Tuesday, February 23, 2021

Innovation wars in a new era of geopolitical competitiveness: how the US technological advantage over China has eroded


If Washington has tended to look at all these efforts in military terms, Beijing is playing a more sophisticated game in which it uses technological innovations to achieve its goals without resorting to war.

China’s bet to increase its power is the 5G infrastructure it sells in the world, the exploitation of synthetic biology to increase food reserves and the construction of smaller and faster microchips.

The real problem for the US is that they do not have a vision of the technologies that matter in this extended competitive environment in many areas or how to facilitate their development – and the private sector alone does not have the capacity to meet the country’s security needs.

The US needs to understand that a wider range of technologies is needed – in addition to those with direct military applications (supersonic aircraft, quantum computing, artificial intelligence), there are also those traditionally developed in civilian research, namely microelectronics and biotechnology. Then all these technologies must eventually be marketed with government financial support.

The challenge of innovation

In the first decades of the Cold War, the United States invested billions of dollars in scientific infrastructure. In 1946, the Atomic Energy Commission was established, which coordinated war laboratories that produced the first nuclear weapons (Oak Ridge, Manhattan Project) while funding academic research centers.

In 1947, the Department of Defense was founded, and in 1950, the National Foundation for Science. After Russia launched the Sputnik satellite in 1957, the United States created NASA and a technology research center of the future that would become the Agency for Advanced Research Projects. In 1964, 17% of the federal budget was money for research and development. The goal was to create a technological foundation defined by conventional and nuclear defense capabilities. This is how supersonic planes, nuclear submarines and guided missiles were built. The private sector capitalizes on intellectual property by transforming capabilities into products and products further into companies. This is how GPS-equipped technologies, lithium batteries, touch screens, voice recognition came about.

Between 1964 and 1994, the development and research sector was gradually taken over by American corporations that were no longer concerned with first-rate discoveries but with strengthening the functionality of existing ones. Aiming for commercial success, companies have focused on possible short-term innovations rather than technologies that would have required decades of effort.

All this time, the actual research was being taken over by privately funded start-ups by investors willing to take risks. Modern venture capital firms emerged in the 1970s – companies such as Apple and Microsoft had their first successes, but exploded in the 1990s with the dotcom bubble (huge speculative investment in internet companies).

The evolution of research and development centers can be summarized as follows – government laboratories – corporations-start-ups.

Then the big companies started buying smaller companies built on venture capital, but with promising technologies. The rise of venture capitalism did not necessarily serve US interests – these companies were valued for their ability to make huge profits in 10 years. This meant that they were less interested in microelectronics versus less capital-intensive software companies.

However, this does not help national security priorities.

Over time, the US government has invested less and less in both state and private research. The Department of Defense continued to receive the largest research budget, but otherwise the money was dwindling and distributed in the absence of a national strategy. The ties between Washington and private companies have weakened – the federal government was no longer the main customer or the first customer of many of the companies that developed the most advanced technologies.

The Chinese market took the dominant position in the world, which led the US to think about customers across borders – for example Apple refused to give the FBI access to its iPhone, a decision that strengthened the commercial value of the brand.

An increasingly obvious complication was the dual nature of the technology – that is, for military and medical use, creating concerns about the security of the distribution chains of electrical components and telecommunications networks.

Civil technologies were becoming more relevant to national security, but it was the private sector and not the US government that was developing them at a rapid pace.

China’s explosion

In the last two decades, China has evolved from a country based on intellectual theft and imitation to a geopolitical adversary capable of innovation. This was due to his long-term thinking. China has increased its investment in technology from less than 5 percent in 2000 to 23 percent in 2020.

China’s rise has been made possible by its strategy of merging the military and civilian sectors – a coordinated effort of cooperation between the defense industry and the private sector. The state provides support through grants, data, government-guaranteed loans or training programs, as well as providing land or office space.

An example is investing in 5G technology. Chinese company Huawei provides a telecommunications infrastructure offering quality equipment at better prices than its Finnish or South Korean competitors. The state has supported the company with about $ 75 billion in tax exemptions, grants, loans or discounts in China, according to the Wall Street Journal. Huawei has also benefited from the Belt and Road initiative, which offers generous loans to Chinese countries and companies to build critical infrastructure.

China has also invested in artificial intelligence research, as evidenced by the large number of scientific papers in the field. However, China’s success has been due not only to funding but also to accessing huge volumes of data. Beijing has fueled the rise of technology companies that extract large stretches of user information. For example, Ali-baba, a giant in online commerce, Tencent, the developer of WeChat, Baidu, originally a search engine that now offers a wide range of products online, and SenseTime, which offers facial recognition technology for the Chinese video surveillance network and which is said to be the most valuable artificial intelligence company in the world.

These companies are required by law to cooperate with the state for the purpose of intelligence operations or, more than likely, they may be forced to provide data for a variety of reasons.

Washington has monitored China’s technological progress through military glasses

Chinese companies have woven a global network of applications through which they collect private information about users – payment history, searches and location. China is thus gathering valuable data about foreign nationals so that it knows how to attract a Westerner who is indebted to spy on Beijing.

China’s huge appetite for data extends to the world’s most intimate information – namely DNA. In the pandemic, the genetic sequencing company BGI – set up as a government-funded research group – has set up field with 50 coronavirus testing laboratories worldwide. As BGI coordinates China’s national genetic data library, it is plausible to think that the biological information of foreign nationals will be stored in these archives, Foreign Policy writes.

China has not yet reached the US in the field of biotechnology, but has shown great interest in it. Or, in combination with massive computing power and AI, biotechnological innovations can solve major human problems from disease, hunger, energy production and climate change.

The researchers developed the CRISPR genetic editing device and were able to encode a video into the DNA of some bacteria, paving the way for a cheap method of storing data. Then, synthetic biologists invented another method of producing nylon, namely with genetically modified microorganisms instead of petrochemicals.

However, biotechnology can become a tool for biological weapons that could target ethnic groups. And different countries will accept different degrees of risk and have different ethical positions on acceptable genetic manipulation.

Beijing’s contempt for human rights coupled with the pursuit of technological supremacy suggests that it could embrace a lax, even dangerous, approach to bioethics.

Washington has been concerned about technological advances and has monitored them to the extent that they contribute to defense capabilities. But China’s challenge of technological supremacy is not just about the advantages on the battlefield – the target has a wider horizon, namely to change the battlefield itself.

Undoubtedly, commercial technologies such as 5G, AI, quantum computing and biotechnology have military applications, only China wants to achieve the vision of a competitive world in which no bullets are needed. Technological supremacy promises the domination of the civil infrastructure on which others are dependent and the exercise of enormous influence.

Beijing has an important motivation to support the export of high-tech infrastructure – beneficiary countries may imagine that they are equipped with electricity, sanitation and banking networks when in reality they leave their critical infrastructure and citizens’ data in the hands of Beijing. place these Trojan horses.

Despite the changing nature of geopolitical competition, the United States has not escaped the tendency to equate security with traditional defense capabilities. An example is electronic components – critical parts not only of commercial products but of almost any important defense system from airplanes to warships. As they drive progress in AI, they will also shape US economic competitiveness. However, neither the government nor the private sector adequately finances innovation in this area – the former because of the need for capital and a long time horizon, the latter because it focuses on stockpiling rather than innovation. China has made great efforts to catch up with the United States and it is only a matter of time before it advances in the microelectronics industry.

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