The UK is under no illusions as to the cyber threat posed by China. The UK government and critical industry sectors, such as defence, telecommunications and IT, have all been subject to Chinese cyber intrusions designed to steal data on an industrial scale. This was last called out publicly in 2018 by then-foreign secretary, Jeremy Hunt, who described Chinese attacks against UK managed service providers as ‘one of the most significant and widespread cyber intrusions against the UK … uncovered to date’.

Drawing on its own experiences in the cyber domain, the UK will also fully understand that espionage capabilities can quickly become sabotage capabilities – the hack of a network to steal data can quickly become the hack that brings the network down. And the UK knows that China’s intelligence law requires Chinese companies to provide it assistance if asked to do so. The UK’s assessment of the cyber threat posed by China does not differ from that of the US.

2. The UK may have managed the use of Huawei kit in its 3/4G networks, but its use in 5G networks significantly increases the risk of Chinese espionage and sabotage.

Just as 3/4G networks are entangled together today, 5G will be entangled with 3/4G networks. Given that Huawei is already providing kit in the UK’s 3/4G networks, the theoretical ability of the Chinese to access and sabotage the UK mobile network would be little changed even if Huawei kit were not used in the 5G elements of the networks.

3. Even if the risk doesn’t increase from 3/4G to 5G, the UK shouldn’t be using Huawei in any ‘G’ network because the threat of serious cyber espionage cannot be mitigated.

The basic cyber security measures that have been used for 3/4G also apply to 5G, with the proper use of encryption to ensure the confidentiality and integrity of data being a crucial one. Ironically, it remains the case that those with the best chance of reading traffic on anyone’s mobile networks are the companies providing ‘over-the-top’ encrypted applications, as well as whichever government hosts those companies under the terms of their domestic lawful intercept (so in the UK that is overwhelmingly the Silicon Valley companies and the US government).

Increasingly, the UK finds itself unable to read the encrypted traffic between suspected terrorists in London and Manchester without Silicon Valley’s help. The presence of Huawei makes no difference – even if the Chinese government were able to use the Huawei kit to listen in, it would face the same problem as the UK government. Let’s be clear – Google can get to the content of gmail passing over a bit of Huawei kit, but China cannot.

4. Ok, the real risk isn’t about spying, it is about China’s ability to use Huawei kit to sabotage the network.

The provision of kit into UK mobile networks and the interfaces between those networks and the rest of the UK’s telecommunications infrastructure are complex processes. Any kit that Huawei provides into UK networks will be integrated with kit and over networks run by other providers – such as BT, Vodaphone, Virgin Media, EE and others. Those providers have a degree of visibility and control over the various interfaces, with ‘redundancy’ built in – another basic UK requirement being to build redundancy into traffic routing to ensure the network as a whole can survive the loss of a single element (network resilience).

Additionally, many of the components inside Huawei kit are manufactured by other nations, particularly the US – software from Microsoft, microchips from Intel and Qualcom. Removing kit within a complex twenty-first century telecommunications network based simply on the nationality of the kit’s ‘supply chain’ is almost impossible. National ownership of a piece of kit is not the only deciding factor when it comes to ‘ease of interference’. As an illustration, if the US were behind the Stuxnet attack, as alleged, it interfered with the kit of a German company, Siemens.

In short, bringing down a complex modern telecommunications network is not easy, whichever bit of kit within the network you ‘own’. But even if you could, when would you do it? It is effectively a ‘one shot’ capability – if used by China, it would undermine the position of all Chinese companies in the world tech market, effectively handing the market to exclusively non-Chinese companies. China would therefore presumably save the ‘one shot’ for war or near-war, in which case it would need to be sure it would work. As I have outlined above, that is not easy.

The sabotage risk is, in reality, probably far subtler. It is more likely that China might try to insert damaging code via mobile networks remotely and deniably, with the Huawei kit used to facilitate an insertion or exfiltration of code/data into other networks – it is part of a pathway or a small but essential cog in a bigger wheel. Note again, however, that other countries could get into Huawei (or Nokia or Ericsson for that matter) kit remotely to do the same thing.

5. Given that there is a potential sabotage risk, can the UK really isolate the core of its network from Huawei?

5G is a cool technology, providing greater bandwidth, faster speeds, better quality and instant connections. It is this faster, smarter layer that will enable the truly innovative applications that we call the ‘Internet of Things’, for example, self-driving vehicles.

Sitting behind this are various technologies. The use of higher frequencies (ultimately including ‘millimetre waves’) means that the system can carry more information and support more devices (‘smart things’) at the same time (4G uses data at rates of 200–300 megabits per second, while service providers are ultimately looking to get 5G to above 40 and even up to 100 gigabits per second). There are many more and smaller transmitting and receiving antennae, using less power and covering smaller geographic areas – allowing the transmission and receipt of signals simultaneously through multiple antennae.

5G uses a Cloud Radio Access Network, meaning cheaper infrastructure and less maintenance. Unlike current generations, 5G base stations use ‘beamforming’ to detect and locate the user, and only transmit in that direction. 5G uses ‘Full Duplex Mode’ enabled by high-speed switching that can handle simultaneous transmission and receipt. Using all of the above, a 5G network can be ‘sliced’ and dedicated to a specific task (e.g. one part for phones and one part for driverless cars).

So 5G looks complicated and distributed. But it can still be divided into core and non-core. The latter refers to the myriad of small antennae, small cells and base stations distributed on masts, street corners and rooftops creating ‘smart’ environments. But there still has to be a controlling brain – the handful of main data centres at the heart of the network, with there being only two or three more centres needed in a 5G network than in a 3/4G network. That is the core, which can be owned and protected by UK service providers, such as Vodaphone and the like, including if held in the ‘cloud’. That is why the UK thinks it might be able to manage the overall risk by restricting Huawei kit to the ‘non-core’ network.

6. But isn’t Huawei kit rubbish anyway?

Perhaps the single-most important reason why Huawei 5G kit seems to outperform its rivals is the amount it has invested in R&D, and its deployment support is very good. The UK’s National Cyber Security Centre has, however, been very critical of Huawei’s coding. Nonetheless, kit can still perform well even when the underlying coding is a mess, meaning that it is not configured in a uniform way and is therefore very ‘buggy’, like Huawei’s. The presence of bugs in software is ‘normal business’ – they are not back doors in themselves, but they can be used to create back doors.

An international standard that set how coding is done would have reduced the number and type of bugs, and, therefore, made the kit inherently more secure. This is a crucial point: the international community should have baked security standards into the design of 5G networks from the outset, rather than now trying to retrofit security measures by means of, for example, the core/non-core debate.

This is the key lesson from the current Huawei saga for future generations of critical technology, including Artificial Intelligence. If we did not do enough to establish the right standards for 5G, we should now start developing the best standards for the 6G that we will be installing in a decade.

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We are on the cusp of colossal changes. But you don’t have to take Mr. Putin’s word for it, nor mine. This is what Erik Brynjolfsson, director of the MIT Initiative on the Digital Economy and a serious student of the effects of digital technologies, says:

“This is a moment of choice and opportunity. It could be the best 10 years ahead of us that we have ever had in human history or one of the worst, because we have more power than we have ever had before.”

To understand why this is a special time, we need to know how this wave of technologies is different from the ones that came before and how it is the same. We need to know what these technologies mean for people and businesses. And we need to know what governments can do and what they’ve been doing. With my colleagues Wolfgang Fengler, Kenan Karakülah, and Ravtosh Bal, I have been trying to whittle the research of scholars such as David Autor, Erik Brynjolfsson, and Diego Comin down to its lessons for laymen. This blog utilizes the work to forecast trends during the next decade.

