OPENING REMARKS

Alan Wm. Wolff
Dewey & LeBoeuf LLP

   Ambassador Wolff welcomed the delegation from China and American participants on behalf of the Science, Technology and Economic Policy Board of the National Academies.

The United States and China have cooperated in science for at least 70 years, noted Ambassador Wolff, a prominent trade attorney who chairs the STEP Board’s Committee on Comparative National Innovation Policies. Prior to World War II, he noted, the United States allocated precious air cargo space to ferrying scientific instruments, materials, and current treatises over the Himalayas from India to Chongqing so that Chinese scientists in exile could continue their work during Japan’s occupation of China.

The modern history of Sino-U.S. science and technology cooperation began on June 5, 1965, in the same National Academy of Sciences building that was the site of this symposium. On that date, the Academy decided to create a committee to foster academic communication and exchanges with China.1 The Council stated: “We hopefully believe the U.S. scientific community can contribute to a lessening of tensions between peoples and nations by endeavoring to create the basis for scientific discourse between Chinese and American scientists.”

That move was important, given the historical context. “You have to remember what great difficulties there had been in the recent past,” Ambassador Wolff recalled. American and Chinese troops had fought in

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1For historical background on Sino-U.S. cooperation in the 1960s and 1970s, see Kathlin Smith, The Role of Scientists in Normalizing U.S.-China Relations: 1965-1979, Council on Library and Information Resources (<http://china-us.uoregon.edu/pdf/Smith’s%20NYAS%20article.pdf>).



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OPENING REMARKS Alan Wm. Wolff Dewey & LeBoeuf LLP Ambassador Wolff welcomed the delegation from China and American participants on behalf of the Science, Technology and Economic Policy Board of the National Academies. The United States and China have cooperated in science for at least 70 years, noted Ambassador Wolff, a prominent trade attorney who chairs the STEP Board’s Committee on Comparative National Innovation Policies. Prior to World War II, he noted, the United States allocated precious air cargo space to ferrying scientific instruments, materials, and current treatises over the Himalayas from India to Chongqing so that Chinese scientists in exile could continue their work during Japan’s occupation of China. The modern history of Sino-U.S. science and technology cooperation began on June 5, 1965, in the same National Academy of Sciences building that was the site of this symposium. On that date, the Academy decided to create a committee to foster academic communication and exchanges with China.1 The Council stated: “We hopefully believe the U.S. scientific community can contribute to a lessening of tensions between peoples and nations by endeavoring to create the basis for scientific discourse between Chinese and American scientists.” That move was important, given the historical context. “You have to remember what great difficulties there had been in the recent past,” Ambassador Wolff recalled. American and Chinese troops had fought in 1 For historical background on Sino-U.S. cooperation in the 1960s and 1970s, see Kathlin Smith, The Role of Scientists in Normalizing U.S.-China Relations: 1965-1979, Council on Library and Information Resources (). 37

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38 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION the Korean Peninsula, and anti-People’s Republic of China attitudes among some in Congress were strong. “So it was a difficult period for this academy to begin to reach out to colleagues in the Chinese sciences to build bridges,” he said. The Cultural Revolution soon intervened, however, and it wasn’t until the 1970s that small numbers of U.S. scientists began to visit again. There was strong American interest in China’s studies of botany and seismology, areas in which China was advanced, Ambassador Wolff noted. The Chinese scientific community, meanwhile, was interested in topics related to the nation’s industrial and agricultural priorities, such as computer science, petrochemical engineering, mineral extraction, telecommunications, mechanized agriculture, and industrial automation. Exchanges resumed in earnest after the Nixon-Zhou Enlai 1972 Shanghai Communiqué. In 1978, Deng Xiaoping suggested there was potential for expanding bilateral exchanges. Ambassador Wolff, who served as U.S. deputy special representative for trade negotiations at the time, noted that the first high-level science delegation to China that year was led by a colleague of his, Frank Press, then President Jimmy Carter’s science advisor and later president of the National Academies.2 That trip, he said, “provided the foundation for the formal bilateral understandings to foster science and technology cooperation that followed.” Soon afterward, China’s Ministry of Science and Technology and America’s National Science Foundation resumed formal cooperation. The Sino-U.S. partnership in science and technology played an important role in helping China’s scientific community recover “from the dislocations of the Cultural Revolution,” Ambassador Wolff said. Meanwhile, “American universities were and are an enormous source of education for Chinese students. Investment in China by American and other foreign corporations was and is an important source of technology for China.” Now, the United States is starting to benefit. “We may be on the threshold of some reverse flow of investment, from China to the United States, and China’s graduate students enrich the research environment of American universities,” Ambassador Wolff observed. “The fruits of major research activity that will take place in China will be available to other countries as well.” One recent sign of this trend, he noted, is that Applied Materials Corp.’s chief technology officer is moving to China to improve production of solar-panel equipment. 2 Frank Press served as presidential science advisor from 1977 through 1980 and as president of the National Academies from 1981 to 1993.

