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The technology war between China and the USA

China and the race for technological supremacy

Richard Robert, Journalist and Author
On March 23rd, 2022 |
5 min reading time
Nigel Inkster
Nigel Inkster
Senior Advisor to the International Institute for Strategic Studies (IISS) and former director of operations and intelligence for the British Secret Intelligence Service (MI6)
Key takeaways
  • At the end of the Cultural Revolution, when China began to reform, a large cohort of educated young people who had been sent to the countryside returned to the cities and became entrepreneurs.
  • The Chinese Communist Party then simply let the enterprises flourish before taking over in the so-called “surveillance capitalism” regime.
  • In becoming a technological power, China has set itself the goal of making its technological standards world standards to dominate the field of industry.
  • The United States is therefore facing the rise of China, creating an existential competition between capitalism and communism.

China’s rise to the top over the last ten years has been spec­tac­u­lar, espe­cial­ly with regards to tech­nol­o­gy. In many indus­tries, it would appear they are aim­ing for tech­no­log­i­cal suprema­cy. Is this part of a grand strat­e­gy? Was it predictable?

On more than one occa­sion, the Chi­nese Com­mu­nist Par­ty has been sur­prised by the con­se­quences of their own poli­cies. At the end of the Cul­tur­al Rev­o­lu­tion, when Chi­na start­ed its eco­nom­ic reform, the coun­try didn’t take into account the impact of a large cohort of edu­cat­ed youth who had been sent down to the coun­try­side and came back to the cities. Because of their “bad” class back­grounds, they couldn’t get gov­ern­ment jobs. Many became entre­pre­neurs. Nobody had fac­tored this in, but over time we saw this entre­pre­neur­ship tak­ing hold.

China’s tech­no­log­i­cal devel­op­ment was part­ly a hap­haz­ard process, which the author­i­ties tried, if not to con­trol, to man­age. With ICT, the Chi­nese lead­er­ship proved to be very good, with a top-down view that cre­at­ing a free-mar­ket envi­ron­ment would enable experimentation. 

The Par­ty sim­ply sat back and watched as com­pa­nies fought amongst each oth­er, with the most suc­cess­ful ones mak­ing it to the top, before pro­gres­sive­ly mov­ing in to exer­cise con­trol over these enti­ties. The tech giants behave in a way sim­i­lar to what Shoshana Zuboff called “sur­veil­lance cap­i­tal­ism”: anti-com­pet­i­tive­ness, abuse of con­sumer data. The Par­ty is now work­ing on reg­u­lat­ing these com­pa­nies, forc­ing them to leave space for new entrants and to stop exploit­ing their cus­tomers dig­i­tal surplus.

There is a get out clause: the state can access all of this data when­ev­er it wants. Chi­na is also col­lect­ing large vol­umes of West­ern data, stored in dig­i­tal ware­hous­es around the coun­try, and pri­vate sec­tor com­pa­nies are pushed to sift through them to find infor­ma­tion that could help the Party.

West­ern gov­ern­ments are still imbued with the idea that not all infor­ma­tion needs to be pro­tect­ed. We are only begin­ning to realise that, aggre­gat­ed togeth­er with oth­er datasets and analysed through­out the fil­ter of arti­fi­cial intel­li­gence, data which in and of them­selves would appear innocu­ous can be very reveal­ing – in ways that we might not want them to be.

What kind of suprema­cy is Chi­na work­ing to achieve?

As Chi­na became a more con­fi­dent tech­no­log­i­cal pow­er, it began to realise that it could use its grow­ing capa­bil­i­ties to shape the inter­na­tion­al are­na. In areas of cyber-gov­er­nance and cyber­se­cu­ri­ty, Chi­na has realised that if they can estab­lish their tech­nol­o­gy stan­dards as the glob­al ones, they can then use their over­whelm­ing man­u­fac­tur­ing pow­er and eco­nom­ic reach to become glob­al­ly dom­i­nant in key areas. This is what the USA did dur­ing 20th Cen­tu­ry and what we the British did in the 19th Cen­tu­ry with teleg­ra­phy. When you wire the world, it gives you a lot of influ­ence and power.

A key objec­tive is to enhance the inter­na­tion­al accep­tance of China’s polit­i­cal and val­ue sys­tems, hence pro­vid­ing secu­ri­ty for a Com­mu­nist Par­ty that lives in con­stant para­noia. There is also the mil­i­tary dimen­sion. Chi­na has been work­ing hard to become a cred­i­ble com­peti­tor to the USA and is on its way to achiev­ing this goal. It is indeed ahead in some areas of mil­i­tary tech­nol­o­gy such as hyper­son­ics. There is also a huge advan­tage for Chi­na in terms of intel­li­gence as it rolls out its dig­i­tal “Silk Road,” which is a sub­set of a much wider glob­al strategy. 