4 WAVES, 3 FACTS

It is useful to think of technical change as having come in four waves since the 1800s, brought about by a sequence of “general purpose technologies” (GPTs). GPTs are best described by economists as “changes that transform both household life and the ways in which firms conduct business.” The four most important GPTs of the last two centuries were the steam engine, electric power, information technology (IT), and artificial intelligence (AI).

All these GPTs inspired complementary innovations and changes in business processes. The robust and most relevant facts about technological progress have to do with its pace, prerequisites, and problems:

• Technological change has been getting quicker. While the pace of invention may not have accelerated, the time between invention and implementation has been shrinking. While average implementation lags are difficult to measure precisely, it would not be a gross oversimplification to say that they have been cut in half with each GPT wave. Based on the evidence, the time between invention and widespread use was cut from about 80 years for the steam engine to 40 years for electricity, and then to about 20 years for IT (Figure 1). There are reasons to bodog sportsbook review believe that the implementation lag for AI-related technologies will be about 10 years. With technological change speeding up and first-mover advantages as big as they have always been, the need for large and coordinated investments is growing.
• Leapfrogging is practically impossible. While a special purpose technology such as landline telephones can be skipped in favor of a new technology that does the same thing such as, say, mobile phones, it is difficult for countries to leapfrog over general purpose technologies. For a country to overtake another, it must first catch up. Technological advancement is a cumulative process. Business process innovations needed to utilize the steam engine were necessary for firms to take advantage of electric power. More obviously, electricity was a precondition for information technology. Regulations that facilitate or impede technical progress, education and infrastructure, and attitudes toward the social change that accompanies new technologies matter as much as the technologies, pointing to the need for complementary policies that shape the economy and society.
• Automation is labor-share reducing, not labor displacing. While the most commonly expressed concern today is that the spread of artificial intelligence will replace workers with smart machines, the effects of earlier GPTs are better summarized as reducing the share of labor earnings in value added. But the evidence also suggests that since the 1970s, automation in relatively advanced economies has put pressure on labor earnings. Put another way, the concern should not be widespread unemployment but the fact that incomes are becoming increasingly skewed in favor of capital over labor. This means that countries that have efficient arrangements for addressing distributional concerns have an advantage over those that don’t.

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Q1: What is the entity list?

A1: The entity list is a tool used by BIS to restrict the export of certain sensitive technologies and components to organizations who are involved in activities that threaten the national security or foreign policy interests of the United States. Being added to the list does not automatically bar U.S. companies from doing business with listed organizations. Companies are required to apply for a license from the government before exporting products or software covered by the Export Administration Regulations (EAR) to an organization included on the list. The entity list was created in 1997 to address risks related to the proliferation of weapons of mass destruction but has since been expanded into a general tool for protecting U.S. security interests. The organizations added through this most recent announcement are not the first Chinese actors to find themselves facing licensing requirements. Chinese tech giants Huawei and ZTE have both been added to the entity list for violating U.S. sanctions against Iran.

Q2: What impact will the listing have on these companies?

A2: It remains to be seen what impact the entity listing will have on these firms and on China more broadly. Much depends on how BIS chooses to enforce the listing. The list does not automatically embargo these companies; it just requires companies to obtain licenses before doing business with them. As we saw in the Huawei case, the entity listing in itself is a strong signal, but whether or not it has a significant impact on these companies depends heavily on how BIS chooses to exercise its licensing authority. For Huawei, BIS decided to grant and later extend a general license for several broad categories of transactions, which allowed Huawei to continue much of its business with U.S. companies unimpeded.

The impact will also depend in part on how dependent these companies are on U.S. components and the U.S. market. Software developers like Yitu or Megvii may be impacted less by the ban than hardware manufacturers like Hikvision, who are more reliant on specialty U.S. components for their cameras and servers. In addition, some affected companies like Hikvision had already begun taking preventative measures ahead of the ban by stockpiling supplies and identifying alternate suppliers.

Q3: How important are these firms for China?

A3: These eight firms are major players in the Chinese AI industry and constitute some of the largest and most successful AI companies in the world. Hikvision is the largest global supplier of video surveillance equipment. iFlytek sells its translation products to 200 different countries. And SenseTime recently became the most valuable AI startup in the world. The Chinese government has highlighted the success of some of these companies by naming them as members of China’s AI “national champions,” tasked with spearheading the country’s research and development efforts in fields like computer vision and voice recognition.

These companies are also important partners of the People’s Liberation Army and Chinese intelligence services. The existence of these companies in the top echelon of the global AI innovation ecosystem is a point of pride for China, and defending them against threats to their continued growth will almost certainly be seen as a national priority by policymakers.

Q4: Is this really about Xinjiang, or is this about weakening China’s AI champions?

A4: Though the BIS announcement arrived during a moment of heightened trade tensions between the United States and China, it would be a mistake to view this move as simply motivated by a cynical desire to hamper China’s progress in AI. The human rights concerns behind the BIS announcement are serious (see our colleague Amy Lehr’s piece on the human rights implications of this announcement), and the restrictions announced by BIS have been a long time coming. This is about Xinjiang first and foremost.

That said, this announcement does fit with the Trump administration’s broader goal of protecting U.S. interests in AI. Chinese AI companies have been repeatedly identified as key partners of the Chinese military and intelligence services, and the United States should ensure that technology is not used in ways that threaten U.S. national security. Furthermore, the United States is rightly concerned about the way that Chinese AI companies behave in global markets. Some of the listed companies are suspected of engaging in intellectual property theft and anticompetitive practices and are providing advanced technologies to repressive regimes in China and around the world.

Q5: Will this move backfire, leading China to build a domestic electronics supply chain and break its reliance on U.S. suppliers?

A5: China has been determined to end their dependence on U.S. technology for a long time and has been investing heavily in its domestic capacity for years. China would have continued to pursue this agenda regardless of U.S. action. This will likely cause them to move their timetable forward, but this is not an easy thing to do. The entities list designations do nothing to address significant structural hurdles that have impeded China’s progress. China will likely try to accelerate the development of its domestic supply chain, but it will face significant challenges in doing so.

Today, only 16 percent of semiconductors used in China are produced domestically, and only half of those are made by Chinese firms. Making advanced semiconductors requires a set of skills and know-how that cannot be acquired by simply throwing money at the problem. Even experts within China concede that the United States is two to three generations ahead in semiconductor production, creating a gap that would take at least ten years to close. And while China is investing large amounts of resources developing its memory chip and foundry manufacturing industry, comparatively little effort has been expended to close the gap on replacing the more advanced central processing unit (CPU), graphics processing unit (GPU), and field-programmable gate array (FPGA) chips that U.S. firms currently provide. China has invested tens of billions of dollars in their semiconductor industry for decades but still cannot produce high-end chips. If it was just a question of investment and political will, China would have broken its dependence on U.S. technology years ago.

China’s political and financial commitment to developing its domestic semiconductor industry will eventually bear fruit. The United States cannot assume that its dominant position in high-end semiconductors will remain unchallenged forever or that China’s dependence on U.S. components will remain a powerful source of leverage forever. But the U.S. government’s campaign to cut off Chinese companies’ access to U.S. technology will do nothing to address China’s structural hurdles. China may redouble its efforts to build a domestic supply chain, but the impact on their ultimate timeline will likely be limited.

William A. Carter is a fellow and deputy director of the Technology Policy Program at the Center for Strategic and International Studies in Washington, D.C. William Crumpler is a research assistant with the CSIS Technology Program.

