If the global community doesn’t come together, China will assume economic dominance of Artificial Intelligence applications, be in a position to spy on much of the world, and leverage international organizations to “make the world as a whole safe for authoritarianism,” according to the Halifax Report.
Tech now the focus of Chinese industrial policy
China has successfully shifted focus away from manufacturing — which it now dominates globally — towards higher-value tech sectors via a “Made in China 2025” policy focused on AI, robotics, quantum computing, new materials and high speed transport.
Whether ranked by market capitalization, revenue or employees, China’s large tech companies now outnumber those of all countries except the U.S. Chinese adoption of AI technologies is faster than in all other countries. Faced with a growing number of countries banning Chinese telecom giant Huawei and the acceleration of digital transformation demanded by the Covid-19 pandemic, China increased state investment — from both local and central government — in semiconductors and artificial intelligence by more than $1 trillion in its latest Five-Year Plan.
The Senate Foreign Relations Committee worries that “due to its sheer size” China “already has an inherent edge” in new technologies, projected to overtake U.S. research and development spending by 2030.
China is formally creating the sort of military-industrial complex that exists informally in the U.S., — ”mobilizing all aspects of national power for science and technology” according to the committee.
Military and civil fusion of data
Huawei has come to symbolize concerns of Western intelligence agencies over China’s tech transformation, but the problems run much deeper.
5G is a security problem beyond Huawei because the increased role for software in managing the networks means they lack the obvious hardware “choke points” used to secure previous generations of networks. The new networks will also connect tens of billions of smart devices — not merely our phones or computers — making them even harder to secure, whether or not the hardware is made by Huawei.
State-controlled business-to-business operations — including those working with Huawei — may ultimately pose a bigger problem for democracies.
Hoffman identifies Global Tone Communication Technology Co. Ltd, or GTCOM, as an example of where Chinese party and state interests use companies like Huawei to achieve their goals. GTCOM is a subsidiary of China’s Central Propaganda Department-controlled and owned China Translation Corp.
Chinese companies are adept at delivering convenient tech-enabled services that range from AI-powered traffic management systems to eCommerce software. Companies such as GTCOM enable parts of those services. In GTCOM’s case by offering machine translation of text in 2.500 pairs of languages.
On the surface that may sound simply like a Chinese version of Google Translate. The potential problem is that military grade intelligence can now be created out of the sort of data that feeds GTCOM’s services. Natural language processing tools can identify extreme language or measure public sentiment. Location can be used to map people’s movements: potentially indicating social unrest or pinpointing political opponents. Unlike Google, companies like GTCOM exist to provide that sort of information to the Chinese state.
Big Data is a recipe for Big Surveillance
Limiting misuse of data largely depends on regulating the way it is processed and providing ways for people to challenge companies’ policies in court.
Both the EU and the U.S. condemn China’s vacuuming up of user data, but attempts to cooperate against China are complicated by their differing approaches to data protection. Though the EU’s General Data Protection Regulation has attracted significant criticism for the way it secures those rights, the U.S. lacks a federal digital privacy law altogether. The problem is reinforced when U.S. military institutions take advantage of that legal vacuum. Vice reported Monday, for example, that the U.S. Special Operations Command, bought the location data of 98 million users of a Muslim prayer app.)
Nand Mulchandani, Chief Technology Officer of the Defense Department’s Joint Artificial Intelligence Center said that to compete with China other countries will have to get past these differences and find a way to engage in global partnerships. Diversity of data, he said, is better than even a huge dataset from within a single country such as China.
“The countries that get the best data sets will develop the best AI: no doubt about it,” Mulcandani said.
China’s unbounded claims to cyber sovereignty
China says in its National Cyberspace Security Strategy that control over the technology and internet services within its borders is “an important part of state sovereignty” and insists that it “will use whatever means necessary” including military force to protect it: “No attempt to use the internet to undermine or overturn China’s national regime or sabotage sovereignty will be tolerated.”
China has been upsetting existing international systems to defend that position. In 2013, for example, it established a rival conference to the U.N.’s Internet Governance Forum, that is favored by countries with censorship track records.
And it doesn’t stop at China’s borders. Samantha Hoffman says China uses data collection “on a massive scale” to go beyond securing the interests of the Chinese people or Chinese data, to explicitly enhance the party’s control at home and continuously expand it overseas.
China’s cyber espionage is increasingly spilling out into the open. In 2018, Le Monde reported that Chinese firms had not only built but systematically bugged the new headquarters of the African Union. U.S. intelligence agencies have identified Chinese hackers as responsible for data breaches involving the majority of Americans: from 22 million government records held by the Office of Personnel Management to Equifax credit reports for 147 million Americans. Canada’s 2020 Cyber Threat Assessment published Wednesday put China at the head of a short list of “greatest strategic threat” countries engaging in state-sponsored cyberattacks on Canada’s critical infrastructure and citizens.
The U.S Department of Justice charges that Huawei is so brazen in its pursuit of stolen intellectual property that it offered “bonuses to employees who succeeded in stealing confidential information from other companies.” U.S. agencies estimate the economic damage may range anywhere from $225 to $600 billion a year.
What can democracies do to reshape global tech?
Key to China’s success is heavy technology investment — signaling that any attempt to outpace China will require industrial policy investments. French Finance Minister Bruno Le Maire Wednesday urged the EU executive to make funding cloud technology a priority.
Another solution: Bans and sanctions that limit the ability of Chinese companies to grow and improve their technology. India took that approach in June, banning TikTok, WeChat and dozens of other Chinese-owned app, saying China stole user data in a way that “ultimately impinges upon the sovereignty and integrity of India.”
Others options include directly enhancing defense capabilities: Boris Johnson this week announced the establishment of a U.K. national cyberforce to protect the UK against cyber attacks, and a new AI agency to develop autonomous weapons systems. Russell Haworth, CEO of Nominet — which manages the U.K.’s internet domain system — backed Johnson’s moves. “China’s role has been well documented. The variety of attacks against an ever growing list of targets necessitates investment,” he said.
Too many of the world’s great challenges, including climate and inequality, require China’s input for the country to be isolated by the West, the Halifax International Security Forum report concludes, but those democracies will need to use the U.S.-led post-war alliance system to force chance.
That’s one fundamental advantage China does not have at its disposal: It has no real allies, only clients and fearful neighbors.
— Laurens Cerulus and Melissa Heikkilä contributed reporting.
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