The High-Tech War With China By Arthur Herman
https://www.nationalreview.com/magazine/2018/09/10/chinas-technology-war-with-america/Nothing less than global dominance is at stake
‘Self-determination and innovation is the unavoidable path . . . to climb to the world’s top as a leading player in technology. We [should] hold innovative development tightly in our own hands. . . . The situation is pressing. The challenges are pressing. The mission upon us is pressing.”
With those words, spoken at the opening of the joint annual conference of the Chinese Academy of Sciences and the Chinese Academy of Engineering in May, President Xi Jinping and the Chinese Communist Party declared war on the United States. Not an actual war, of course, or even a cold war like the one we fought against the Soviet Union. No, this is a war for control of key sectors of the global economy, as laid out in Xi’s “Made in China 2025” initiative at the 19th Party Congress last October: a struggle for high-tech supremacy over everything from robotics and advanced telecommunications to artificial intelligence, supercomputers, and the quantum computers of the future.
The stakes of this conflict are in many ways as serious as those of the race for nuclear supremacy during the Cold War. It isn’t being fought over military hardware such as Minuteman missiles or even today’s stealth fighters and nuclear submarines — although the ultimate utility of such weapons will depend on who finally wins this high-tech race. The technologies in question are ostensibly civilian: cell phones, microchips, supercomputers, and the coming Internet of Things, as well as basic research and development in areas such as artificial intelligence and quantum computing. Yet these are precisely the technologies that will power and network the world’s most advanced weapons systems — and, especially in the case of quantum technology, become weapons systems themselves.
For the U.S., whether we yet realize it or not, this is an existential struggle. China sees the high-tech competition as the moral and political equivalent of war. The Made in China 2025 plan makes clear that China views winning the tech competition as part of a grand strategy to replace the U.S. as the world’s leading superpower. As Trump economic adviser Peter Navarro remarked on Meet the Press this past April, “what’s at stake here . . . is the industries of the future . . . artificial intelligence, robotics, quantum computing. And what’s at stake is not just our economic prosperity. If I may, it’s also our national security. Because many of these industries of the future have profound military implications.”
It is alarming, then, that, apart from a few figures in the Trump administration, such as Navarro, and a few figures on the Hill, so far we don’t seem to be taking this conflict as seriously as Beijing is. We are neither investing comparable resources nor formulating an overall strategy. Instead, economists and the media continue to define our struggle with China in terms of trade wars and tariffs.
What’s really going on is a struggle for the future not just of the U.S. but of the world, with China pushing for global hegemony and the U.S. belatedly pushing back. At stake is the future not only of the American economy but also of the economies of our allies in Europe and Asia. Will they be part of a cooperative world economic system based on free-market principles of the kind that have spread prosperity around the globe since World War II, or will they become tributaries to Beijing and its mega-corporations and state-owned enterprises?
The answer to that question will depend on what happens in five high-tech areas that will decide who wins this high-stakes struggle for dominance in the 21st century.
The first area is supercomputers, whose blinding speed of computation has become essential for oil and gas exploration, scientific research, and military tasks such as simulating the impact of nuclear explosions down to the molecular level and designing advanced aircraft. American IT giants such as IBM and Cray used to have a near-monopoly on supercomputers, going back to the heyday of the Space Race. But over the last decade, China has pushed the U.S. into second place among nations with the most supercomputers. According to TOP500, a project that has tracked supercomputer development for more than two decades, 206 of the world’s fastest computers are now in China, compared with 124 in the U.S. In fact, two of the four fastest machines on the list — the Sunway TaihuLight and the Tianhe-2A — are in China. America recently regained the top spot with the development of the Summit supercomputer at Oak Ridge National Laboratory, but this is a race in which the number of Chinese contestants is growing while the number of American ones is shrinking.
