China is vying to become the world’s No. 1 superpower, a distinction long held by the U.S. The communist country “is threatening American innovation and national security by exploiting weaknesses in U.S. patent protection, and Big Tech is letting them get away with it,” according to a synopsis for a new documentary film, “Innovation Race,” which opens in theaters Wednesday.
Retired Air Force Brig. Gen. Robert Spalding, author of “Stealth War: How China Took Over While America’s Elite Slept,” says that “the movie itself really talks about the importance of the patent system to innovation in the United States, how that’s kept our country secure throughout the almost 240-plus years of existence, and how that security was negated by the America Invents Act.
“And how in this competition that we face today, with China in particular, that it’s creating a challenge for America in terms of innovation and keeping its rightful place at the top of science, technology, and research and development,” Spalding says.
The America Invents Act was passed and signed into law in 2011 by then-President Barack Obama, who at the time said the “much-needed reform will speed up the patent process so that innovators and entrepreneurs can turn a new invention into a business as quickly as possible.”
Spalding also discusses what he found to be the most surprising takeaway from the “Innovation Race” documentary.
“Well, I in particular like the stories of the inventors. And I think understanding the personal calculations that they went through in terms of trying to protect their intellectual property and then realizing that they’re not able to, to me was … I think, the most important part of the film,” he says.
Spalding added:
One of the things about America is, innovation relies on individual initiative, and if you’re not certain about the ability to protect your intellectual property, then you’re going to be less likely to go out there and take all the financial risks and personal risks that are associated with being an entrepreneur and or inventor.
And so, hearing those stories, understanding the implications across our economy as you multiply those by 330 million, really just gives you a sense of the gravity of the challenge that this America Invents Act created for our country.
Spalding joins “The Daily Signal Podcast” to discuss the “Innovation Race” movie, what’s at stake for U.S. national security, and the so-called Made in China 2025 plan. (“‘Made in China 2025’ is an initiative to comprehensively upgrade Chinese industry,” Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies, explains.)
Listen to the podcast below or read the lightly edited transcript.
Samantha Aschieris: Brig. Gen. Robert Spalding is joining the podcast today. He’s the author of “War Without Rules: China’s Playbook for Global Domination” and “Stealth War: How China Took Over While America’s Elite Slept.” He’s also in the new movie “Innovation Race.” Thank you so much for joining today.
Retired Brig. Gen. Robert Spalding: Thank you. It’s great to be here.
Aschieris: Of course. Now, I want to talk about this new movie that’s coming out, “Innovation Race,” which will be in theaters on Nov. 16. Can you tell us a little bit about the movie?
Spalding: Well, I started a company after I left the military, and one of the things that I learned very quickly is that a lot of the ideas I had with regard to our patent system were no longer valid. In fact, I was told by our head of hardware that in participating in patent litigation throughout his career recently, patents, almost 85% had been overturned.
And so we had focused on trade secrets to protect our intellectual property for our company. And that’s because of the America Invents Act, which was passed in 2011, which negated a lot of the constitutional patent protections that were created by the Founders of our country.
And so the movie itself really talks about the importance of the patent system to innovation in the United States, how that’s kept our country secure throughout the almost 240-plus years of existence, and how that security was negated by the America Invents Act and how in this competition that we face today, with China in particular, that it’s creating a challenge for America in terms of innovation and keeping its rightful place at the top of science, technology, and research and development.
Aschieris: Now, without giving too many spoilers away, I heard the movie talk about national security. Can you speak to what’s at stake regarding our national security and our innovation race with China?
Spalding: Sure. We got out of the habit of really understanding what it means to compete with an adversary that’s a peer, or in the case of China, in terms of military in their region, I would say they’re at the top.
And so when the Cold War ended and the Berlin Wall came down, at the time, we were spending 2% of [gross domestic product] on research and development, science, and technology. We had an enormous science and technology capability in terms of indigenous talent in the United States. Our infrastructure and our manufacturing were top notch. And as the Cold War ended, we really embraced China, and all of those things really reversed.
So today, when you think of how much we’re investing in science and technology from the government standpoint, it’s less than 0.7%. Usually most of that technology ends up in the hands of China. Our infrastructure is a grade D. Our manufacturing supply chain has almost completely moved to China. And then most of our talent now is coming from overseas, and in particular, a lot of it is coming from China.