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MAIN ARGUMENT

Chinese strategists view space and cyberspace as domains that have become critical to economic development as well as to defense and national security objectives. From their point of view, Chinese economic and security interests increasingly extend into space and cyberspace, and these domains are becoming a growing focus of international competition. Consequently, China must enhance its ability to use space and cyberspace to its advantage while preventing an adversary from exploiting any potential Chinese vulnerabilities in these areas. Space systems (and related applications) and information and communications technology (ICT) are also areas in which Chinese officials anticipate considerable demand for investment in many BRI countries. Indeed, China’s proposed Belt and Road Space Information Corridor, which features applications and services related to navigation and positioning, remote sensing, weather, and communications satellites, and the Digital Silk Road, which focuses on the development of communications networks, smart cities, and e-commerce activities, are emerging as important components of BRI. Beijing appears to view the two initiatives as means of expanding its economic and political influence in parts of the world that it sees as increasingly important to its interests.

POLICY IMPLICATIONS

• BRI projects related to space and cyberspace could increase participating countries’ economic dependence on China in ways that might give Beijing even greater leverage over them.
• Growing reliance on ICT provided by Chinese companies with close ties to China’s military and intelligence services could also exacerbate security risks for recipient countries, including some U.S. allies and partners.
• The U.S. and allies such as Japan and Australia Bodog Poker could respond to the space and cyber components of China’s BRI by offering to provide innovative space capabilities, ICT investments, and cybersecurity assistance to key participants as an alternative to reliance on Chinese space systems and communications networks.

Michael S. Chase is a Senior Political Scientist at the RAND Corporation and an Adjunct Professor at the Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies (SAIS).

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The United States leads the world in innovation, research, and technology development. Since World War II, the new markets, industries, companies, and military capabilities that emerged from the country’s science and technology commitment have combined to make the United States the most secure and economically prosperous nation on earth. This seventy-year strength arose from the expansion of economic opportunities at home through substantial investments in education and infrastructure, unmatched innovation and talent ecosystems, and the opportunities and competition created by the opening of new markets and the global expansion of trade. It was also forged in the fire of threat: It was formed and tested in military conflicts from the Cold War to the war in Afghanistan, in technological leadership lost and regained during competition with Japan in the 1980s, and in the internal cultural conflicts over the role of scientists in aiding the Pentagon during the Vietnam War. Confronted with a threat to national security or economic competitiveness, the United States responded. So must it once again.

This time there is no Sputnik satellite circling the earth to catalyze a response, but the United States faces a convergence of forces that equally threaten its economic and national security. First, the pace of innovation globally has accelerated, and it is more disruptive and transformative to industries, economies, and societies. Second, many advanced technologies necessary for national security are developed in the private sector by firms that design and build them via complex supply chains that span the globe; these technologies are then deployed in global markets. The capacities and vulnerabilities of the manufacturing base are far more complex than in previous eras, and the ability of the U.S. Department of Defense (DOD) to control manufacturing-base activity using traditional policy means has been greatly reduced.

Third, China, now the world’s second-largest economy, is both a U.S. economic partner and a strategic competitor, and it constitutes a different type of challenger.1 Tightly interconnected with the United States, China is launching government-led investments, increasing its numbers of science and engineering graduates, and mobilizing large pools of data and global technology companies in pursuit of ambitious economic and strategic goals. The United States has had a time-tested playbook for technological competition. It invests in basic research and development (R&D), making discoveries that radically change understanding of existing scientific concepts and serve as springs for later-stage development activities in private industry and government. It trains and nurtures science, technology, engineering, and mathematics (STEM) talent at home, and it attracts and retains the world’s best students and practitioners. It wins new markets abroad and links emerging technology ecosystems to domestic innovations through trade relationships and alliances. And it converts new technological advances into military capabilities faster than its potential adversaries. Erosion in the country’s leadership in any of these steps that drive and diffuse technological advances would warrant a powerful reply.

However, the United States faces a critical inflection point in all of them. There is a great deal of talk among policymakers, especially in the Defense Department, about the importance of innovation, but the rhetoric does not translate fast enough into changes that matter. The Task Force believes that the government and the private sector must undertake a comprehensive and urgent response to this challenge over the next five years. Failure to do so will mean a future in which other  countries reap the lion’s share of the benefits of technological development, rivals strengthen their militaries and threaten U.S. security interests, and new innovation centers replace the United States as the source of original ideas and inspiration for the world.

The major findings of the Task Force are:

• Countries that can harness the current wave of innovation, mitigate its potential disruptions, and capitalize on its transformative power will gain economic and military advantages over potential rivals.
• The United States has led the world in innovation, research, and technology development since World War II, but that leadership is now at risk.
• U.S. leadership in science and technology is at risk because of a decades long stagnation in federal support and funding for research and development. Private-sector investment has risen, but it is not a substitute for federally funded R&D directed at national economic, strategic, and social concerns.
• Friends, allies, and collaborators tightly link technology ecosystems and create scale in a globalized system of innovation, and thus are a competitive advantage. Washington’s current trade policies needlessly alienate partners, raise costs for American tech firms, and impede the adoption of U.S. technology in foreign markets.
• A central strength of the U.S. innovation environment has been a steady pipeline of domestic STEM talent and the country’s ability to attract the best and brightest students, engineers, and scientists from around the world. A lack of strong education initiatives at home and new barriers to talented foreign students’ and workers’ coming to and remaining in the United States will have long-term negative economic and national security consequences.
• The Defense Department and the intelligence community will fall behind potential adversaries if they do not rapidly access and deploy technologies developed in the private sector.
• The defense community faces severe challenges in attracting and retaining tech talent.
• The defense community faces deteriorating manufacturing capabilities, insecure supply chains, and dependence on competitor nations for hardware.
• A persistent cultural divide between the technology and policymaking communities threatens national security by making it more difficult for the Defense Department and intelligence community to acquire and adopt advanced technologies from the private sector and to draw on technical talent.
• China is investing significant resources in developing new technologies, and after 2030 it will likely be the world’s largest spender on research and development. Although Beijing’s efforts to become a scientific power could help drive global growth and prosperity, and both the United States and China have benefited from bilateral investment and trade, Chinese theft of intellectual property (IP) and its market manipulating industrial policies threaten U.S. economic competitiveness and national security.
• China is closing the technological gap with the United States, and though it may not match U.S. capabilities across the board, it will soon be one of the leading powers in technologies such as artificial intelligence (AI), robotics, energy storage, fifth-generation cellular networks (5G), quantum information systems, and possibly biotechnology.
• Although the Donald J. Trump administration has boosted the budgets of several technology-related organizations within the DOD and issued a number of executive orders, its efforts to accelerate innovation in critical frontier technologies such as AI are too incremental and narrow in scale.
• The United States is ahead of the rest of world in AI, but others are closing the gap—and U.S. failure to compete for global talent could result in the loss of its lead.
• In the race for the next generation of communications technologies, the Trump administration has developed only a few parts of what should be a multifaceted strategy. It has failed to coordinate a response to Huawei’s global expansion, muddied its message about the company’s economic and national security risks, and not sufficiently accelerated domestic efforts to deploy 5G.
• Beijing has often exploited the openness of the American system. Efforts to protect U.S. intellectual property are a necessary complement to, but not a substitute for, innovating faster than China. The administration is over-weaponizing trade and investment policy, with costs to U.S. innovation.

The United States needs a national security innovation strategy that ensures it is the predominant power in a range of emerging and foundational technologies over the next two decades. This Task Force report offers policy recommendations for the federal government, industry, and academia. Progress on this issue will require contributions and creativity from all three sectors if the United States is to maintain its ability to lead the world in the scientific and technological innovations necessary to its security and economic vitality. Some of the recommendations can be implemented in the short term; others will require more systemic change.

