Technology policy formulation has gained a renewed importance for governments in the era of strategic competition, but contextual understanding and expertise in deciding where to focus efforts are lacking. As a result, it’s difficult to judge whether a country’s research and development output, no matter how advanced, and its development of production capacity, no matter how significant, align with the country’s intended strategic objectives or can be used effectively to achieve them.

The ability to measure the relative strengths and weaknesses of a country by weighing specific strategic objectives against technical achievements is of paramount importance for countries. This is especially true as nations seek to resolve supply-chain resilience problems underscored by the Covid-19 pandemic.

A new pilot project ^[1] at ASPI’s International Cyber Policy Centre focuses on a handful of critical technologies in the context of strategic partnership and strategic competition. Specifically, we focus on the biotechnology and energy technology sectors in China and in the Quad countries of Australia, India, Japan and the United States. During the Quad leaders’ summit in March 2021, a Quad working group on critical and emerging technology was announced ^[2]. The communiqué from the summit said that the new group was intended to ‘ensure the way in which technology is designed, developed, governed and used is shaped by the Quad countries’ shared values and respect for universal human rights’.

The communiqué didn’t directly name China, but China was clearly implied in the Quad leaders’ pledge to recommit to ‘promoting the free, open, rules-based order, rooted in international law and undaunted by coercion, to bolster security and prosperity in the Indo-Pacific and beyond’. China’s rejection of the Quad’s vision of a free and open Indo-Pacific, willingness to use economic coercion and the resulting strategic competition call further attention to multiple technology sectors’ heavy reliance on a single source. A solution must be found that can exploit synergy across technology sectors among collaborating countries while ensuring supply-chain resilience.

‘Critical technologies’ ^[3] broadly refers to strategically important technology areas. Australia ^[4], for example, defines ‘critical technology’ as ‘technology that can significantly enhance or pose risks to Australia’s national interests, including our prosperity, social cohesion and national security’. To assess national capabilities, we measured each country’s R&D and infrastructure development efforts using patent and patent impact data and academic impact data and compared those results against the country’s technology-specific policy goals.

We found that success in connecting policy objectives to outcomes isn’t yet entirely measurable. This assessment is no doubt at least partially because the development of policy objectives postdates most of our data. Our comparison of national policies pertaining to each critical technology we research shows that China, followed by the US, tends to have more clarity about what it seeks to achieve by investing in R&D and production capabilities and by following that up with actions that will achieve those objectives. India, Japan and Australia don’t lack policy development or innovative capacity, but we believe they have been less effective at connecting concepts to capability.

We also noted that our ways of understanding the impact and quality of research and patent applications don’t necessarily answer questions on the ways in which they help a country achieve strategic objectives associated with those technologies. One patent, for example, can significantly influence the evolution of a technology; others might incrementally advance knowledge or create offshoot fields. Australia and India, and to a lesser extent Japan, filed far fewer patents than the US and China, but the impact of those few patents was more on par with that of US patents, which were high in both number and impact. In China, a disproportionately large number of patents were filed internally, but our findings showed that the competitive impact of those patents was low. Yet the competitive impact of a patent in terms of its ability to significantly influence the evolution of a field and the ability of R&D to meet strategic aims are two different things.

We assess that Chinese companies tend to patent-specific applications of technology. This indicates a fast-paced and iterative approach to technology delivery in China. We believe the knock-on effect of the incentive structure in China is that the R&D base is disadvantaged, while companies and researchers focus on implementing specific applications of technology that meet policy needs. Companies may be seeking to achieve those objectives by owning the market first, and patents support that approach. They’re adding economic value by increasing the quantity of applications, and owning the market comes before efforts to refine the product.

Chinese companies export their products globally, and they are probably achieving some market power and incumbency even if the product quality is by objective metrics inferior. This pattern might be more pronounced across the other critical technologies ASPI ICPC will examine as the project evolves in 2022, such as artificial intelligence, data science and data storage technologies.

It is hard to know, in China’s case, whether R&D is having the intended policy effect. But the general implications of its approach still pose a significant challenge for Quad nations as they seek to move more rapidly from concept to capability.