So all of these things that we had that led to our victory in the Cold War, which was not a military competition, but more of an economic and science and technological competition, all of those advantages have essentially been subsumed by China.
And so as we enter the second Cold War with Russia’s invasion in Ukraine and a coming invasion by China of Taiwan, we find ourselves in a completely different position than we were at the end of World War II, which is we had all of the supply chain, we had all the manufacturing capability. Today we don’t, and that leaves us at tremendous, tremendous disadvantage.
One example alone is pharmaceuticals, where China controls the manufacture of pharmaceuticals, and if we do try to get in a situation where we’re sanctioning China over an invasion of Taiwan, their ability to cut off supply to pharmaceuticals will be a crippling blow to the United States. And so I think we haven’t really thought well in terms of what are the implications of this relationship with China that we’ve looked after over the last 30 years.
Aschieris: Yeah, that is really interesting, to put in perspective with China controlling pharmaceuticals. How do we reverse that? Is it too late at this point? How do we bring that to the United States so we aren’t in a situation where if we do have to sanction China in the event that they do invade Taiwan, that we’re able to give the American people what they need?
Spalding: Well, the funny thing is, most of the people that say that we can’t do this are the people that are benefiting from the fact that we did do this.
And for the most part, U.S. corporations and financial institutions operate on greed. That’s always been the case. It was even the case during World War II when you had companies that were advocating not to go to war with Germany because they had a financial stake with the Nazi regime.
So this is not something new to U.S.’ open system and capitalist free market system, but it’s something that we have gotten out of the habit of dealing with from a government perspective.
And so we can move the supply chain. We can rebuild our infrastructure. We can have American children go and have STEM scholarships just like we did during the Cold War, it just requires resolve.
It will take some time, but nevertheless, this competition is not a military competition. And so one of the things that we can consider, like we did during the first Cold War, is to reduce our direct expenditure on military weapons and transfer some of that expenditure to the things that I’m talking about, infrastructure, manufacturing, science and technology, STEM education. And in doing so, prepare ourselves much better for the competition to come because, quite frankly, the challenge of nuclear weapons has not gone away.
Although, we seem to have lost our fear and respect for the weapons and our knowledge of what they do in terms of the calculations that nation-states have to think about when it comes to an adversary that’s nuclear-armed. So I think focusing our financial expenditures in the United States on these things will get us far along the path in making them happen.
The corporate sector, the financial institutions of this country are not going to do it voluntarily. We had to impose legal restrictions on doing business with the Soviet Union to prevent companies from doing the same thing that they’re doing today with China. So this is not something new, it’s just something that we are three decades out of practice of.
Aschieris: Now, I, while I was watching the movie, learned so much and really was just fascinated by how much knowledge was being relayed throughout the movie. What, from your perspective, was the most surprising thing or fact or even takeaway that you learned while making this movie?
Spalding: Well, in particular, like, the stories of the inventors and I think understanding the personal calculations that they went through in terms of trying to protect their intellectual property and then realizing that they’re not able to me was, I think, the most important part of the film.
One of the things about America is innovation relies on individual initiative, and if you’re not certain about the ability to protect your intellectual property, then you’re going to be less likely to go out there and take all the financial risks and personal risks that are associated with being an entrepreneur and or inventor.
And so hearing those stories, understanding the implications across our economy as you multiply those by 330 million really just gives you a sense of the gravity of the challenge that this America Invents Act created for our country.
Aschieris: Now, in the movie, the Made in China 2025 plan was also talked about. Can you explain a little bit more about what is this plan? And it’s 2022, we’re coming up on 2025 in just three years, how close is China to achieving its goals as part of this plan?
Spalding: Well, as you can see with the CHIPS Act that was recently unveiled and the further restrictions that the Commerce Department is beginning to put toward the ability for China to get access to chip manufacturing technology, we’re starting to really recognize the power of Made in China 2025 and we’re starting to react. But in reality, when you look at things like quantum and artificial intelligence, the Chinese have already surpassed us in many of these areas.
And so Made in China 2025 is a top-down plan by the Chinese Communist Party to dominate what they believe to be the major technology of the 21st century. In a sense, the United States was doing something very similar. Now, they weren’t like China, saying, “These are the technologies where we are going to invest in.” They were just investing in labs and creating space for innovation to happen by using federal dollars.
