for that company before switching sides. So I’m not sure how many of these cases were forced technology transfers versus Faustian bargains to gain a market position in China.

America without strong human capital

We should be thoughtful about what message we are sending to people of Chinese descent, as history has taught us many times. In the 1920s, if you wanted to get an advanced education in the sciences, you went to Germany. That all changed in the 1930s as people fled persecution. For people like Albert Einstein, Felix Bloch, Erwin Schrödinger, Leo Szilard, Edward Teller, and many others, it was Germany’s loss and America’s gain. America was built by immigrants, whether it was Germans and Scandinavians who emigrated to the Midwest, Italians and Irish who emigrated to the Northeastern states, or the Chinese laborers who built the first western railroads. What if the US could no longer cultivate, attract, and retain human capital such as people like Jensen Huang who built Nvidia, Lisa Su who turned around Advanced Micro Devices, or Eric Yuan, the founder of Zoom, on our shores? Would the country be better off?

Enjoying the best of both worlds

To me, it was already evident in the early 2000s that the US would eventually regret the loss of capabilities associated with making high-tech products. I remember visiting the cable TV operator in Beijing and hearing their plans to lay optical fiber all the way to apartment buildings and businesses. Then I visited an optical components factory in Shenzhen, and thought to myself that one day the American defense establishment would wonder how China developed those capabilities. My colleague Gary Pisano and I wrote a widely read piece in the Harvard Business Review on this subject in 2009.[3] This is the crux of the debate today: the US is losing the ability to innovate, and the implications are serious particularly when you have an autocratic regime on the other end who now controls critical capabilities.

We should welcome Chinese immigrants, especially those who want to bring a business here or come here for advanced studies. One of my Singaporean colleagues once commented that the truly remarkable thing about America was that it was one of the only nations that had successfully integrated people of such diverse origins. We should take advantage of that.

As anti-China rhetoric heats up in venues like the House Select Committee on China, we should make sure that we send the right message. And that message should be: “Send us your best and your brightest, those who thirst for opportunities to better lives for themselves and their families, and to improve our society. You will be welcome on our shores, and you will strengthen us in building a better America.”

***
[1] Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party
[2] US-China Tensions Fuel Outflow of Chinese Scientists From US Universities, Sha Hua and Karen Hao, The Wall Street Journal.
[3] Restoring American Competitiveness, Gary P. Pisano and Willy C. Shih, Harvard Business Review.
[4] ASPI’s Critical Technology Tracker, Australian Strategic Policy Institute.

© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).