A new U.S. innovation strategy should be based on four pillars: funding, talent, technology adoption, and technology alliances and ecosystems. Action is required over the next five years.

The major recommendations of the Task Force are:

Restore Federal Funding for Research and Development

• The White House and Congress should restore federal funding for research and development to its historical average. This would mean increasing funding from 0.7 percent to 1.1 percent of gross domestic product (GDP) annually, or from $146 billion to about $230 billion (in 2018 dollars). Only the government can make the type of investments in basic science that ignite discoveries; such investments are too big and risky for any single private enterprise to undertake.
• Federal and state governments should make an additional strategic investment in universities. The investment, of up to $20 billion a year for five years, should support cross-disciplinary work in areas of pressing economic and national security interest.
• The White House should announce moonshot approaches to society wide national security problems. This would support innovation in foundational and general-purpose technologies, including AI and data science, advanced battery storage, advanced semiconductors, genomics and synthetic biology, 5G, quantum information systems, and robotics.
• The White House, Congress, and academia should develop a twenty first-century National Defense Education Act (NDEA), with the goal of expanding the pipeline of talent in science, technology, engineering, and mathematics. A twenty-first-century NDEA would support up to twenty-five thousand competitive STEM undergraduate scholarships and five thousand graduate fellowships.
• Universities, federal and state government, and business should address the underrepresentation of minorities and women in STEM fields through mentoring, training, research experience, and academic and career advising. They should also provide financial support for room and board, tuition and fees, and books, as well as assessments of job placement opportunities in STEM fields, highlighting employers with clear track records of fairness in hiring, promotion, and pay.
• Federal agencies, the private sector, and universities should work together to support debt forgiveness for students going into specialized technology sectors. The United States needs to make it easier for foreign graduates of U.S. universities in scientific and technical fields to remain and work in the country. Congress should “staple a green card to an advanced diploma,Bodog Poker ” granting lawful permanent residence to those who earn a STEM master’s degree or doctorate. Congress should also pass the Development, Relief, and Education for Alien Minors (DREAM) Act.
• Congress should pass legislation that permits immigrants to live and work in the United States if they can raise funds to start new companies.
• The federal government should make targeted—rather than sweeping —efforts to prevent the theft of scientific knowledge from American universities.

• Federal agencies and each of the military services should dedicate between 0.5 and 1 percent of their budgets to the rapid integration of technology. The heads of each agency should also hire a domain specialist deputy for fast-track technologies (for example, data sciences, robotics, and genomics) from outside the government for a two- to four-year assignment.
• Congress should establish a new service academy, the U.S. Digital Service Academy, and a Reserve Officer Training Corps for advanced technologies (ROTC-T) to foster the next generation of tech talent.
• Lifelong career paths should be complemented with more short-term, flexible options. The White House and Congress should bring people from the technology industry into all three branches of the government for temporary rotations. They should also develop new fellowships to encourage the circulation of technologists, military officers, and federal officials between the technology sector and the Defense Department.

• The State and Treasury Departments should create a technology alliance to develop common policies for the use and control of emerging technologies.
• The Department of Commerce should work with major trading partners to promote the secure and free flow of data and the development of common technology standards.
• The Department of Commerce and the U.S. International Development Finance Corporation should encourage American start-ups in AI and data science, genomics and synthetic biology, quantum information systems, and other frontier technologies to invest in, export to, and form R&D partnerships with firms in emerging technology ecosystems. The goal would be fostering early adopters, developers, and customers who will build on U.S. technologies.
• The Department of Energy (DOE), Department of State, National Institutes of Health (NIH), National Science Foundation (NSF), Office of Science and Technology Policy (OSTP), and other relevant agencies should develop a network of international cooperative science and technology partnerships, open to governments and the private sector, to apply frontier technologies to shared global challenges, such as climate change. Federal agencies should not only fund efforts that will include cooperation with other nations’ science organizations but should also provide R&D and tax incentives for tech firms to form international collaborative partnerships.
  During the early years of the Cold War, confronted by serious technological and military competition from the Soviet Union, the United States invested heavily in its scientific base. Those investments ensured U.S. technological leadership for fifty years. Faced with the rise of China and a new wave of disruptive technological innovation, the country needs a similar vision and an agenda for realizing it. The United States must once again make technological preeminence a national goal.

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China has serious ambitions to become a global leader in artificial intelligence (AI). The Chinese government, at the central and local levels, has announced large amounts of planned expenditures to support AI activities; however, it is not clear how much of the planned expenditures by the Chinese government is actually being expended, who is providing the money (e.g., central government, local government, enterprises, private investors), to whom the money is going, or on what the money will be spent. The absence of information on these issues makes it challenging for Western analysts, media, and policy makers to understand the extent of China’s activities in support of AI. This lack of information can lead to confusion and misleading comparisons between Chinese and U.S. expenditures on AI, which have caused alarm among some policy makers and observers.

The highest quality data on U.S. Federal expenditures on AI research and development (R&D) are provided by the Office of Management and Budget (OMB) and the Networking and Information Technology Research and Development (NITRD) program. Comparisons between U.S. Federal and Chinese expenditures in AI should use comparably produced data. In other words, the data should be annualized, focused on R&D, focused on AI, be provided by the central government, and be based on outlays or government budgets. Our hypothesis is that information in Chinese government documents and reported in the Chinese media is too poorly defined—in terms of timing, sources, and purpose—to support credible comparisons between U.S. Federal and Chinese central government expenditures on non-defense AI R&D.

This document describes the tentative framework for testing our hypothesis. It identifies 10 critical aspects of the expenditures associated with Chinese AI activities. The critical aspects are information that we believe is necessary to support an assessment of the expenditure’s comparability to U.S. Federal Government expenditures on AI R&D. By examining the critical aspects, we will be able to assess whether each activity represents an expenditure that is an outlay of money, substantially supports R&D, substantially focuses on AI, and is funded by China’s central government. If all four of those criteria are true, the activity’s expenditure can be judged as comparable to actual U.S. Federal Government expenditures for AI R&D. The proportion of Chinese expenditures that are deemed comparable with U.S. Federal expenditures will either support or undermine our working hypothesis.

The application of our framework to publicly announced Chinese AI activities, which will be the subject of a subsequent report, will provide the assessment of the comparability of each activity’s expenditures with U.S. Federal expenditures on AI R&D. The framework described here is tentative and may evolve as the analysis progresses. The goal of this document and the future analysis is to test our hypothesis—not to estimate China’s total expenditures on non-defense R&D for AI. In line with this goal, we do not plan to investigate all possible sources of expenditure data on non-defense R&D for AI; instead, we limit our scope to activities whose awards are publicly competed, because they are the most likely to have generated publicly available data. We believe that these publicly competed activities will provide a sufficient amount of data to test our hypothesis and provide valuable insight into Chinese expenditures on non-defense AI activities.

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While the Trump administration has caused a fair degree of uncertainty in Beijing about its ultimate strategic and economic objectives through an unconventional policy process, shifting personnel, and conflicting messages emanating from the President’s tweets, there is a widespread consensus among Chinese policy makers and analysts about the motivations of U.S. technology policy. Officials and academics are convinced that Washington is pursuing a strategy of containment, designed to slow China’s rise as a science and technology power, or, as Fudan University Professor Zhou Wen argues, “The United States’ real intention is to suppress the development of China’s high-tech industries.”[1]

To be sure, over the last several years both China and the United States have acted to reduce vulnerabilities created by the interconnectedness of their science and technology systems. President Xi Jinping has continued to implement the techno-nationalist policies introduced by his predecessors. The 2017 National Cybersecurity Law and Made in China 2025 as well as large investments in artificial intelligence, semiconductors, and quantum computing are the most recent efforts to free China from dependence on the West for critical technologies. Washington, anxious about China’s rising technological capabilities and its program of military-civil fusion, has limited Chinese investment in U.S. technology sectors, blocked Chinese telecommunications companies from doing business in the United States and other markets, and tightened controls on the sale of technologies.

