Eduardo Jaramillo
In recent weeks, the membership of a new U.S. Congressional National Security Commission on Emerging Biotechnology has been finalized, shedding light on how biotech ties between the U.S. and China could come under scrutiny in 2023.
The commission was created by the FY 2022 National Defense Authorization Act (NDAA), and requires commissioners to produce reports examining risks and threats related to military use of biotech, and make recommendations for how the U.S. can remain a global leader in the sector.
Mandated to include members of Congress as well as individuals with expertise on biotechnology and national security, the commission includes Sen. Todd Young (R-IN), Sen. Alex Padilla, (D-CA), Rep. Ro Khanna (D-CA), and Rep Stephanie Bice (R-OK).
Given the generally hawkish sentiments toward China currently prevailing in the U.S. Congress, the new commission is likely to take a tough-on-China approach. In a statement on her appointment to the commission, Rep. Bice highlighted China as a key focus. “We must maintain our preparedness, especially as countries like China continue to integrate biotech into their strategic development,” she said. Todd Young, the other Republican on the commission, has in the past also expressed his support for competition with China in the technological domain.
In a statement to The China Project on the commission, Sen. Padilla didn’t specifically refer to China. “Further investments and a whole-of-government approach is necessary to keep up with global competition,” he said. “Our commission will look at precisely that.”
The commission is chaired by Jason Kelly, co-founder and CEO of the Boston-based biotech company Ginkgo Bioworks, and vice chaired by Michelle Rozo, former director for technology and national security on the National Security Council.
What are the stakes?
Biotechnology encompasses a range of applications, including drug research and production, improved agricultural output, gene editing, and industrial manufacturing. Given the importance of such technologies in geopolitical competition, the U.S. has asserted that global leadership in the sector is an imperative. In a September speech, U.S. National Security Advisor Jake Sullivan laid out a new vision for American technological leadership that identified biotech as key to national security. “Computing-related technologies, biotech, and clean tech are truly ‘force multipliers’ throughout the tech ecosystem,” Sullivan said. “And leadership in each of these is a national security imperative.”
In addition to the many contributions biotech can make toward national strength and competitiveness, the commission will likely home in on risks that come with certain kinds of biotech, such as harvesting of genetic data. The U.S. has in the past raised concerns over possible leaks of American genetic data to Chinese firms. Large amounts of genetic data are key to the research and development efforts of biotech firms.
“The reality is if you want precision medicine, which I think that we do, you need to compile these data sets with millions and millions of samples,” Abigail Coplin, Assistant Professor of Sociology and Science, Technology and Society at Vassar College, told The China Project.
While China has pushed forward with collecting genetic data on such a scale, the U.S. government has not done so. “The U.S. is very upset that China is building these data sets, but we do not have a clear plan of how we are going to actually build them ourselves,” said Coplin.
An AI blueprint
The contours of the new commission follow a roadmap set by the National Security Commission on Artificial Intelligence (AI) established by the National Defense Authorization Act for Fiscal Year 2019. The AI commission released a 756-page report in March 2021, which asserts that the U.S. “must win the AI competition that is intensifying strategic competition with China.”
With hundreds of mentions of China throughout, the report is chock full of recommendations to the U.S. government on how best to ensure U.S. leadership in AI technology. Later provisions in the FY 2022 NDAA require the Department of Defense to report to Congressional defense committees how to implement the recommendations, aiming to ensure the commission’s impact.
Eric Schmidt, the former CEO of Google, chaired the AI commission, and has also been named a member of the new biotech commission. Schmidt has been a vocal critic of Chinese policies, such as use of AI and biometric technologies in China’s repressive measures in its Xinjiang region.
Schmidt came under scrutiny for investing in American AI firms that received government contracts while leading the National Security Commission on AI. Media reports also recently pointed out Schmidt’s investments in biotech firms after it was announced last month that he would sit on the new commission. A representative for Mr. Schmidt declined to provide a comment for this article on his behalf.
A biotech breakup
Many American and Chinese entities in the biotech sector have become entangled through investments and collaborations. Given increasing focus on biotech as it relates to national security, these ties are likely to only become more of a focus for lawmakers going forward.
For example, the U.S. biotech giant Amgen holds a nearly 20% stake in the prominent Chinese biotech firm BeiGene, which develops and commercializes medicines to improve medical treatment worldwide, and which has found some success in cancer therapeutics. Chinese firm Wuxi Biologics has also made significant investments in its U.S. operations, which include a $60 million biologics lab and production facility in Worcester, Massachusetts.
Chinese companies (including BeiGene) have also attracted top U.S. talent to their ranks, further entangling the two sides. U.S. measures implemented in October that prevent U.S. persons from performing certain functions for Chinese semiconductor firms demonstrated the Biden Administration’s willingness to crackdown on Americans helping China advance key technologies, and similar measures could be deployed in the biotech sphere.
Despite signals from the U.S. government that a crackdown on the biotech sector could be coming down the pipeline, investors seem ready to continue backing biotech firms with links to China. Structure Therapeutics, a biotech firm with research and development operations in China, recently held its initial public offering on Nasdaq, raising $161 million, more than it initially expected. Dozens of other biotech, biopharmaceutical, and health care companies are currently listed on U.S. exchanges.
Non-commercial collaboration between Chinese and American entities has also taken place in biotech. As part of a multi-year collaboration, the Memorial Sloan Kettering Cancer Center and the Chinese Thoracic Oncology Group have worked together to push Chinese and American regulators to approve cancer drugs more quickly. Cancer treatments are one of the medical areas where Chinese firms have found the most success.
What competition means for biotech
The biotech commission is forming just as the U.S. government signals its intent to intensify overall tech competition with China. The U.S. in recent months has taken sweeping action to blunt China’s ability to develop its computing tech, imposing chip export controls in October, enlisting allies to coordinate against China, and fully choking off Huawei from U.S. suppliers.
While the Biden Administration has yet to take such extensive steps against China’s efforts in biotechnology, it has in recent months signaled that it is exploring such possibilities. In October, the head of the Commerce’s Department’s Bureau of Industry and Security (the agency that decides what firms end up on the U.S.’s export control lists) stated that biotech was “on [his] radar.” In September, the Biden Administration issued an executive order shifting government policy to prioritize domestic production of pharmaceutical investments in biotech, leading investors to abandon shares of Chinese biotech firms, especially those with U.S. ties (although some called the selloffs premature — it will take years for the U.S. to fully substitute imports of Chinese drugs).
In 2021, the Biden Administration sanctioned several Chinese biotech firms, as well as the Chinese Academy of Military Medical Sciences and associated research institutes over allegations of involvement in human rights abuses in Xinjiang. In 2018, the Trump Administration also strengthened the Committee on Foreign Investment in the U.S. (CFIUS), raising roadblocks for foreign investors and resulting in a downturn in overall foreign investment in U.S. biotech companies.
Were the Biden Administration to implement tougher measures on China’s biotech companies, the effects would play out differently from the chip industry. “One of the problems that I’m seeing right now in a lot of American policy is that they’re kind of taking the dynamics of semiconductors and assuming that they also apply to biotech, and they don’t,” said Coplin. “There is not the same first mover advantage in biotechnology as there is in semiconductors, because it is so driven by basic science, and tied to basic science.”
“While politicians are very eager to throw technologies into the securitized space, there’s not a lot of discussion about what the costs of doing so are actually going to be for the American industry.”
The takeaway
American policymakers appear to be moving toward a decoupling in Chinese and American biotech efforts, both commercial and otherwise. If they’re not careful in how they do so, American firms could stand to lose out more than in other high tech industries.
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