A common occurrence (maybe too common) in my household are debates between my father and I regarding the potential for China to surpass the magnitude of Western innovation, namely in the domain of information technology.
I argued that it is highly plausible that China posses the greatest threat to American commercial superiority since the Cold War, and trigger a ‘technological’ arms race on a global scale. My father, however, suggested that American supremacy will continue to prosper – pointing to the quality of American university research, democratic governance, an emphasis on individual freedoms, and generous compensations for those achieving excellence. He believed that in doing so, the United States attracts the best and brightest from across the globe, offering them an asset which China lacks – intellectual diversity.
Unfortunately for me, he’s partially correct. You see – information technologies are one the greatest economic cornerstones deployed by the United States in modern times to help solidify itself as the world’s largest economy. As stated by Edward Snowden in his new book, Permanent Record, one of the largest reasons why America maintains its current position as a guarantor of global commerce, is due to the astonishing fact that almost all international communication permeates through the United States since the invention of the internet in 1989. Additionally, the US controls so much of the world’s communications that as of 2020, over 90% of the world’s internet traffic passes through technologies developed, owned, and operated by American businesses and Intelligence agencies. As with many successful business’s, much of America’s wealth has derived from its ability to reach the marketplace first and systematically develop and adopt technology in a variety of its industries. In doing so, America became the unofficial gatekeeper for the World Wide Web.
Mr. Snowden went on to write, “It’s not just the Internet’s infrastructures that are fundamentally American – it’s the computer software, (Microsoft, Oracle), and hardware (Apple, HP Dell), its everything from the chips, (Intel, Qualcomm), to the routers and modems (Cisco, Juniper), to the platforms that provide the email (Google), and store the cloud data (Amazon, IBM)”.
China has previously challenged American’s almost complete monopoly on global IT communications, with the ‘Great Firewall’, nationalized satellite connections, and even state-run server engines. However, Mr. Snowden argues, “America still remains the hegemon, the keeper of the master switches that can turn almost anyone on or off at will”. It is for this fact alone that America, and many of its Allies, have blocked Huawei from entering its telecom industries. In doing so, they can eliminate any threat that poses to a global order led by America.
Now, America’s monopoly is under new threat from the ‘recent’, and rapid development of technologies, such as Quantum Computing and advances in Artificial Intelligence. Their emergence has convinced cyber specialists such as, Eric Schmidt, the former chairman of Alphabet, Google’s parent company, that these systems have the potential to reshape global balances of power. In fact, Schmidt, who currently holds a chair at the Defense Innovation Advisory Board publicly stated, “By 2020, China will have caught up (to America). By 2025, China will be better than us (America). By 2030, they will dominate the industries”.
Instead of relishing its place as the manufacturing puppet for American tech goods, China has taken the opportunity to dramatically rethink its role in the global economy and its relationship with technology, transforming the label “Made in China” to one of global desire. This is most evident in the sponsoring of state-developed technologies using heavy capital expenditure. In fact, as of 2015, Chinese leaders announced that it would be investing over $300 billion (US) in the next decade into domestic tech R&D.
It is irrational, therefore, to suggest that America will maintain its position simply because it is the established gatekeeper to the ‘internet of things’. The question remains, can expenditure alone compensate for lack of intellectual property? If so, does China possess the capability to undermine America’s top IT researchers? The Economist states, “the vital question is not what technologies China has access to now, but how it built that access and how its capacity for fostering new technologies is evolving”. It is the small, but strategic, chess moves that China is making today, that will stifle American innovation tomorrow.
While China’s past indicates that it has struggled to produce a variety of competing products in international markets, such as the internal combustion engine, sound civil aviation, or even superconductors, it’s unique type of governance has ensured that the success of its tech corporations are not restricted by funding. “It doesn’t necessarily mean that their scientists are better,” said Martin Laforest, a physicist and senior manager at the Institute for Quantum Computing at the University of Waterloo in Ontario, Canada. “It’s just that when they say, ‘We need a billion dollars to do this,’ bam, the money comes”.
This can best be seen in the Chinese city, Shenzhen, the tech capital of China. The region has seen unprecedented growth and support from tech giants, Alibaba and Tencent, and has produced market values of ~$500bn, rivaling Facebook’s. As of 2019, China had flexed its engineering capabilities by producing the world’s fastest supercomputer, the Sunway TaihuLight, which earned its title in a computing competition in Frankfurt, Germany. Other milestones include the launch of China’s BeiDou satellite navigation system (bds), a direct competitor to the to US GPS systems. In addition, the June 2019 announcement illustrated that Chinese satellite networks had successfully performed “entangled” quantum particles communication – something that neither American military nor its private sector has yet to achieve.
Although the digital era may be entering a renaissance of sorts, it will be America’s response to China’s growth that will define the next decade of global tech relations. Instead of trying to kneecap Chinese technology out of fear, policymakers should work with security experts to determine if adoption of foreign technology is possible, even if companies like Hauwei are required to split contracts with a multitude of domestic vendors. In doing so, the added competition will benefit both consumers and corporations, improve relations with China, and allow security experts to sleep well at night.
As stands right now, President Trump has cut back spending on R&D to 0.6% of GDP, less than a third of what it was in 1964. In fact, the days of overwhelming American support for domestic R&D has (for the most part) ended. China has increased its annual spending into the private industries by 12% yearly since 2012 – projected to surpass America by late 2020. In addition, Mr. Trump’s extreme immigration policies have supervened what has traditional made America great – its diverse population of global scientists and researchers.
Although many argue that a tech-war is inevitable, I believe the next few decades will most likely showcase a complex continuum of innovation by both superpowers – one which may foster mutual adoption and bipartisan agreement. If America is to maintain its global superiority, it must incentivize immigrating scientists and researchers from all regions of the world. Intellectual capital may turn out to be America’s most powerful economic weapon in its entire arsenal.
1| “With the states help Chinese Technology is booming“, https://www.economist.com/technology-quarterly/2020/01/02/with-the-states-help-chinese-technology-is-booming
2| Haass, R. (2018). A world in disarray: American foreign policy and the crisis of the old order. New York, NY: Penguin Books,” Richard N Hass: President of the Council on Foreign Relations and the senior Middle East adviser to President George H. W. Bush
3| “Technology progress in China still leads to fireworks“, The Economist, https://www.economist.com/technology-quarterly/2020/01/02/technological-progress-in-china-could-still-lead-to-fireworks
4| “The Battle for digital supremacy“, The Economist, https://www.economist.com/leaders/2018/03/15/the-battle-for-digital-supremacy
5| “China Will surpass in AI Around 2025“, Defense One, https://bit.ly/2O37u54
6| Snowden, E. (2019). Permanent record. London: MacMillan.