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39 OPENING REMARKS Perhaps just as important as the flow of scientific knowledge is the exchange of ideas on science and technology policy, Ambassador Wolff said. He recalled a comment made at a 2006 conference in Beijing by Richard C. Atkinson, the former director of the National Science Foundation. Mr. Atkinson explained that in the 1970s “there was very little economic theory or data about investments in R&D and economic development [to make] the case to the Congress for federal support of research.” The NSF, therefore, initiated a study exploring that link. Decades later, Dr. Atkinson noted, a report by the President’s Council of Economic Advisors concluded that half of the growth in the American economy in the previous 40 years had been due to investments in research and development.3 “The private sector is a major driver of R&D, but federally funded research at universities plays a key role,” Dr. Atkinson said in his 2006 speech. Atkinson’s message to his Chinese counterparts was that he believed government funding of university research “was a core need of scientific progress and innovation in this country,” Ambassador Wolff explained. In the United States, supporters of science and technology are in “a battle right now to make sure that government funding of basic research and development is sufficient,” he noted. “Many people around this room and in the American scientific and technology community are currently trying to get through Congress a very important level of funding for university research and other research in this country. So the struggle continues and hasn’t changed that much in 40 years.” The scientific communities of China and the United States can benefit from sharing views on best practices for national policies, he said. “Today is another step in that process of mutual exchange and—I trust— mutual benefit.” Ambassador Wolff then explained America’s innovation system. A 2006 National Academies publication defined the National Innovation System, a term popularized by President Richard Nixon, as “a network of institutions in the public and private sectors, whose activities and interactions initiate, develop, modify, and commercialize new technologies.” This National Innovation System, the publication explained, involves flows of knowledge among complex, inter-linked, and overlapping “innovation eco-systems” at universities, government research laboratories, large and small businesses, and other organizations.4 3 Council of Economic Advisors, Economic Report to the President, 1995. 4 This definition is cited in National Research Council, India’s Changing Innovation System: Achievements, Challenges, and Opportunities for

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40 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION China also has an immensely rich history of innovation. “For many centuries, if not millennia, China led the West in innovation,” Ambassador Wolff observed. “Not only were remarkable things invented, but they also were put into circulation for practical use.” In the West, schoolchildren learn that the world is indebted to China for inventing porcelain in the 7th century AD; gunpowder, fireworks, and rockets in the 4th century AD; paper and tea in the second century BC; kites in the 5th century BC, and silk in 3600 BC. “But I don’t think many outside China know that the invention of noodles dates back at least 4,000 years,” he said. Ambassador Wolff then presented an extensive sampling of other, less-heralded Chinese inventions: Magnetic Compass 200 BC Movable Type 1050 AD Wrought Iron 5th Century BC Blast Furnace 250 BC Paper Money 700 AD Paddle Wheel Boats 650 AD Metal Bells 200 BC Fork (preceded chopsticks) 2400 BC Lacquer Ware 5000 BC Stone Plowshares 3500 BC Toxic Gas for War 400 BC Use of Chromium (for weapon tips; first used in 210 BC West around 1797) Golf 1000 AD Crossbow 200 BC Use of Vitamin-Rich Foods (as disease treatment) 200 BC Diagnosis of Diabetes 200 BC Dietary Treatment of Diabetes 650 AD Isolation of Hormones (used for medical 1110 AD treatments) Fishing Reel 4th Century BC Cooperation, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2007.

