Can China innovate the technologies of tomorrow with an oppressive political system, a failing economy and loss of support from the international community? Despite everything, Xi's China has managed to become a technology leader in critical fields, such as quantum communications and 5G wireless communications. (Photo by Hector Retamal/AFP via Getty Images)
"China," some say, "is largely a land of rule-bound rote learners." The Chinese try but rarely make breakthroughs on their own. Moreover, ruler Xi Jinping, who demands that his regime dominate the technologies of the world, is fast eliminating the one essential ingredient of innovation: freedom. Totalitarianism promotes obedience, a quality not particularly helpful for developing the technologies of tomorrow.
Yet despite everything, Xi's China has still managed to become a technology leader in critical fields, such as quantum communications and 5G wireless communications. The Chinese, because of their success, are now racing to own the technologies of this century.
China also has weaknesses. Its economy is failing, and the regime, through especially provocative actions, is losing the support of the international community. The country's window of vulnerability, however, is only a few years at most. So this is the time for the world to act.
Thinker David Goldman persuasively argues that it does not matter whether the Chinese people can innovate. Their regime has put together all the elements needed to dominate technology.
Beijing spends enormous sums pursuant to meticulously crafted multiyear programs, like the 13th Five-Year Plan, the Digital Silk Road effort, and the infamous Made in China 2025 initiative. When China spends, it spends big. Premier Li Keqiang, while issuing his Work Report at the National People's Congress meeting at the end of last month, announced a campaign to build "new types of infrastructure," in other words, technology.
China, therefore, is going on a tech-spending binge. More than a dozen Chinese municipalities, including Beijing and Shanghai, have since the beginning of this year committed to spend $935 billion, and corporations like Alibaba and Tencent will chip in. The Ministry of Industry and Information Technology talks about the country committing $1.4 trillion in the next five years.
China can spend, but can it innovate in an oppressive political system? Oppressive political systems kill creativity in the arts and social sciences, but they also stifle the other sciences. Innovation often does not benefit from top-down decisions that are often ill-conceived and therefore counterproductive.
Yet it doesn't matter whether communist regimentation has made the Chinese people tech dullards — by and large they are not — because bureaucrats can hire all the creative talent they need from other countries.
As Goldman points out, "For the first time in its long history, China has succeeded in recruiting Western innovators on a large scale." There are, for instance, 50,000 foreigners working for national champion Huawei Technologies including, he writes, "some of Europe's best scientists and engineers in the field."
That was the formula for China's lead in quantum communications. Beijing took the breakthrough of an American — Albert Einstein described the phenomena of "spooky action at a distance" — and expertise from Vienna, and created for itself at least a half-decade lead in developing hack-proof quantum communications.
In another quantum area, computing, China's home-grown effort is lagging. Google is far ahead with a 72-qubit computer. IBM's computer is 50 qubits, and China, according to Zhu Xiaobo of the University of Science and Technology of China, is "working on 24 qubits."
China also is working on plundering Google, which has various operations in the People's Republic including its AI China Center in Beijing and partnerships with the country's two leading universities, Peking and Tsinghua. Yet the company has larger plans. "As Google's AI research ramps up in China, they will ultimately need greater capabilities than a built-from-scratch cloud computing firm can provide," Brandon Weichert of the Weichert Report told Gatestone. "So it is inevitable that Google will attempt to either partner with or purchase a Chinese cloud computing firm, like Tencent."
America's artificial intelligence efforts get an indirect boost from Google's operations in China, but China is benefitting a lot more, especially because tech, like water, flows downhill. Moreover, tech transfers to the Chinese pose a threat to Americans because of Beijing's policy of "civil-military fusion." This policy means there is no such thing as civilian-only tech cooperation in that country. The technologies that Beijing manages to beg, borrow, or steal — often steal — is directly pipelined to the People's Liberation Army.
So Google, which has refused to work with the U.S. Defense Department on artificial intelligence, is helping the Chinese military in that critical field. This situation is hideous, and hideous things never last. "The United States has to absolutely prohibit Google and other tech firms from doing business in China or with Chinese firms," Weichert, also the author of an upcoming book on Chinese space tech, tells me. Furthermore, he persuasively argues that Washington must prohibit American manufacturing concerns from transferring technology to China.
At the moment, a complete ban on technology transfers looks drastic and therefore unlikely. There are, however, two reasons why China may not be able to get its hands on the tech it needs, ban or no ban.
First, China's market is losing its attractiveness. The economy is in distress, suffering from both the coronavirus pandemic and systemic weaknesses, like excessive indebtedness, smothering state controls, and xenophobic hostility to foreign investment.
The economy, from most indications, remains backward. When Premier Li announced his plan for new infrastructure, he also advocated a major push to build a "street stall economy," — an economy built on street vendors.
The reality is that China cannot provide livelihoods for its people, and that in turn suggests the country over the long term will not be able to maintain the resources necessary to fund tech investments. Beijing can say it will spend $1.4 trillion, but an overstretched state with a stagnant economy is unlikely to make good on that pledge.
Second, China is taking on the world — both neighbors and faraway countries — with its fierce "wolf warrior diplomacy." Its wolfish approach is having consequences. For instance, China's killing of 20 Indian soldiers on Indian-controlled territory in the Himalayas on June 15 will probably lead to a ban on Huawei telecommunications equipment in India, perhaps even a "rip and replace" effort.
As Beijing pushes away the world, tech cooperation will be restricted, and that brings us back to Google. The Trump administration in January severely restricted the export of AI geospatial products. This and other restrictions on the way will impact Google's cooperative efforts in China.
Already, Huawei and other companies, due to decades of malicious conduct, have been added to the U.S. Commerce Department's dreaded "Entity List." Because of this designation, Huawei and the other businesses have been ring-fenced: Americans, without prior approval from the Department's Bureau of Industry and Security, may not sell or license to the listed companies products or technologies covered by the U.S. Export Administration Regulations.
What does this mean in practice? Huawei will not be able to sell 5G base stations, an important product, in about 12 months, when it runs out of chips. The company will not be able to source these critical components for years, unless it finds some party willing to violate U.S. law.
Moreover, the Trump administration has been getting more aggressive with coercive measures, even going so far as to sanction educational institutions. Last month, the Trump administration added the Harbin Institute of Technology and Harbin Engineering University to the Entity List.
China's answer is to steal as much as it can and buy tech wherever possible. It has, for instance, been trying to build a relationship with South Korea's Samsung, the world's no. 2 maker of smartphones, to obtain 5G chips it can no longer get due to the Entity List designation. Don't be surprised if Huawei, perhaps with the support of the leftist government of President Moon Jae-in in Seoul, buys Samsung to get its technology.
Backdoor strategies like those involving Samsung can alleviate the effect of foreign sanctions, but they are only stopgap measures at best.
This is, therefore, the time to stop China before, by hook or by crook, it dominates technology to the detriment of the world. The window in which American actions can be effective is narrowing. Huawei, for instance, can design the sophisticated chips it needs, yet it cannot build them due to its inclusion on the Entity List. It should be able to develop the ability to build chips, however, in a few years.
So it's now or never. Now is the time to shut down Beijing's massive, state-directed, and government-funded effort to dominate the world's technologies.
Gordon G. Chang is the author of The Coming Collapse of China and The Great U.S.-China Tech War. He is a Gatestone Institute Distinguished Senior Fellow.