Craig Carmoney’s BLOG

To U.S. Policymakers:

America is standing at a strategic crossroads. While efforts to revive domestic manufacturing have dominated economic discourse and political agendas, an even greater challenge looms—one that threatens to redefine the balance of global power for generations. The United States is at risk of falling behind in research and development (R&D), and the implications are more severe than many realize. China, through sustained investment and long-term planning, is positioning itself to dominate the next era of innovation-driven industries. If the U.S. does not rapidly recalibrate its priorities, it may face a future where technological dependence replaces leadership—and recovery becomes nearly impossible.

China’s R&D Surge: A National Strategy with Global Consequences

China is not simply playing catch-up. It is executing a deliberate, well-funded strategy to lead in critical fields like artificial intelligence, quantum computing, biotechnology, semiconductors, and clean energy. In 2023, China’s R&D spending surpassed $600 billion—closing the gap with the United States. More importantly, it is increasing not just the quantity, but the quality of its output: China now leads the world in high-impact scientific publications, international patent filings, and STEM graduate production.

This growth is not accidental. It is backed by state-led initiatives like “Made in China 2025,” the “14th Five-Year Plan,” and a suite of national laboratories and research universities aligned with strategic goals. These efforts are synchronized across government, industry, and academia, reinforcing a long-term vision for technological supremacy.

The U.S. Response: Overemphasis on Manufacturing, Underinvestment in the Future

In contrast, the United States has largely responded by turning to manufacturing as a catchall solution for economic insecurity and supply chain fragility. While onshoring and industrial resilience are legitimate concerns, manufacturing is not a substitute for innovation. It is a downstream beneficiary of R&D—not its driver.

Policymakers must recognize a fundamental shift in global economic structure: the greatest value creation today stems from intellectual capital, not physical production. Countries that lead in R&D shape the rules, own the platforms, and capture the lion’s share of economic and geopolitical power. Manufacturing, especially in high-tech sectors, increasingly depends on the fruits of innovation—materials science, automation, energy storage, AI-driven logistics—most of which originate in labs and R&D centers, not factory floors.

The problem is not simply that we’re investing too little in R&D—it’s that we’re investing too slowly, without strategic coherence, and with diminishing federal commitment. Public R&D spending as a percentage of GDP in the U.S. has fallen from over 2% in the 1960s to less than 0.7% today. Private sector innovation alone cannot fill this gap; foundational research and breakthrough science require sustained, risk-tolerant public investment.

Policy Recommendations: Restoring America’s Innovation Leadership

To regain strategic momentum, policymakers must act decisively:

Rebuild Federal R&D Funding: Double federal investment in basic and applied research over the next decade, particularly through NSF, DOE, DARPA, and NIH. Prioritize sectors with both economic and national security implications. Establish a National R&D Strategy: Create a unified, bipartisan innovation strategy that aligns public funding, academia, and industry toward long-term goals—similar in ambition to the space race or the Human Genome Project. Modernize the Talent Pipeline: Expand STEM education and research fellowships. Incentivize high-skilled immigration, particularly for researchers and entrepreneurs in critical fields. Without top talent, R&D leadership is unsustainable. Link Innovation to National Security: Strengthen R&D protections and export controls for emerging technologies while encouraging trusted global partnerships. China’s dual-use strategy ensures civilian tech feeds military capacity—ours must anticipate that. Rethink the Role of Manufacturing: Shift the narrative: manufacturing should be seen as a beneficiary of R&D, not the other way around. Smart manufacturing policy focuses on advanced capabilities and integrates with innovation ecosystems.

The Stakes: Beyond Economics

The implications extend beyond economics. Whoever leads in R&D will not only own the next wave of industries—they will set the ethical frameworks, technical standards, and geopolitical terms of the 21st century. If the U.S. cedes that ground, it risks strategic dependence on a rival power whose values diverge from democratic norms.

This is not just a competition of economies, but of systems. To preserve national security, global leadership, and future prosperity, the United States must return to what made it exceptional: relentless investment in discovery, innovation, and the future.

Policymakers hold the keys. Now is the time to act.