Thucydides And The Dragon: Artificial Intelligence And Sino-US Rivalry
USA vs China rivalry and Made in China
“Made in China” used to mean cheap and poor quality, and probably involving the theft of intellectual property somewhere along the line. That perception has been out of date for many years now. Counterfeiting by Chinese manufacturers is still a major problem in some industries, but the best Chinese companies are world leaders in quality and in innovation. European telecoms utilities are alarmed by Trump’s demand that they exclude Huawei components from their G rollout programmes: if they comply, their G services will be late and expensive.
China’s two mobile payments giants, Alibaba’s Alipay and Tencent’s WeChat Pay, both have many more active users than PayPal and Apple Pay combined. This is partly due to the developing world leapfrog effect: China’s banks are bureaucratic and slow, and the global credit card firms Visa and Mastercard are banned. AliPay and WeChat Pay are now so pervasive that using cash in China can be problematic.
In the most dramatic economic miracle humanity has ever seen, China has raised a fifth of the world’s population out of grinding poverty in the last generation by the simple expedient of adopting a form of capitalism. But the ambitions of the not-very-communist party which remains in power go far beyond developing mere economic heft. The party wants China to become the dominant player in the world’s most advanced technologies, especially artificial intelligence.
China’s sputnik moment
The defeat of the world’s best player of the board game Go in by AlphaGo, an AI system developed by DeepMind, based in London and owned by Google, was China’s “Sputnik moment”. This is a reference to America’s shock in , when the Soviet Union successfully launched a satellite into space. President Eisenhower responded to this blow to America’s prestige by establishing the Advanced Research Projects Agency it soon added a D for Defense and became DAR, which has funded a lot of the foundational research in AI, as in computers generally.
The game of Go is revered in China, and especially in military circles, where it is seen as good training in military strategy. Just two months after AlphaGo beat Lee Sedol, China published its Made In China document, MIC which spelled out the party’s goal to shift the country’s economy from low-end contract manufacturing to high-end design and production, and to dominance in ten key industries, including aspects of AI.
China’s emergence as an economic and technological giant obviously threatens the US’ position as the world’s only superpower, a status it has enjoyed since the fall of the Berlin Wall and the collapse of the Soviet Union.
The US response to China’s rise
Trump responded to MIC by accusing China of unfairly forcing American companies to hand over key technologies, and imposed tariffs on Chinese goods in an attempt to force China to reduce the US trade deficit by importing more American products and services. America has legitimate grievances about China’s track record on trade, human rights, and other areas. But America is not without its blemishes, and it should not seek to prevent China from growing its economy and improving the lives of its citizens.
The Covid- pandemic has aggravated the situation. China’s early response to the outbreak was reprehensible, but Trump and other populists have sought to exaggerate that in order to cover up their own disastrous handling of the crisis.
So far, the Chinese government has sought compromise over conflict: it has toned down the rhetoric of MIC , and its retaliatory tariffs have been circumspect. It has indulged in some public schadenfreude about the US’ experience of the coronavirus, but it has not pressed the pedal to the floor. How long will that self-restraint last?
The Thucydides trap
In his book “Destined for War”, Harvard political analyst Graham Allison raised the spectre of historical determinism with the idea of the “Thucydides trap”. In the fifth century BC, Sparta’s fear of Athens’s rise led to competition, then mistrust, then confrontation and war, and the Athenian historian Thucydides argued that this was inevitable. An analysis of sixteen occasions since then when a rising power threatened the dominance of an existing major power showed that war was avoided in only four of the sixteen cases. But it is perhaps encouraging that of the three cases involving the US, only one ended in war.
The ingredients for conflict are all present. China’s economy is on the cusp of becoming larger than that of the US, although its GDP per head is still much lower. Its GDP growth rate has slowed in recent years, but is still nearly three times that of the USA subject to the usual caveats about Chinese economic statistics. Its military spending is also growing fast, and although it has a long way to go to build a force more capable globally than the US, it is well on the way to being dominant in its neighbourhood. And in that neighbourhood it has interests and claims which the US will not easily cede – the big one being the independence of Taiwan, which China regards as a breakaway province.
The flashpoints are not just local. China’s Belt and Road initiative involves infrastructure investments in countries, and there are fears it represents a new version of colonialism, especially in economically weak host countries like Pakistan and some African nations.
From Cold War to Code War?
The most dangerous source of conflict could be China’s determination to catch up with and then surpass America as the leading developer of AI, our most powerful technology. Some fear that the Cold War between the two nuclear superpowers could be followed by a Code War between its two AI superpowers.
Taiwanese venture capitalist Kai-Fu Lee, a former Google and Apple executive, argues that China will overhaul the US in AI because it has more hard-working and aggressive entrepreneurs and researchers, and also because it has a disregard for privacy which allows its researchers to amass more data. “If data is the new oil, China is the new Saudi Arabia”, as one critic put it.
It is true that the — work ethic hours a week makes Chinese startup scene a highly competitive one. Many Chinese students no longer want to stay in the US when they finish their degrees in computer science. They are keen to return home and get rich there.
Do Chinese people care about privacy?
It is also true that China’s attitude to privacy distinguishes it from the US, and even more from Europe. The Social Credit system being pioneered today has the potential to become a level of government surveillance that would make Big Brother jealous. This is happening partly because the communist party wills it so, and resistance is pretty much impossible for most citizens. It is also partly because corruption is endemic and severe in China, and levels of trust outside family networks are low. A system which punishes anti-social behaviour swiftly and effectively is less resisted in China than it would be elsewhere.
But we should not over-state the extent to which being oblivious to privacy issues is a killer app. China watcher JJ Ding argues that Chinese people do care about privacy, and that the government knows it cannot take their acceptance for granted. The US tech giants still have a significant lead in technology and expertise, and they still have momentum. AI is increasingly a duopoly between China and the US, not an emerging Chinese hegemony.
The US managed to avoid the utter disaster of full-scale military confrontation with the Soviet Union, and in many ways its relations with China are much closer, which should make confrontation less dangerous. The US economy is less open than those of most developed countries – trade accounts for % of US GDP, compared to % for the UK, and % for China. But the US and Chinese economies are far more entwined than America’s ever was with the Soviet Union. GM sells more cars in China than in the USA and Canada combined, and Apple, Qualcomm and most other large US companies are similarly exposed.
Avoiding the splinternet: a role for Europe
Trump’s populist attacks on Huawei won’t kill it, although they could certainly curb its growth, and perhaps shrink it for a while. In the longer run they could easily have the perverse effect of damaging the US tech sector: China may decide that America is an inherently untrustworthy partner, and make the very heavy investments of time and treasure required to wean itself off US suppliers, and build its own chip industry, for instance. They could lead to “the splinternet”, a fracturing of the world’s technology ecosystem into two distinct communities, which would make global co-operation harder, and provoke mutual fear and suspicion.
War between China and the US or NATO is the worst possible outcome, but at this stage it still looks unlikely. Both the US and Chinese governments must walk a tightrope between pursuing their legitimate grievances on the one hand, and provoking outright hostility and communications breakdown on the other. This requires wisdom and diplomatic skills which are not prominently on display in both Beijing and Washington at the moment.
It would help if there were three AI superpowers, not just two. AI is not a race, as there is no finish line, and unless the internet splinters completely, the advances made by any party help everyone. But at the moment, Europe is barely involved. That ought to change, and soon.