The long-term effects of the decoupling of the U.S. and Chinese technology systems are uncertain. While both sides are likely to lose the efficiencies that came from the globalization of innovation, such decoupling may also energize American and Chinese policy makers to mobilize even greater resources for scientific competition. It is, however, too early to know whether the costs of eliminating the vulnerabilities created by interdependence outweigh the potential innovation gains of competition.

In the short term, it is possible to identify an emerging Chinese strategy in reaction to U.S. pressure consisting of: doubling down on indigenous innovation and developing “core technologies”; protecting supply chains; diversifying access to foreign technology; making diplomatic efforts that stress the shared benefits of Chinese technology development; and continuing cyber-enabled theft of intellectual property.

U.S. Strategy

The Trump administration has placed Chinese technology policy front and center as a danger to U.S. economic and national security, and in response it has rolled out a fourfold policy response.[2] First, the United States levied tariffs on products benefiting from “Made in China 2025,” Beijing’s initiative to upgrade its manufacturing sector, placing a 25 percent tariff on 1,300 industrial technology, transport, and medical products.

Second, Congress has limited Chinese investment in U.S technology sectors, and the Commerce Department is revising the export control laws so as to block the flow of critical technologies to Chinese end-users. In August 2018, Congress passed the Foreign Investment Risk Review Modernization Act, enabling the Committee on Foreign Investment in the United States (CFIUS) to investigate additional investments, for instance minority positions or overseas joint ventures. The legislation also added new national security criteria to CFIUS decisions. The Trump administration has blocked the sale of the Lattice Semiconductor to a group that included bodog online casino a Chinese venture capital firm; barred Broadcom’s US$121 billion offer for Qualcomm; prevented Ant Financials acquisition of MoneyGram; and demanded that Beijing Kunlun Tech give up its control of Grindr, a gay dating app.

In addition, the 2018 Export Control Reform Act includes new controls on the export of “emerging and foundational technologies.” The Commerce Department, which is responsible for overseeing such restrictions, has published a list of technologies that might be controlled, including computer vision, speech recognition, and natural language understanding.[3]

Third, Trump officials have made it more difficult for Huawei and other Chinese telecom companies to do business in the United States. Congress has prohibited the Pentagon from buying network equipment from either Huawei or ZTE, and security concerns reportedly were behind AT&T’s and Verizon’s decisions not to distribute Huawei smartphones. The Federal Communications Commission has proposed making it more difficult for smaller carriers to use the Universal Service Fund to pay for future purchases of telecom equipment from Huawei and ZTE, and in April 2019 the FCC opposed China Mobile’s application to provide telecommunications services in the United States.[4]

In addition, U.S. officials have pressured Australia, Canada Japan, the European Union, and other allies and friends not to use Huawei for 5G infrastructure. Whereas Germany and the UK have suggested they can manage the risk of using Chinese suppliers, Secretary of State Mike Pompeo has threatened to stop sharing intelligence with allies, telling an interviewer, “If a country adopts this [Huawei equipment] and puts it in some of their critical information systems, we won’t be able to share information with them, we won’t be able to work alongside them.”[5] Others, such as Bahrain, Iceland, Saudi Arabia, Latin America, and the United Arab Emirates, have ignored Washington’s warnings and have recently signed deals to deploy Huawei’s 5G equipment.[6]

Fourth, the Department of Justice has pursued a number of high-level indictments against Chinese companies for theft of intellectual property. In November 2018, Trump officials charged Fujian Jinhua with the theft of DRAM—dynamic random-access memory technology— from Micron. The Commerce Department subsequently put Fujian Jinhua on a list of entities that cannot purchase components, software, and technology goods from U.S. firms. In January 2019, the Justice Department unsealed indictments claiming that Huawei stole technology from T-Mobile and that Huawei had a formal policy of awarding bonuses to employees who stole confidential information from competitors.[7]

The Trump administration has also responded to the return of Chinese hackers after the brief downturn in activities in the wake of a September 2015 agreement between President Xi and President Obama in which both sides pledged not to become involved in cyber-enabled theft of intellectual property for competitive advantage. In November 2017, the Justice Department indicted three Chinese nationals employed by the Chinese cybersecurity firm Boyusec, charging them with hacking into the computer systems of Moody’s Analytics, Siemens AG, and global positioning system developer Trimble Inc. In November 2018, then Attorney General Jeff Sessions announced a China initiative to identify priority Chinese trade theft cases, pool FBI and Department of Justice resources to combat Chinese economic espionage and evaluate whether additional legislative and administrative authorities would be required to protect U.S. assets from foreign economic espionage. Finally, in December 2018 the United States, in coordination with Canada and the United Kingdom, indicted two Chinese citizens for hacking more than forty-five technology companies in at least one dozen U.S. states.[8]

Technology Containment

Chinese analysts are clear about the goals and motivations of U.S. technology strategy. In short, they argue that Washington is pursuing policies designed to slow China’s rise as a science and technology power. Or, as Li Zheng of the China Institute of Contemporary International Relations, has put it, “The United States views technology as the ‘last barrier’ to constrain China’s challenge.” Li continues that U.S. actions have “risen to the strategic level,” seeking to “systematically and comprehensively curb the rapid rise of China’s technology industry.” Moreover, Zhou Xiaoming, a former Chinese diplomat, argues that the containment policies are here to stay: “The containment of the United States against China will be a normal state, and it will intensify. We must learn to adapt.”[9] These “containment” policies, according to most analysts, are not a response to Beijing’s industrial policies or theft of intellectual property, but rather they stem from a decline in U.S. power and prestige and a “panic” about China’s rise in technologies, such as 5G and artificial intelligence.[10]    

Analysts and policy makers have used the blockade of ZTE as clear evidence of Washington’s intentions and China’s vulnerabilities. In April 2018, the United States announced a seven-year ban on American firms from selling parts and software to ZTE after the company violated an agreement that was reached when it was caught illegally shipping U.S. goods to Iran.[11] Even though the ban was eventually overturned after the company paid a US$1 billion fine, the ban threatened ZTE’s survival and clearly demonstrated China’s dependence on U.S. technology, especially semiconductors.  

