Although the US remains a world leader in hi-tech research and development, its failure to quickly commercialize high-end tech like next-generation 5G networks has seen the country lag behind China in the tech race, according to former US Treasury Secretary Hank Paulson.

Although cutting-edge technologies like AI algorithms and machine learning techniques can make everything faster and more efficient, their practical use needs the support of 5G, which is considered the transmission and distribution infrastructure to enable these technologies to perform optimally, Paulson wrote in an op-ed for The Washington Post published on Tuesday.

“While our universities and tech firms still lead in cutting-edge innovation – from artificial intelligence to 5G wireless technology – it is China that has deployed them. The United States is losing the commercialization race, a failure of our own making,” said Paulson, who also serves as chairman of the Paulson Institute. He added that the US must urgently confront these shortcomings to make up for lost time and opportunities.

Visitors tour an exhibitor booth with 5G on display at the Smart China Expo in southwest China's Chongqing Municipality on August 27. (Picture: AP)

Beijing’s goal to dominate tech industries under its Made in China 2025 plan, which includes dedicated investments in hi-tech areas including semiconductor design and fabrication, has been dealt a setback by the US-China trade war, with a number of advanced manufacturing sectors experiencing weaker demand.

5G, a technology crucial to reaping increased economic benefits from connecting billions of devices and building new services in the future, is one of the key issues that has entangled the world’s two largest economies and deepened the trade war after Huawei Technologies was banned from supplying the latest telecom equipment to the US and some of its allies.

On December 5, Shenzhen-based Huawei launched a legal challenge against the US Federal Communications Commission’s (FCC) decision on November 22 to ban carriers in rural America from tapping the Universal Service Fund (USF) to buy the Chinese telecom giant’s network equipment, adding to its earlier legal battles with US authorities.

The US government sees Huawei, the world’s largest telecom equipment vendor and the largest 5G equipment supplier in terms of market share, as a security threat due to its close ties with the Chinese government, an accusation the Chinese company has long denied.

Paulson’s concerns are contrary to Larry Kudlow, US President Donald Trump’s top economic adviser, who said in July that the US was ahead of China in terms of 5G development.

“We are ahead of the rest of the world in this country, by far,” Kudlow, director of the National Economic Council said following a meeting with executives from US technology companies in July.

CTIA, a Washington-based wireless industry association, said in April the US was tied with China for the top position in the global 5G race and was no longer a laggard.

Beijing’s industrial policy and China’s private sector are racing to propel the commercialization of 5G and the technologies, products and services it enables, not only for China but for nations that would welcome Huawei’s 5G, Paulson wrote. He said as Washington has stalled, even China’s state-owned enterprises have deployed quickly, with some 150,000 5G base stations planned to be erected by the end of the year, about 15 times what the US will have.

“America has no domestic manufacturer of 5G equipment, so it must rely on European or Chinese suppliers. China already has Huawei and ZTE,” said Paulson. In China, 5G is already available in more than 50 cities, while in the US there is only 5G E, which is no substitute for a truly competitive 5G network, he added.

“We need a catch-up strategy to close this gap quickly. And it’s time for an honest assessment of how our government has let our innovators and businesses down,” Paulson said.

The US government is putting real money behind its effort to curtail the footprint of Chinese equipment vendors. A new agency, called the US International Development Finance Corporation, plans to tap some of its US$60 billion budget to help developing countries and businesses purchase equipment from other companies, according to a Bloomberg report earlier this month.

“The US is very focused on ensuring there’s a viable alternative to Huawei and ZTE. We do not want to be out there saying no. We want to be out there saying yes,” Adam Boehler, the first chief executive officer of the DFC, was quoted saying in the report.