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41 OPENING REMARKS Manned Flight With Kites (1891 in Europe) 6th Century AD Standardized Lumber Dimensions 1100 AD Natural Gas Use for Heat and Light 4th Century BC Negative Numbers (also in Greece, but not used 3rd Century AD widely in Europe until 1550) Pinhole Camera (a century before discovery by 450 BC Aristotle) Raised Relief Maps 3rd Century BC Rotary Cooling Fan (first used in West in 16th 200 BC Century) Seismometer 132 AD Steel 2nd Century BC Iodine Treatment for Goiter (1860 in France) 7th Century AD Chain Suspension Bridge 15th Century Toilet Paper 589 AD Tune Bells 8th Century BC Underwater Salvage 1065 AD Only in more modern times has the technology flow begun to reverse from West to East, Ambassador Wolff noted. The flow began with innovations like the windmill from the Middle East and telescope from Europe, and continued with a “cascade of inventions borne of the industrial and information technology revolutions,” he said. For the past decade, Chinese leaders have stressed that innovation is vital to the nation’s future. In 1999, Ambassador Wolff noted, General Secretary Jiang Zemin said in a speech at a conference on innovation: “In today's world, the core of each country's competitive strength is intellectual innovation, technological innovation and high-tech industrialization.5 Six years later, Party General Secretary Hu Jintao introduced a new objective, when he said that the government should “give priority to indigenous innovation” in science and technology work. Mr. Hu also said the country should “increase core competitiveness and strive to make science and technology innovation with Chinese characteristics a 5 Jiang Zemin, General Secretary of the Communist Party of China Central Committee, keynote speech to the National Technological Innovation Conference, August 23, 1999.

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42 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION 6 reality.” He also said the government must “create a policy environment beneficial to technological innovation.” The United States also has grown increasingly concerned about advancing innovation. Ambassador Wolff cited the landmark 2007 report titled Rising Above the Gathering Storm,7 produced by a committee of the National Academies. The report said the government should design science and technology policy to: “…ensure that the United States is the premier place in the world to innovate; invest in downstream activities such as manufacturing and marketing; and create high- paying jobs based on innovation by such actions as modernizing the patent system, realigning tax policies to encourage innovation, and ensuring affordable broadband access.” There are many similarities between the innovation goals and policies of the United States and China, Ambassador Wolff said. “Each wishes to enhance the prospects for successfully initiating, developing, modifying, and commercializing new technologies.” Both countries also “want a substantial part of all stages of the innovation system to be located within their own national boundaries.” This does not necessarily mean each product must be developed locally, “but at least a healthy share of the spectrum for products in general” so that a large number of high-quality jobs are created to bring economic benefits. The focus is different, however. Chinese leaders seem to be more concerned with the “front end of this process, initiating and developing new technologies,” he said. The United States is more concerned with the “back end, the commercialization of new technologies.” There also are some similarities and differences when it comes to policy. “We should learn something from each other by comparing these two sets of national policies,” he said. Both the United States and China recognize the need to support science, technology, engineering, and math education from the primary school level to advanced degrees, he said. They also both “recognize the importance of supporting university 6 Speech by Hu Jintao, General-Secretary of the CPC Central Committee, November 27, 2005. 7 National Academy of Sciences/National Academy of Engineering/Institute of Medicine, Rising Above the Gathering Strom: Energizing and Employing America for a Brighter Future, Washington, DC: The National Academies Press, 2007.