In a series of speeches after the ZTE ban, Xi Jinping highlighted China’s need for innovation and technological self-determination. In an April 20, 2018 speech on cyberspace and information technologies, Xi focused on indigenous innovation and for the first time described “core technologies” as “important instruments of the state” (核心技术是国之重器).  (Xi’s 2016 speech on cyberspace also stressed the centrality of “gaining breakthroughs in core technology as quickly as possible,” but it did not use the phrase “instrument of the state.”)[12]  

In May 2018, at a joint annual conference of the Chinese Academy of Sciences and the Chinese Academy of Engineering, Xi exhorted the gathered scientists and engineers to redouble their efforts, stating: “Self-determination and innovation is the unavoidable path … to climb to the world’s top as a leading player in technology.” [13] Xi returned to the same themes in July 2018, telling the Central Financial and Economic Affairs Committee that “China must improve innovation capabilities for key and core technologies and keep a firm hold on the initiative in the development of science and technology to offer a strong technological guarantee for China’s development.” [14]

In September, during a visit to Heilongjiang, President Xi argued that “rising unilateralism and trade protectionism” was pushing Chinese companies to adopt a “self-reliance” strategy, which, he said, was “not a bad thing.”[15] Days after the Commerce Department sanctioned Fujian Jinhua in November, Xi called for acceleration of the development of artificial intelligence, telling a Politburo study group that China must “control” the technology and make sure it is “securely kept in our own hands.”[16]

China’s Response

In the face of U.S. pressure, Beijing has adopted a five-part response. First, although China is likely to make some concessions at the margins of its industrial policy as part of any trade deal, it is equally expected that it will follow Xi’s repeated calls to double down on efforts to reduce dependence on the West for semiconductors and other critical technologies. In a March 2019 speech to the National People’s Congress (NPC), Li Keqiang made no reference to “Made in China 2025,” but he stated the government would promote advanced manufacturing in the same areas covered by Made in China 2025.[17] Similarly, the 2019 draft plan of the National Development and Reform Commission submitted  to the NPC states that it “will prioritize and strongly develop a number of clusters of strategic emerging industries in key fields such as next-generation IT, high-end equipment, biotechnology, and new materials.”[18]

At the same meeting, Chinese lawmakers passed a new foreign investment law that is intended to stop the forced transfer of technology from foreign companies. There are, however, serious questions about enforcement of the law, and there is, in any case, no evidence that Chinese policy makers have abandoned deeply held beliefs about the need for technological self-reliance.[19]  

China will continue to promote advances in semiconductors with huge investments in new fabs and technology. In 2018, China’s chip imports broke US$300 billion, rising from US$270 billion in the previous year.[20] Hu Weiwu, a Chinese Academy of Science scholar and the engineer behind the Loongson CPU, believes that the ZTE incident is a chance for the “domestic chip industry to turn a crisis into an opportunity.”[21] He suggested that the Chinese government should take advantage of this opportunity to promote the commercial application of domestic chips and build China’s own information and communication technology ecosystem. During the last several years, Beijing has mobilized US$100–US$150 billion in public and private funds to build an indigenous industry. Local governments have ramped up investment projects and the central government has designated a number of companies as national champions in manufacturing and chip design. China has the most fab projects in the world, with thirty new facilities or lines either in construction or in the planning stages.[22]

China will also pursue other avenues for computer and chip design, for example designating a quantum-computing “megaproject.” The government is reportedly investing US$1 billion to build the National Laboratory for Quantum Information Sciences in Hefei, and in 2017 Chinese companies filed twice as many patents for quantum computing as did American companies.[23]   

Chinese technology companies have signaled that they will follow the government’s lead. As Alibaba’s CEO Jack Ma said, “Big enterprises have an important responsibility. If we do not master the core technologies, we will be building roofs on other people’s walls and planting vegetables in other people’s yards.”[24] Baidu released its smart chip, Kunlun, in July; Huawei unveiled a 7nm microchip in August; and Alibaba launched its semiconductor division Pingtouge in September. This new business will develop artificial intelligence chips for cloud computing and Internet-connected devices. Huawei also announced that it has built its own operating systems for smartphones and laptops in case it is unable to use Google or Microsoft software in the case of another round of U.S. sanctions, and in April 2017 the company announced it will establish an Institute of Strategic Research and invest US$300 million each year for the next five to ten years to fund research in basic science and technology.[25]

Second, Chinese technology companies will make efforts to protect their supply chains from U.S. sanctions. After the arrest of CFO Meng Wanzhou for allegedly violating sanctions on Iran, Huawei’s leaders feared they would face a fate similar to that of ZTE. Huawei boosted purchases of capacitors, integrated circuits, flash memory and camera-related parts from Japanese suppliers, stockpiling components in case of a potential ban on U.S. sales.[26] Huawei reportedly asked Taiwan’s ASE Technology Holding and King Yuan Electronics, its top chip packaging and testing providers, to relocate most production to sites in mainland China. The company also spoke with Taiwan Semiconductor Manufacturing Co. about moving some chip production to Nanjing.[27]

Third, Chinese firms and investors are diversifying and looking for new technology-investment opportunities beyond U.S regulations. In 2016, China invested US$18.Bodog Poker 7 billion in 107 U.S. tech firms. In 2018, because of increased CFIUS scrutiny the total dropped to US$2.2 billion for eighty deals. As investment in the United States has fallen, there have been some notable technology acquisitions in Europe, such as Tencent’s US$8.6 billion purchase of Finnish gaming company Supercell and CSC Group’s multimillion-dollar investment in the London-based accelerator Founders Factory.[28] European governments are, however, updating or introducing foreign-investment screening regimes, and for the first time a Chinese acquisition was blocked when the German government vetoed the takeover of a machine tool company.[29]

In addition, Chinese investors are looking at the Israeli technology sector, where Chinese investment has grown from US$274 million in 2016 to US$325 million in the third quarter of 2018.[30] Chinese funders supplied at least US$20 million in all seventeen financing rounds for Israeli start-ups during the first three quarters of 2018.[31] In response to these investments as well as Chinese investments in Israeli infrastructure, the Trump administration has reportedly told Israeli officials they must establish a CFIUS process for dual-use technologies and they also risk harming intelligence-sharing between the United States and Israel if the infrastructure projects move forward.[32]

Fourth, Chinese diplomatic efforts are likely to stress the global benefits of Chinese scientific and technological development and the threats to trade and security emanating from the United States. For example, during his 2019 Davos speech Wang Qishan called for countries to “work together to shape the global architecture in the age of the fourth industrial revolution with the vision to create a better future for all mankind.” He warned, however, that it is “imperative to respect national sovereignty and refrain from seeking technological hegemony, interfering in other countries’ domestic affairs, and conducting, shielding, or protecting technology-enabled activities that undermine other countries’ national security. We need to respect the independent choices of model technology management and of public policies made by countries, and their rights to participate as equals in the global technological governance system.”[33]  

Chinese diplomacy is also likely to echo the public relations campaign that Huawei has mounted in the face of U.S pressures, casting aspersions on those who question the security of Huawei’s products. In an op-ed piece in the Financial Times and in a speech at the Mobile World Congress in Barcelona, Guo Ping, chairman of Huawei, drew attention to U.S. intelligence capabilities. Explaining why Washington was trying to block the company, Guo argued that Huawei equipment was more difficult for the National Security Agency (NSA) to hack because the agency maintained cooperative relations with U.S. telecoms. Since Chinese firms were unlikely to cooperate if U.S. intelligence wanted “to modify routers or switches in order to eavesdrop,” Guo concluded, Huawei “hampers U.S. efforts to spy on whomever it wants.”[34]

The Foreign Ministry made a similar pivot with Australia’s new encryption bill, which requires tech companies to provide law enforcement and security agencies access to encrypted communications. Asked whether Australia was engaged in a double standard since it had banned Huawei from its 5G roll-out because it did not want companies in their networks that were beholden to another government, Foreign Ministry Spokesperson Lu Kang noted “Forcing companies to install ‘backdoors’ through legislation means protecting one’s own security and interests at the expense of other countries’ security and their people’s privacy.” Lu further claimed, “It is baffling how the country concerned could whip up ‘security threats’ posed by other countries or companies with trumped-up charges under the facade of cyber security, while they themselves are engaged in acts that endanger cyber security.[35]  

Fifth, Chinese hackers will continue their campaign of cyber-enabled theft of intellectual property. CrowdStrike, FireEye, PwC, Symantec, and other cybersecurity companies  reported new Chinese computer attacks on U.S. companies in 2017 and 2018. Rob Joyce, a senior official in the NSA and former White House cybersecurity coordinator, stated in November 2018 that “it’s clear that they [China] are well beyond the bounds today of the agreement that was forged between our countries.”[36]

Chinese hackers may have reinstated their cyber-enabled theft of intellectual property for two reasons.[37] First, Beijing may have never intended for the pause to be long term, but instead saw it as an opportunity to gain diplomatic advantage for a planned restructuring of its cyber forces that independently would create a temporary downturn in activity. The purpose of this reorganization, which involved the creation of the Strategic Support Forces and the shifting of espionage to more skilled hackers in the Ministry of State Security (MSS), was to allow the People’s Liberation Agency (PLA) to focus on warfighting and to reduce the chances that Chinese hackers would be called out by Washington. In effect, Beijing did not intend to give up hacking over the long term; it simply wanted to stop being caught so often.

