Much of the American tech industry is lining up with the federal government to develop a comprehensive U.S. response to China’s military-civil fusion, a policy that has forced cooperation between businesses and the communist government in Beijing.

Some private-sector leaders who hoped to remain neutral now recognize that they must pick sides in the global competition between the U.S. and China, Jacob Helberg, an adviser with the leading software company Palantir, told a private gathering of tech executives and policymakers in Washington this month.

“In practice, being neutral often meant being equidistant between Washington and Beijing. It meant companies saw themselves as global and detached from their American origins,” Mr. Helberg told the Hill & Valley Forum. “I’m happy to say that I think the era of Silicon Valley’s neutrality is over.”

The CIA agrees. Tech entrepreneurs and investors are no longer shy about working with the U.S. national security community and to be seen doing so, according to CIA Chief Technology Officer Nand Mulchandani.

“I think that debate’s over,” Mr. Mulchandani said at the recent Special Competitive Studies Project’s AI expo in Washington. “There’s still people who still don’t want to work that way, but for the vast majority of Silicon Valley, especially with Ukraine, Israel … I think national defense and economic defense technology are all now one thing.”

The AI expo attracted more than 11,000 registered attendees and more than 150 exhibitors eager to hear from military and intelligence leaders about new opportunities to work with the U.S. government. The Hill & Valley Forum attracted hundreds more technologists and top government officials excited to huddle about artificial intelligence and threats from China.

Palantir is leading the charge. The software company that started in the 2000s with the help of a CIA-contracted investment fund is now a publicly traded company with a market capitalization valued at more than $45 billion.

Its leadership believes it is the model for tech founders willing to work with the government. Palantir Chief Technology Officer Shyam Sankar told The Washington Times he is leading a new “First Breakfast” initiative to get America’s national security community and defense tech companies working hand-in-hand.

“I want to lower the ladder and help as many of these other folks succeed as possible,” Mr. Sankar said at the AI expo in Washington. “I want to do that in a way where I’m going from selling the book, to use the Amazon metaphor, to enabling them by selling them infrastructure where they can succeed so the government can get what it wants.”

Palantir is proselytizing for a new “ecosystem of tech patriots,” as its CEO Alex Karp explained at the Hill & Valley Forum. Mr. Karp blamed elite colleges and universities for creating a “pagan religion of mediocrity and discrimination and intolerance and violence.” He said he wants to see America prioritize transparency and meritocracy that he thinks resembles Silicon Valley’s ethos.

But debates persist about the appropriate role of government in compelling tech companies’ behavior. Amid a new U.S. law threatening to ban TikTok in America if its Chinese owners do not divest, discussion of a more aggressive industrial policy resembling China’s is no longer forbidden in polite society in Washington.

Josh Wolfe, co-founder of the venture fund Lux Capital, raised the issue of an American policy of military-civil fusion at the Hill & Valley Forum.

“China has military-civil fusion, they’re overt about it, it’s an admonishment, if you’re working on technology it’s part of the CCP,” Mr. Wolfe said. “And so we don’t need that, but we need people that are really motivated.”

The potential adoption of a new national industrial policy disturbs many American capitalists who support a free market determining outcomes without the intervention from the government.

While market failures have made the American economy more dependent on foreign companies in competition against China, Hoover Institution Director Condoleeza Rice said she does not think government regulation is the only option or right answer.

The former secretary of state told reporters that Washington policymakers needed to think differently about the global tech race.

“We shouldn’t call it industrial policy, we should call it strategic investment or something,” Ms. Rice said at a gathering sponsored by Stanford at its Palo Alto campus in April.

In-Q-Tel is doing just that. The CIA-contracted venture capital fund which helped grow Palantir has branded itself a strategic investor and quietly added international partners.

The fund received more than $200 million from taxpayers in 2020 and 2021, according to paperwork filed with the IRS, and it has started spending other countries’ money as well.

“Several years ago, in conjunction with support from CIA, we created a program called In-Q-Tel International, which is a fund that invests in companies outside the United States, that gets funded by the U.S. government, the U.K. government, and the Australian government,” said Steve Bowsher, In-Q-Tel CEO, at a Council on Foreign Relations event last month.

Originally an American-based fund, In-Q-Tel opened up offices in London and Sydney, and later in Germany and Singapore, as the American government’s preferred strategic investor has gone global.

“We realized that in order to really be aware of all of the innovation occurring in the world, and also understanding what China and Russia and some of these other countries were up to, we had to expand our footprint,” Mr. Bowsher said.

Preserving America’s capitalist identity as global competition with communists and autocrats heats up will prove challenging. A coming indication of the U.S. government’s appetite for free market outcomes will be evident in Congress’ evaluation of a plan led by Senate Majority Leader Charles E. Schumer to spend at least $32 billion on AI research and development.

The funding request was ignored since it was first put forward in 2021, but Mr. Schumer has re-upped the multibillion-dollar proposal amid his concern that China could surpass America in the tech race by spending more money.

• Ryan Lovelace can be reached at rlovelace@washingtontimes.com.