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43 OPENING REMARKS research, which has not been true of every leading trading country,” he said. The United States and China both support research parks, regard protection of intellectual property as important, and “see a global interest and a national interest in creating renewable energy technologies and associated equipment industries and utilities,” he said. Policy differences between China and the United States, however, “require examination,” Ambassador Wolff said. One is U.S. immigration policy. As a result of tougher American immigration and work-visa policies, he said, the United States is having a harder time retaining highly trained, foreign-born talent with advanced degrees in science and technology. Another issue is U.S. defense spending. Early investment by the military was instrumental in the commercial success of integrated circuits, the Internet, large aircraft, and GPS navigation systems, Ambassador Wolff pointed out. Government demand, which does not move as quickly as private commercial demand, can also be a drag on the pace of technological evolution. Today, for the bulk of products that are not exclusively used by the military, commercial demand is a powerful catalyst for development. The government can help launch technology, not guarantee widespread adoption. “The involvement of government is something like booster rockets for the Space Shuttle, which must not remain attached after initial thrust,” Ambassador Wolff said. If attached, “they would make getting into orbit impossible.” The United States is closely watching a number of developing policies in China. For example, it is interested in whether China’s heavy investments in infrastructure will present market opportunities for foreign companies. “There will be global commercial benefits for China from the creation of its high-speed rail industry and photo-voltaic cells, among other industrial policy programs,” he said. The United States also is watching China’s policies with respect to intellectual property and whether it is adopting national rather than international industrial standards. The evolution of China’s National Indigenous Innovation Policy is another major issue. The question is whether, “on balance, these policies are helpful or harmful to China,” Ambassador Wolff said. The two nations are interested in the policy tools each other are using to promote innovation. One question, for example, is how China’s financial support for renewable-energy projects compares with those of others. Another topic of mutual interest is the role venture capital will play in both countries compared to other sources of capital. The related issues include “what is needed, at what stage, and is it forthcoming?” Ambassador Wolff observed. Other topics include the optimum role of

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44 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION large corporations, including state-owned enterprises in China, as compared with small and medium enterprises. Yet another is future role of foreign direct investment in promoting innovation. “Each of these topics and many others will emerge from our discussions and invite further exploration,” he said. Conferences such as this one help stimulate thinking on ways to improve both nations’ science and technology policies, Ambassador Wolff said. Among the fundamental questions: “Which policies promote innovation and which may retard or distort the process?” he said. “Where are there areas for future cooperation and collaboration? Where can we find areas where working together would have the potential for creating a major benefit for other countries as well – such as finding solutions to the challenges of carbon sequestration, cheap energy-efficient bio-fuels and batteries?” In his own view, Ambassador Wolff said, government support is “vitally important for progress in science, technology, and innovation.” However, government should play a supporting role, “like that of a proud mother or father watching a high school or college graduate.” Government direction that is “warranted and truly useful after that graduation is limited,” he said. “As much harm as good can come from such interventions. That is our national experience and our bias. So interventions must be very careful so as not to be counterproductive.” The market drives perhaps as much as 85 percent of innovation, Ambassador Wolff said. “If we were clever enough to figure out where the market was headed, we would all be billionaires.” Ambassador Wolff also challenged the notion of indigenous innovation as a useful path. “In this globalized world, there is no indigenous innovation,” he said. Before the rise of fast and easy international communication, local innovation was more common. Ambassador Wolff noted that in his books on science and innovation in China, the eminent historian Joseph Needham8 credited China with invention of the stirrup, which allowed warriors to stay in the saddle at a full gallop. “But the Hittites, my wife tells me, invented the stirrup about two millennia earlier,” Ambassador Wolff said. “What the Hittites and the Chinese inventors lacked was access to Internet cafés to cross- fertilize their innovations for their mutual benefit.” 8 Joseph Needham (1900-1995) edited a series of volumes on Science and Innovation in China published by Cambridge University Press. The first of 27 volumes was published in 1954. The project continues under the Needham Research Institute.

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45 OPENING REMARKS New technologies will make such cross-fertilization even easier. Ambassador Wolff noted that Cisco has a great video-conferencing system that makes individuals at a meeting feel like they are in the same room as those across the table from them, even though they actually are on different continents. The next step will be use of holograms, which will enable people to feel the presence of others located far way and to conduct “truly virtual meetings,” he said. That will save money not only on tea and pastries but also airfare, he noted. Science, technology, and economic policy usually catch up with progress, Ambassador Wolff observed. “But policy often lags invention. It does not very often precede it.” He noted that the integrated circuit and Internet “were great enablers of this new world, but the applications that add the next very large layers of value are the products of individual and private corporate achievements.” Each country and industry needs to find best practices to support innovation and inform each other of these findings, Ambassador Wolff said. “This is a secret recipe for progress. When we discover it and share it, we enrich the world.” He said the United States and China have much to learn from each other and added that he hopes the two nations will follow up on this conference with another conference in China so that the dialogue can continue.

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