Second, the return of hacking may be a reaction to increased pressure from Washington. If Chinese policy makers believe the United States has adopted a technology containment strategy, they are also likely to believe they have little to gain from honoring the 2015 agreement between Xi and Obama.

No matter the reason, and it may actually be some combination of the two, China possibly believes it can reach a stable equilibrium of espionage with the United States, in which the MSS deploys a level of tradecraft equivalent to the hacking conducted by the NS.. A high level of relatively “noisy” activity (for which they were likely to get caught and be called out on) is being replaced by a smaller number of more professional hacks who nevertheless provide China access to U.S. assets.[38]

Conclusion

There is also another possible direction that Beijing could take. Chinese leaders could embrace openness and an innovation strategy, a more bottom-up effort to create an environment supporting technological innovation rather than continuing down the road of market barriers and top-down, state-directed efforts to develop specific technologies. There is a long debate in Chinese technology policy about the best means to achieve the objectives of technological autonomy, and parts of the bureaucracy  believe that it is possible for China to raise its technological capabilities through more market-friendly policies. The 2006 Guidelines on the National Medium- and Long-term Program for Science and Technology Development, for example, introduced the idea of indigenous innovation (zizhu chuangxin) and eighteen science and engineering “megaprojects” also draw on the experience of Silicon Valley and introduce policies that deal with university-industry collaboration, venture capital, and small-start-ups. At least eight provisions either directly or indirectly focus on small and medium-sized technology businesses.[39]

There are hints of this thinking in some of the analysis of what is called the U.S. technology containment strategy. While analysts do not question the legitimacy of the ultimate goal of developing and controlling core technologies, they also introduce a range of reforms necessary to improve China’s innovation capabilities. These include reforming the education system, limiting the impact of political factors in funding and personnel evaluations, and recruiting foreign talent.

These voices were clearly in the minority even before the current U.S.-China technology war, and they are unlikely to gain significant policy traction during the technology war. Instead, the stark vulnerability in core technologies that has been exposed by U.S. actions will accelerate efforts to eliminate such dependencies. Beijing is likely to continue with heavy state support for R&D, especially for semiconductors, AI, and other frontier technologies; to coordinate with technology companies on the development of these same technologies; to diversify investment opportunities; and to direct a campaign on cyber-enabled industrial espionage.

Although Washington should maintain efforts to push back against Beijing’s market distorting policies and cyber theft, U.S. policy makers should work more closely with their counterparts in Europe and Asia to create a more multilateral effort. The European Commission’s March 2019 review of the EU’s relations with China, for example, criticizes Beijing for preserving “its domestic markets for its champions, shielding them from competition through selective market opening, licensing and other investment restrictions; [and] heavy subsidies to both state-owned and private sector companies.”[40] Such efforts may take some of the heat out of the tech war, making it less a U.S. containment strategy and more a broader conflict between China’s development model and the norms of the more open economies.

Both sides will incur costs from a technology cold war. Global challenges, such as addressing climate change and stopping pandemics, require collaboration, and all will benefit from breakthroughs in clean energy, carbon capture, and new vaccinations against influenza. Chinese and American policy makers will need to distinguish between competition over technologies with national security implications and more cooperative approaches to targeted technologies that could be the basis for a reconsidered U.S.-China science relationship. 

Adam Segal is the Ira A. Lipman chair in emerging technologies and national security and director of the Digital and Cyberspace Policy Program at the Council on Foreign Relations

CLM was launched in 2002 under the editorial leadership of Alice Miller at the Hoover Institution of Stanford University.  Upon Alice’s retirement in September 2018, Minxin Pei of Claremont McKenna College assumed CLM’s editorship. CLM also moved from the Hoover Institution to an independent website, www.prcleader.org.

CLM is funded by a grant from the Smith Richardson Foundation.

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[1] Zhou Wen, “Huawei Incident is the US Political Pursuit of China’s High-tech Enterprises” (华为事件是美国对中国高科技企业的政治追杀), at https://mp.weixin.qq.com/s/_qudPfUS9qhVTCgcl0uBNw

[2] Office of the U.S. Trade Representative, Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, under Section 301 of the Trade Act of 1974, March 22, 2018, at https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF; White House Office of Trade and Manufacturing Policy, How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World, June 2018, at https://www.whitehouse.gov/wp-content/uploads/2018/06/FINAL-China-Technology-Report-6.18.18-PDF.pdf 

[3] Cade Metz, “Curbs on A.I. Exports? Silicon Valley Fears Losing Its Edge,” New York Times, January 1, 2019, at  https://www.nytimes.com/2019/01/01/technology/artificial-intelligence-export-restrictions.html

[4] Cecilia Kang, “F.C.C. Chair Plans to Block China Mobile From U.S. Market,” New York Times, April 17, 2019, at https://www.nytimes.com/2019/04/17/business/fcc-china-mobile-block.html

[5] “Mike Pompeo: Been Making Sure Countries Understand the Risk of Putting Huawei Technology into their IT Systems,” Fox Business News, February 21, 2019, at https://video.foxbusiness.com/v/6005194321001/#sp=show-clips

[6] Jeremy Horwitz, “Huawei Racks Up 5G Network Deals at MWC 2019 Despite U.S. Pressure,” VentureBeat, February 27, 2019, at https://venturebeat.com/2019/02/27/huawei-racks-up-5g-network-deals-at-mwc-2019-despite-u-s-pressure/  

[7] U.S. Department of Justice, “Chinese Telecommunications Device Manufacturer and its U.S. Affiliate Indicted for Theft of Trade Secrets, Wire Fraud, and Obstruction bodog poker review of Justice,” January 28, 2019, at https://www.justice.gov/opa/pr/chinese-telecommunications-device-manufacturer-and-its-us-affiliate-indicted-theft-trade

[8] U.S. Department of Justice, “Two Chinese Hackers Associated with the Ministry of State Security Charged with Global Computer Intrusion Campaigns Targeting Intellectual Property and Confidential Business Information,” December 20, 2018, at https://www.justice.gov/opa/pr/two-chinese-hackers-associated-ministry-state-security-charged-global-computer-intrusion

[9] “U.S. Technology Blockade Against Chinese Firms Seeks to Contain China High Tech Development and Innovation” (美国对中国企业技术封锁 想遏制中国高科技发展和创新) Gucheng, August 6, 2018, at https://finance.gucheng.com/201808/3482211.shtml

[10] “Discussing China’s Breakthroughs in Core Technological Innovation within the Context of U.S. Technological Containment Strategy” (前沿 | 透过美国对华科技遏制谈我国核心技术创新突破), China Infosec, April 1, 2019, at  https://mp.weixin.qq.com/s?__biz=MzA5MzE5MDAzOA==&mid=2664117218&idx=2&sn=fc617d34adecbe0943dabcb9abdb5fce&chksm=8b5e311bbc29b80d6b0f94f370583e577273743a736dc8e798ec4da60764e4478438e5e586f2&scene=0&xtrack=1#rd

