A decade ago, I was a skeptic that China could escape its mid-level manufacturing strategy. It was the workshop for the world, and always would be. It was a top-down system dominated by the Communist Party. It would never be able to duplicate the innovation patterns seen in Silicon Valley and other American “hot spots,” or technology clusters.
But evidence is mounting that I was wrong, as this report from the Information Innovation and Technology Foundation shows. China has been able to acquire technology from foreign companies operating on the mainland, but it also has siphoned off a huge flow of cutting-edge ideas from hacking U.S. computer systems, planting economic spies and agents in American companies and governmental institutions, buying up distressed U.S. companies in targeted technology spaces such as aviation and becoming very active in Silicon Valley venture capital investing. These are some of avenues I have identified in my forthcoming book, “The New Art of War: How China’s Government is Stealing Technology in America and Undermining Our Democracy.” (Brick Tower Press, May 2019.)
Once the Chinese government and affiliated bodies obtain a technology, they are able to develop it faster than most American companies or institutions can because Chinese state-owned enterprises and a relative handful of private companies such as Alibaba and Baidu, are sitting on many billions of dollars of cash. They can obtain investment dollars in China faster than American rivals can.
They also are taking advantage of a huge domestic market and of a basic cultural trend that is hard to quantify–the Chinese believe in developing a technology such as Artificial Intelligence before they resolve any moral or ethical dilemmas. In contrast, we place a much greater emphasis on trying to understand the legal and moral framework for such technologies as genetic editing.
If you add it all up, as the foundation’s report shows, China probably now has a leading position in 5G telecommunications, supercomputers, quantum computing, AI, and other information-technology sectors. They are still dependent on the outside world for semiconductors, but they are trying to ease that dependency. They have not yet cracked international markets with automobiles made in China, but they are working on leapfrogging existing manufacturers by developing all-electric vehicles.
We will never be able to negotiate a halt in China’s technological push. Our only recourse is to harden our computer systems and institutions against further theft but more fundamentally, we have to rev up our innovation machine to stay ahead. There is a very clear military and security dimension to this. The Chinese speak openly about a fusion between their civilian and military sectors. If an enterprise or company develops a cutting-edge technology, there is no question but that the People’s Liberation Army will have access to it.