So in many ways, what Made in China 2025 is doing for China, our spending on research and development during the Cold War did for the United States in terms of its competition with the Soviet Union. So they’re very different programs in terms of how they go about what they’re doing, but very similar in terms of what their intended goal is.
In terms of the United States, we wanted to have technological superiority over the Soviet Union. The Chinese are seeking the same thing, and they’re just going about it a different way, but they are putting the requisite investment into their universities, their corporations, as opposed to what the United States is doing.
Even the CHIPS Act, for example, China has spent hundreds of billions of dollars trying to get chip manufacturing technology and the CHIPS Act only, I think, spends $40 billion.
So understanding that this is a competition of how much we invest in our science and technology I think is important, but Made in China 2025 is not something that we should look lightly at because it seeks to do the same thing that we did the Soviet Union, which is dominate the technology space.
Aschieris: And as you know, as well as our audience knows, we just had the midterm elections for the next Congress. What are you hoping to see policy-wise regarding China? Where do you think Congress can be more aggressive, in your opinion?
Spalding: Well, many of the things that we did during the Cold War, I think, need to be brought back. They had a program called Education for National Security, and that was federal dollars that were given to American kids to get a STEM degree. That’s where we got a lot of our scientists that work on the rocket program, for example.
Investing in science and technology, so boosting the level of that investment from the 0.7% that I mentioned to 2% of GDP, I think would be good. Using things like the Defense Production Act and Title III to bring back manufacturing, to force manufacturing to come back to the United States in certain areas, and then using the purchasing power of the federal government to further incentivize that. These are all things that I think the Congress could do, and to include preventing investment of our retirement funds into China.
So ensuring that whether it be financial, corporate, trade, academic, our political system, that each of these areas, that we eliminate any ability for China to use those areas to undermine our society, I think, is important.
Now, these have been policies that were pursued in the Trump administration, the Biden administration has also attempted, but what ends up happening is the corporate sector and the financial sector lobby, both the president and the administration and Congress to water down these policies so that they’re actually not as effective as they could be.
And so I think the new Congress, what they could do is begin to really sharpen and accelerate that decoupling, and in doing so, force the reshoring of critical manufacturing like electronics and especially pharmaceuticals.
Aschieris: Now, just before we go, your final thoughts. What do you think is being missed in the coverage of China and its threat to U.S. interests?
Spalding: Well, I think the big thing that stood out for me in the 20th [Chinese Communist] Party Congress is that Wang Huning, who is the ideological, intellectual underpinnings of [Chinese President] Xi Jinping thought and who advised Jiang Zemin and who advised Hu Jintao, is on the Standing Committee.
So people like Liu Hu, who were educated along the lines of a free market economy and really worked hard with Ambassador [Robert] Lighthizer to get to a trade agreement that was then torn up by Xi Jinping—I think what we see in this new Standing Committee are absolute ideologies. And so understanding that there is no way to coexist with the Chinese Communist Party because of their ideology.
They fear constitutional democracy. They fear their population coming to understand, appreciate, and then desire the liberties that are granted by our Constitution. And so they do everything in their power to suppress that, not just at home, but abroad.
So understanding the ideological nature of this competition and whether or not we understand that they’re a threat, the Chinese Communist Party view our republic as a direct threat to their continued rule over their population. We have to acknowledge that, we have to respect that, and we have to respond to that, in much the same way that [Franklin D. Roosevelt] and Winston Churchill did when they signed the Atlantic Charter prior to the start of World War II. They understood at that time what Nazi Germany and Imperial Japan wanted.
In particular, Winston Churchill understood what the Soviet Union wanted. They actually came to the United States for a tour, gave a very important speech in St. Louis about the Iron Curtain falling over Europe, and really gave the ideological underpinnings behind the reasoning behind our response during the first Cold War.
We need that. We need that understanding that this is an ideological competition. It is not one where the both can survive and coexist in a globalized world where they’re completely interconnected. One has to give way to the other.
Either you have nations that respond to their citizens or you have citizens that respond to authoritarian regimes, and that is this type of world that China seeks to engender, much the way the United States and her allies sought to engender the ideas of civil liberties and rule of law and human rights and free markets at the end of the Second World War.
Aschieris: Well, thank you so much for joining me today to talk about “Innovation Race,” Brig. Gen. Robert Spalding. I would love to have you back on in the podcast in the future. It was really great to get your insight and hope you’ll join me again soon. Thank you so much.
Spalding: Thank you.
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