[11] US Department of Commerce, “Secretary Ross Announces Activation of ZTE Denial Order in Response to Repeated False Statements to the U.S. Government,” April 16, 2018, at https://www.commerce.gov/news/press-releases/2018/04/secretary-ross-announces-activation-zte-denial-order-response-repeated

[12] Xi Jinping, “Speech at the Work Conference for Cybersecurity and Informatization,” translated by China Copyright and Media, April 19, 2016, at https://chinacopyrightandmedia.wordpress.com/2016/04/19/speech-at-the-work-conference-for-cybersecurity-and-informatization/

[13] Kinling Lo, “Xi Jinping Urges China to Go All in on Scientific Self-reliance After ZTE Case Exposes Hi-tech Gaps,” South China Morning Post, May 28, 2018, at https://www.scmp.com/news/china/economy/article/2148189/xi-jinping-urges-china-go-all-scientific-self-reliance-after-zte

[14]“Xi Stresses Improving Innovation Capabilities for Key, Core Technologies,” Xinhua, July 14, 2018, at  http://www.xinhuanet.com/english/2018-07/14/c_137322614.htm

[15] Xu Wei, “Xi Stresses Nation’s Self Reliance,” China Daily, September 27, 2018, 

[16] Anna Fifield, “As China Settles in for Trade War, Leader Xi Emphasizes ‘Self Reliance,’” Washington Post, November 2, 2018, at https://www.washingtonpost.com/world/asia_pacific/as-china-settles-in-for-trade-war-leader-xi-emphasizesself-reliance/2018/11/01/2961b2b2-d8de-11e8-9559-712cbf726d1c_story.html

[17] Lingling Wei, “Beijing Drops Contentious ‘Made in China 2025’ Slogan, but Policy Remains,” Wall Street Journal, March 5, 2019, at https://www.wsj.com/articles/china-drops-a-policy-the-u-s-dislikes-at-least-in-name-11551795370

[18] “Report on the Implementation of the 2018 Plan for National Economic and Social Development and on the 2019 Draft Plan for National Economic and Social Development,” at http://www.xinhuanet.com/english/2019-03/17/c_137901686.htm

[19] Austin Lowe, “China’s Foreign Investment Law Fails to Address U.S. Concerns,” Lawfare, March 7, 2019, at https://www.lawfareblog.com/chinas-foreign-investment-law-fails-address-us-concerns

[20]  “China’s Chip Imports Break $300 Billion, According to the General Manager of China’s National IC Fund” (芯片进口总额突破3000亿美元，中国芯及AI芯片要强大缺什么？) LeiPhone, April 11, 2019,  at https://www.leiphone.com/news/201904/n3z1Mu1chbtZuuKT.html

[21] “The U.S. Banning ZTE from Buying U.S. Chip Technology Fuels Debate about Whether ‘Chip Sickness’ Requires a ‘Chip Cure’” (中兴被美国禁用芯片引热议 “芯病”还需“芯药”医), China Youth Daily, April 19, 2018, at http://it.people.com.cn/n1/2018/0419/c1009-29935507.html

[22] Mark Lapedus, “China’s Foundry Biz Takes Big Leap Forward,” SemiEngineering, January 28, 2019,  at  https://semiengineering.com/chinas-foundry-biz-takes-big-leap/  

[23] Susan Decker and Christopher Yasiejko, “Forget the Trade War. China Wants to Win Computing Arms Race,” Bloomberg, April 8, 2018, at https://www.bloomberg.com/news/articles/2018-04-08/forget-the-trade-war-china-wants-to-win-the-computing-arms-race

[24] “Alibaba’s Jack Ma on Developing Core Technologies post-ZTE,” Shanxi Evening News, April 24, 2018, 

[25] Arjun Kharpal, “Huawei Built Software for Smartphones and Laptops in Case it Can’t Use Microsoft or Google Products,” CNBC, March 15, 2019, at https://www.cnbc.com/2019/03/15/huawei-has-built-its-own-operating-system-for-smartphones-laptops.html; “Huawei Commits 300 Million USD Annually to Basic S&T research,” Xinhua, April 17, 2019, at http://www.xinhuanet.com/english/2019-04/17/c_137984843.htm

[26] Naoki Watanbe, “Huawei Boosts Japan Parts Orders, Hedging US Risks,” Nikkei Asian Review, March 7, 2018, at https://asia.nikkei.com/Business/China-tech/Huawei-boosts-Japan-parts-orders-hedging-US-risks

[27] Lauly Li, Cheng Ting-Fang, and Coco Liu, “Huawei Tells Suppliers to Move Production to China as US Ban Looms,” Nikkei Asian Review, January 30, 2019, at https://asia.nikkei.com/Business/China-tech/Huawei-tells-suppliers-to-move-production-to-China-as-US-ban-looms

[28] Ji Bo, “Amid Trade War, Foreign Startups May Spot Opportunity in China,” Venturebeat, March 16, 2019, at https://venturebeat.com/2019/03/16/amid-trade-war-foreign-startups-may-spot-opportunity-in-china/

[29] “Chinese Takeover of German Firm Leifeld Collapses,” BBC, August 1, 2018, at https://www.bbc.com/news/world-europe-45030537

[30] Rami Blachman, “Amid Trade War Crossfire, Israel-China Tech Courtship Presses On,” Technode, February 28, 2019, at https://technode.com/2019/02/28/amid-trade-war-crossfire-israel-china-tech-courtship-presses-on/   

[31] Nisha Gopalan, “For China, Israel Loses its Promised Land Allure,” February 22, 2019, at https://www.bloomberg.com/opinion/articles/2019-02-23/scrutiny-of-china-tech-deals-via-israeli-cfius-hurts-both-sides

[32] Stuart Winer, “Chinese Investment in Israel Could Harm Intelligence Ties, US Official Warns,” Times of Israel, January 16, 2019, at https://www.timesofisrael.com/chinas-investments-in-israel-could-harm-intelligence-ties-us-official-warns/

[33] Full Text of Chinese Vice President’s Speech at 2019 WEF Annual Meeting, January 24, 2019, at http://www.xinhuanet.com/english/2019-01/24/c_137771279.htm

[34] Guo Ping, “The US Attacks on Huawei Betray its Fear of Being Left Behind,” Financial Times, February 27, 2019, at https://www.ft.com/content/b8307ce8-36b3-11e9-bb0c-42459962a812

[35] Foreign Ministry Spokesperson Lu Kang’s Regular Press Conference on April 10, 2019, at https://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/t1653187.shtml

[36] “U.S. Accuses China of Violating Bilateral Anti-Hacking Deal,” Reuters, November 8, 2018, at https://ca.reuters.com/article/topNews/idCAKCN1NE02E-OCATP

[37] Lorand Laskai and Adam Segal, “A New Old Threat: Countering the Return of Chinese Industrial Cyber Espionage,” Council on Foreign Relations, December 6, 2018, at https://www.cfr.org/report/threat-chinese-espionage

[38] Adam Segal et al., “Hacking for Ca$h: United States,” Australian Strategic Policy Institute, September 25, 2018, at https://www.aspi.org.au/report/hacking-cash

[39] Adam Segal, “Chinese Technology Policy and American Innovation,” testimony before US China Security Review Commission, June 15, 2011, at  https://www.cfr.org/report/chinese-technology-policy-and-american-innovation

[40] European Commission, “EU-China – A Strategic Outlook,” March 12, 2009, at https://ec.europa.eu/commission/sites/beta-political/files/communication-eu-china-a-strategic-outlook.pdf  

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