The Coming Tech War With China

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The United States is already in the middle of its next great war — even if it's only just starting to realize it. In the latest National Security Strategy, the White House highlighted China's growing technological prowess as a threat to US economic and military might. The Asian powerhouse has taken on a leading role in several critical emerging technologies. Five years ago, by contrast, it was widely perceived as an imitator in technology, not an innovator.

As hard as it may be for Washington to admit, China is catching up in the tech race. The question now is whether tech firms in the United States, a country that embraces private enterprise and a free economy, will be able to keep up with their Chinese counterparts' breakthroughs.

The Disruptive Power of Dual-Use Technology

Chinese President Xi Jinping has made developing his country's technological capabilities a key priority, not only to wean China from its dependence on foreign technology but also to turn it into a leader in innovation. And sure enough, China is gaining ground on its rivals in the tech realm. The country has chalked up an array of impressive achievements over the past few years, including its developments in hypersonic missiles, human gene-editing trials, and quantum satellites. Of the many emerging technologies China is helping to advance, though, artificial intelligence is perhaps the most significant — for Beijing as well as its adversaries.

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Google CEO Sundar Pichai recently posited that the advent of AI was "more profound than ... (that of) electricity or fire." If he oversold the development, he did so only slightly. AI may well be the most important technological advancement of our lifetime. What makes it so critical is that much like aerospace technology or the internet before it, AI will have applications in military as well as civilian life — and will likely revolutionize both.


As hard as it may be for Washington to admit, China is catching up in the tech race.


In the civilian world alone, AI has practically unlimited uses. The technology already helps power smartphone applications such as visual and audio recognition software and digital personal assistants. As global data collection rates continue to grow exponentially, AI algorithms will inevitably have to take over processing and managing the glut of information. AI will also transform the medical industry, diagnosing and treating various illnesses — to say nothing of the other white-collar jobs the technology will eventually complement or supersede.

The military applications, meanwhile, will be no less impressive. In 2016 an algorithm running on a Raspberry Pi — a $35 computer that fits in the palm of your hand — beat a retired US Air Force colonel every time in a series of simulated dogfights. The computer, moreover, showed no sign of fatigue over time, unlike its human competitor. As AI continues to evolve, it will doubtless work its way onto the battlefield, driving tanks, ships and perhaps even robotic soldiers. The technology's potential for rapid data processing and analysis could give troops on the front lines a more complete picture than ever before of their enemy's position and activities. AI will probably find more applications in asymmetric warfare, too. Islamic State militants in Iraq and Syria have used drones to deliver explosives to their targets, while Houthi rebels in Yemen have deployed unmanned vessels to carry waterborne improvised explosive devices. For now, these vehicles are operated by remote control, but in time, they could give way to autonomous technology.

An Eye on AI

The possibilities of AI aren't lost on the Chinese president. In a feat of meticulous blocking, two influential books on the subject stood on the bookshelf behind Xi during his annual televised New Year's Eve address. Weeks earlier, China's Ministry of Industry and Information Technology released a three-year development plan for AI, part of a larger initiative launched in July 2017 that includes specific goals for such technologies as artificial neural network processing chips, intelligent robots, automated vehicles, intelligent medical diagnosis, intelligent drones and machine translation. China's Ministry of Science and Technology announced in November 2017 that it had formed a sort of dream team made up of the biggest Chinese tech firms — Baidu, Alibaba, and Tencent — to lead the country's AI development alongside voice recognition software developer iFlytek. Each of these companies is hard at work cultivating the learning algorithms and hardware, and gathering the data, necessary to build a wide range of functional AI platforms. Baidu, for instance, has started developing open-source programs, such as the autonomous driving platform Apollo, to collect as much data as possible.

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Nor is the importance of AI lost on the US Department of Defense. Like his predecessor, Ash Carter, Secretary of Defense James Mattis supports the Pentagon's Defense Innovation Unit Experimental (DIUx), despite calls from Republican lawmakers to roll the project into the Defense Advanced Research Projects Agency. DIUx, headquartered in Silicon Valley, aims to ensure that the military can quickly adapt and integrate innovations that come out of California's tech hub. To that end, it awarded tech firm C3 IoT a contract late last year to develop an AI platform for the Air Force to predict when aircraft and equipment need maintenance.

