As the United States and China look to protect their national security needs and economic interests, the fight between the two financial superpowers is increasingly focused on a single area: technology. The clash erupted in public on Tuesday after the United States government, citing national security concerns, called for a full investigation into a hostile bid to buy the American chip stalwart Qualcomm -- a review that is often a death knell for a corporate deal.
Perhaps it’s the natural human aversion to bad news -- sometimes known as the “ostrich effect” -- but few opinion leaders on U.S. economic policy appear willing to take a cold, hard look at the state of U.S. manufacturing. If they did, they wouldn’t be happy. First, U.S. manufacturing suffered catastrophic losses in employment and output in the 2000s; then its recovery in the 2010s was only modest; and now it faces existential challenges from a resurgent China that is well practiced in the dark arts of “innovation mercantilism.”
Four years ago, planners at the Pentagon reviewed estimates of China’s growing military investments with what one called a “palpable sense of alarm.” China, the planners determined, was making advances that would erode America’s military might--its ability to project power far from its shores. [wsj subscription required]
The move by Apple to host Chinese users' iCloud accounts in a new data center in China -- one that is compelled by new laws -- is part of a bigger, ongoing technology trade war between the world's two biggest economies, said the head of investment research at a data analysis company.
The U.S. National Science Board (NSB), which in January stated that China was catching up to the United States in research and development (R&D) expenditures, said in a 7 February statement that if current trends continue, the board “expects China to pass the United States in R&D investments by the end of this year.”
For years Silicon Valley dismissed Chinese tech firms--first as an irrelevance, then as industrial spies and copycats. Most recently China has been seen as a tech Galapagos, where unique species thrive than would never spread abroad. But as our Schumpeter column explains this week, China’s technology industry has been catching up far faster than expected.
A technology revolution is now sweeping the world, and the countries that most effectively seize the opportunities it creates will dominate the 21st century. Nowhere is the revolution more transformative for lives, livelihoods, security and prosperity than in the field of artificial intelligence. AI will shift the balance of power in both the global economy and international relations, because the countries that master AI first will have a crucial strategic advantage in writing the rules for the next global order.
China is a rising power in artificial intelligence. This white paper, a collaboration between Eurasia Group and Dr. Kai-Fu Lee, a leading AI researcher and founder of Sinovation Ventures, provides an in-depth view of China's AI sector, detailing where it lags and where it is leap-frogging ahead of the United States in the most important technology race of the 21st century.
Human rights activists say they fear the authorities could use that power to track down dissidents, citing cases from more than a decade ago in which Yahoo Inc handed over user data that led to arrests and prison sentences for two democracy advocates. Jing Zhao, a human rights activist and Apple shareholder, said he could envisage worse human rights issues arising from Apple handing over iCloud data than occurred in the Yahoo case.
One thing about Huawei that particularly brothers the U.S. government is its founder, Ren Zhengfei, who is a former officer of the People’s Liberation Army, the armed force of China and the country’s Communist Party. This is hardly the first time the U.S. government has expressed concerns over Chinese tech companies’ ties with the country’s government.