The second area is microchips, the beating heart of all modern information technology. Again, the field used to be dominated by the U.S., before allies such as Japan, South Korea, and Taiwan took over. Today, China’s chip industry is still roughly one-ninth the size of ours. But the Chinese government is determined to break that dominance and is spending more than $30 billion to expand its domestic production as part of the Made in China 2025 initiative, even as America’s microchip industry is steadily shrinking in ways that will have enormous strategic as well as economic consequences. China understands that creating versions of the most advanced semiconductor technology will position its chip makers not only to dominate the future market but also to give it a leg up in the third area of the conflict: artificial intelligence (AI).
While Americans are still worrying about whether advancing AI research is going to lead us into a Terminator-type apocalypse, China has set a national goal of spending $150 billion to become the AI global leader by 2030. A recent Brookings Institution report notes that, already, “China has become the world’s leading AI-powered surveillance state,” using voice, facial, and biometric data to keep track of its citizenry while also employing AI in preparation for cyberwar and kinetic-war scenarios. Unfortunately, in this endeavor the Chinese are getting help from an American company, Google, that has built a major AI center in China to be staffed by Chinese scientists — just as U.S. chipmakers have been helping China develop its competence and capacity in manufacturing advanced microchips.
The fourth area is 5G telecommunication networks. The United States is just beginning to think about the standards needed for the high-cost fiber-optic infrastructure that 5G networks will involve. China, by contrast, is looking to dominate the 5G future by setting core technical standards that the rest of the world will have no choice but to accept if the U.S. can’t stop dithering.
The fifth, and possibly the most important, area is the race to build the first large-scale quantum computer. By using subatomic particles and the principles of quantum physics to process data, quantum computers will easily outperform the fastest supercomputers in solving complex mathematical puzzles. They will also be able to unlock in a matter of seconds virtually every public encryption system the world uses today. Last year, China started building a $10 billion facility in Anhui Province to develop quantum technology for both military and civilian uses. Chinese IT giants including Alibaba and Huawei are part of the national quantum-computer-development effort, and Chinese applications for patents in quantum technology, particularly quantum-encryption technology, have increased dramatically this year.
Meanwhile, Congress and the White House are just getting around to thinking about how to maintain our current lead in quantum-computing technology, with a quantum-information-science subcommittee taking shape at the Office of Science and Technology Policy, and with a bill introduced in the House that would allocate $1.25 billion over the next five years toward research in the quantum field. That’s still only a fraction of what the Chinese government is already spending, to say nothing of what Alibaba and Huawei will do at Beijing’s behest.
So how does the United States fight back?
Fortunately, we are not without resources. For one thing, we still have a private IT sector that thrives on innovation and risk-taking, neither of which the Chinese excel at (yet) and both of which are essential for major breakthroughs in these vital areas. As part of its ongoing trade war with China, the Trump administration is looking to impose rules banning companies with 25 percent Chinese ownership or more from buying U.S. companies that own “industrially significant technology,” which will help to contain China’s efforts to establish a Silicon Valley bridgehead. Likewise, the Trump administration’s decision in April to block ZTE’s access to American microchips nearly brought that Chinese IT giant to its knees. The administration later reversed its ban, to the dismay of some of us, but the episode did prove how vulnerable China still is in this high-tech contest.
Still, it doesn’t pay for the United States to be complacent about its current edge in innovation. According to the latest report from the World Intellectual Property Organization, China will surpass the U.S. in patent filings in the next three years — a sure sign that China is learning to develop advanced technologies on its own. “Not too many years ago we would say China steals information and that is how they innovate,” says Chris Taylor, the CEO of the prominent data-analytics firm Govini. “That’s not where they are anymore.”
It’s yet another reason we need a comprehensive national strategy that harnesses America’s private-sector innovation and efficiency to a set of clear national goals in the high-tech arena. We can’t afford to lose this war, any more than we could World War II or the Cold War. We won those wars by finding the right combination of public and private efforts. These included the Arsenal of Democracy in World War II and a series of offset strategies, culminating in the decisive Strategic Defense Initiative, that leveraged our existing technological advantages against the Soviets in the Cold War.
We can win this time, too, but we have to start fighting back — now.
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