In the quest to hone its AI capabilities, the Defense Department hasn't lost sight of China's own progress with the technology. The country's sheer size sets it apart from other tech innovators such as South Korea or Japan; China could scale up its rapidly increasing tech abilities and use them against the United States in a way that not even Russia has managed. With that in mind, Mattis made China's rise in tech a centerpiece of his National Defense Strategy, highlighting the US government's need to strengthen ties with emerging tech companies, including AI startups.

Chinese Research and Development Is Growing Fast

A Space Race for the 21st Century

Today's mad dash for AI isn't the first technology race the United States has run. During the Cold War, the country vied against the Soviet Union to develop a variety of aerospace, nuclear and computing innovations. Washington emerged victorious from that contest; though the Soviet Union focused its efforts almost exclusively on military applications, it lacked the research and development capacity of the United States. The size of its critical industries enabled the United States to outstrip the Soviet Union in military technology while still diverting some of its attention and resources to consumer products.

Like the Soviet Union, China is interested more in national security and defense than it is in the commercial sector. The difference lies in China's size and in its economy.

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The country's immensity could make it a more even match for the United States in terms of developing and adopting emerging technologies. Given that the country's population exceeds 1.3 billion people — and that data privacy is a low priority for Beijing — China offers its AI companies a big leg-up over their US competitors by giving them access to a huge pool of data. Furthermore, unlike the tightly controlled Soviet economy that hindered innovation, China's hybrid economy offers individuals and companies incentive to push the boundaries in tech development. The country's model of capitalism isn't one of control, though Western media often portray Chinese tech firms as dependent on Beijing to subsidize and direct their activities. Instead, the central government outlines areas in which it would like companies to operate and provides incentives to encourage competition. AI is one of those areas, and China's tech giants are eager to outpace one another in the field. Aware that it missed the boat with smartphone technology, Baidu, for instance, has set its sights on AI as its opportunity to get an advantage over Tencent, Alibaba, and Huawei.


Once upon a time, the United States could rest easy in the knowledge that no other country could match its combination of physical size and technological ability. Now China can.


For now, China lags behind the United States in the tech race, especially in semiconductor development. As the gap between them narrows, however, the United States will be forced to respond. The challenge for Washington will be that, unlike earlier dual-use technologies, AI applications will immediately have profound implications for the consumer electronics market. And because the Chinese and US economies are highly integrated with each other, China's achievements even in the commercial sector pose a serious threat to the United States. The question for the United States isn't so much whether China can surpass it in the race to harness emerging technologies; it's how close the Asian country will come to doing so. China is large enough that its tech sector could give Silicon Valley a run for its money in terms of market share if it even comes close to producing the same technologies. For that reason, many US tech firms are trying to withhold some of their advancements from defense applications in hopes of maintaining a competitive edge in the commercial sphere.

Building a Strategy

Once upon a time, the United States could rest easy in the knowledge that no other country could match its combination of physical size and technological ability. Now China can. As a result, the current US administration is working to develop a more robust response to the United States' budding rival. The White House's investigations into China's intellectual property policies, calls for greater scrutiny of its foreign investment activities and even proposals to nationalize the fifth generation wireless protocol or 5G, network are all initial attempts to counter the country's rise in technology. So far, though, these initiatives have only provoked a backlash in the United States.

Forging a comprehensive strategy against China will become all the more important for Washington as time goes by. The dizzying pace and unpredictable trajectory of innovation compel tech companies to constantly broaden their horizons or else jeopardize their competitiveness. But as the same firms expand their services into more and more industries, they risk running afoul of US antitrust laws. The more companies such as Google, Amazon and Apple Inc. grow, the bigger the targets on their backs become. Antitrust investigations and busts in the United States, in turn, could give Chinese companies a prime opportunity to catch up to their competition.

The Coming Tech War With China is republished with permission from Stratfor.com.

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