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The Economist May 18th 2019

Special report China and America

2 techno-dystopia that China has built in

Xinjiang. “The good news is that the Chinese are going to discover that autarky is hard,” says Mr Mulvenon. Americans have watched China stealing and reverse-engineering one generation of technology, he says, then having to steal the next after failing to master the underlying science. “That model is incredibly inefficient.” China is willing to spend what it takes, showering would-be champions with billions of dollars in subsidies and prodding local firms to place orders. Among the beneficiaries is the Commercial Aircraft Corporation of China, whose c-919 commercial airliner is intended as a direct competitor to Boeing’s 737. State planners have set a goal of a 10% domestic market share for Chinese airliners by 2025. The c-919 has had teething troubles, making that timetable ambitious. But success for China could quickly feel zero-sum in America, whose Made in China top export category to China in 2017 was civilian aircraft, worth $16.3bn. The Rubio report laments that at least ten American firms supply vital parts to the c-919. China has created big brands in such fields as electric vehicles and batteries, in part by shutting foreign rivals out. Protectionist barriers have also allowed Chinese internet firms to grow. In 2009 the ten largest internet companies by revenue were American. Now several are Chinese (see chart on previous page). Still, it is a mistake to exaggerate China’s strengths in big-data analysis and ai, according to Dieter Ernst of the East-West Center, a think-tank in Hawaii. A near-total lack of privacy protection may help sweep up lots of data, but American firms are better at advanced algorithms that make ai less dependent on big data sets, Mr Ernst wrote. Big Chinese applications are still mostly powered by American-designed chips, which remain world-beating. America has other advantages. Joy Dantong Ma of MacroPolo, the in-house think-tank of the Paulson Institute, examined the origins of leading speakers at the most prestigious ai gathering. Most came from American universities and tech firms, she found. Crucially, though, more than half those American stars were foreign-born. Team Trump’s visa clampdown imperils that. Some forms of competition can be fair but still end with the gains going mostly to one side. Notably, some technological fields give a “first-mover advantage” that offers huge rewards to countries or businesses that take an early lead, allowing them to set standards that later entrants have little choice but to follow. In April the Defence Innovation Board, a Pentagon advisory committee of Silicon Valley luminaries, issued a report warning that China is on track to pull off this feat in the race to dominate 5g mobile telecommunications. This next generation of wireless technology promises to revolutionise existing industries and invent whole new ones with data speeds about 20 times those of 4g. A decade ago American firms took an early lead in 4g, setting standards for new handsets and applications that spread worldwide. That dominance helped Apple, Google and other American businesses generate billions of dollars in revenues. China learned its lesson, investing $180bn to deploy 5g networks over the next five years and assigning swathes of wireless spectrum to three state providers. In America the same part of the spectrum is largely off-limits commercially because it is used by the federal government. American firms are experimenting with a different part of the spectrum that has some advantages under laboratory condi-

tions but is easily blocked by buildings and trees. For this reason, in spite of American pressure on allies, much of the world is likely to adopt China’s handsets, chips and standards, the Pentagon board concludes. Since America’s armed forces are expected to operate worldwide, they must prepare to send data through a “postWestern” world of wireless technology and through “zero-trust” networks, studded with components from such Chinese firms as Huawei. That will mean more focus on encryption and security. Home of the splinternet Some technology contests look more benign. As China and America wall off their respective digital markets from one another, each will look for growth in the rest of the world. A divided world wide web, or “splinternet”, is already a reality, as China’s internet grows behind a great firewall of censorship. American champions like Amazon are promoting payment services in India. China’s Alipay service is active in Brazil. China is exporting surveillance systems and censorship algorithms to police states from Ethiopia to Venezuela. With a change in direction, America could make a virtue of an internet that respects privacy. Western biomedical firms and gene-editing laboratories could make a virtue of stricter ethics. It is unhelpful that Mr Trump is a techno-curmudgeon. He has proposed budgets that slash scientific-research funds, though Congress reversed them. After two recent crashes of Boeing 737 Max airliners, he tweeted that “airplanes are becoming far too complex to fly”. Still, last year Mr Trump signed a bipartisan bill authorising $1.3bn for quantum-computer research. The aim is to keep ahead of Chinese work on computers that harness the laws of quantum physics to achieve processing speeds out of a sciencefiction film. America leads this field, but Xi Jinping deems it a national priority, quizzing scientists who have returned from quantum laboratories in America and Europe. Should China succeed, it could develop almost unhackable satellite communications and quantum radar to detect the stealthiest planes and submarines. Such a success would turn a technology China is on track contest into an arms race. America would to dominate 5G then have to decide whether this China can mobile telebe deterred or whether one day it might use communications its new capabilities. 7


Profile for MA Rtin

The Economist - 18.05.19  

The Economist - 18.05.19