While Rus­sia has con­sid­er­able cyber strengths, nobody is going to buy a Russ­ian oper­at­ing sys­tem or a Russ­ian com­put­er. Though Rus­sia has been active­ly think­ing about issues of cyber secu­ri­ty and cyber gov­er­nance, it is Chi­na that, through its dom­i­na­tion and abil­i­ty to com­mer­cialise this tech­nol­o­gy, is much bet­ter placed to make the weath­er in these areas.

How is the West reacting?

It is now an arti­cle of faith amongst the Chi­nese lead­er­ship that the USA is bent on pre­vent­ing China’s rise. This is a dan­ger­ous sit­u­a­tion. Mark Twain said, “his­to­ry doesn’t repeat itself, but some­times it rhymes”. If you look at Impe­r­i­al Japan in the 1930s, there are sim­i­lar­i­ties. Put blunt­ly, if Chi­na is backed into a cor­ner and has no oth­er option, it may lash out.

Com­mer­cial inte­gra­tion used to be a fac­tor of peace. But this trend has reversed. There has been an over­con­cen­tra­tion in the man­u­fac­ture of strate­gic com­modi­ties in Chi­na. Before the Covid-19 cri­sis the pri­vate sec­tor was already start­ing to diver­si­fy its sources. This move­ment is gain­ing momen­tum. The gold­en era where Chi­na was the world’s fac­to­ry is com­ing to an end. 

Ear­li­er this year Chi­nese For­eign Min­is­ter Wang Yi said the big ques­tion is whether the USA is will­ing to coex­ist with a coun­try with a very dif­fer­ent cul­ture, val­ues and stage of devel­op­ment. Its exter­nal dis­course is about coex­is­tence. How­ev­er, the inter­nal mes­sag­ing is one of exis­ten­tial com­pe­ti­tion between cap­i­tal­ism and socialism.

The ques­tion is: is there any room for Euro­peans in this glob­al con­test? The EU and the UK lack a basic cor­pus of exper­tise and under­stand­ing of Chi­na. They have great schol­ars, but their knowl­edge doesn’t feed through into polit­i­cal aware­ness. Besides, polit­i­cal and com­mer­cial inter­est might diverge, both at nation­al lev­el or with­in the EU between net exporters and net importers.

China’s pref­er­ence would be to deal with Europe as a sin­gle, pre­dictable block. Where­as, in real­i­ty, it is a kalei­do­scope of 27 states, each with very dif­fer­ent objec­tives. The temp­ta­tion to divide and rule is overwhelming.

Does tech­nol­o­gy rein­force these trends? So far, it has been uni­fy­ing the world, but it might become a bar­ri­er between two sep­a­rate worlds in the near future. 

I always sug­gest my Chi­nese friends to read Karl Pop­per on the pover­ty of his­tori­cism. They won’t read Pop­per because he’s very rude about com­mu­nism. But his basic point is that you can’t pre­dict the future because you can’t pre­dict how tech­nol­o­gy will evolve.

Tech­nol­o­gy can be an empow­er­ing force for all coun­tries, not just Chi­na and the USA. Take the exam­ple of the cheap Turk­ish drones that were able to alter the mil­i­tary bal­ance in Nagorno Karabakh. Europe can shape its own des­tiny if it gets the fun­da­men­tals right. We need to cre­ate an enabling envi­ron­ment for Euro­pean tech­nol­o­gy, and then devel­op appli­ca­tions of exist­ing tech­nolo­gies that would add val­ue and give the Euro­peans some leverage.

In quan­tum com­put­ing, Europe has a few cham­pi­ons. How do you keep these com­pa­nies afloat long enough?  In the USA such start-ups would be tak­en over by one of the big tech com­pa­nies: in Chi­na they would receive gen­er­ous state sub­si­dies. Can Europe find a way to sub­sidise its tech start-ups until they can com­mer­cialise their research?

5G is stalled at the moment, just deliv­er­ing faster down­load times for video. It will stay that way unless we devel­op the actu­al appli­ca­tions. If you don’t invest in autonomous vehi­cles or in robot­ics, if you don’t autho­rise adven­tur­ous appli­ca­tions for arti­fi­cial intel­li­gence, 5G will not ful­fill its potential.

Europe should also start to move away from the pre­cau­tion­ary prin­ci­ple and catch up with tech­nol­o­gy lead­ers in fields like AI, biotech and robot­ics. Data pri­va­cy is also an issue: there is a bal­ance between pri­va­cy and innovation.

Emerg­ing tech­nolo­gies can serve mankind’s inter­ests if used prop­er­ly. Maybe in every gov­ern­ment com­mit­tee ded­i­cat­ed to these top­ics, there should be a cou­ple of career crim­i­nals, to be able to antic­i­pate how malign actor might abuse these tech­nolo­gies and hence pre-empt abuse. In any case we need var­i­ous competencies. 

As such, tech­nol­o­gy issues should be at the very cen­tre of the polit­i­cal agen­da. Last year the Chi­nese Polit­buro spent two days look­ing at blockchain tech­nol­o­gy. This is how you do it if you want to under­stand, and to shape, the future.

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