The rise of China as a high-tech superpower

The prospect of a booming Chinese tech sector is setting off alarm bells in Washington, DC. But what is Europe’s place in the cold war over tech?

In the early hours of a cool spring morning in Penn Valley, Pennsylvania, Temple University professor Xiaoxing Xi was awoken by someone at his front door. BANG! BANG-BANG! Forceful, intimidating – “Who knocks on people’s doors like that?” Xi thought before rushing downstairs. The Federal Bureau of Investigation, it turns out, is who knocks on people’s door like that.

Xi has since testified in Congress and in interviews as to how government agents poured into his home, handcuffed him, marshalled his wife and children out of their rooms at gunpoint and proceeded to search the family’s home in their quiet Philadelphia suburb.

It was May 2015, and the university professor had been under surveillance for months. Based on his email activity, the FBI suspected that Xi was transmitting classified details of a pocket heater – an advanced instrument used in superconductivity research – to China.

Dramatic and lifechanging, as it may be, this type of raid is now routine work for FBI agents. The bureau has officially singled out Chinese tech espionage as its top counterintelligence priority and a “grave threat to the economic well-being and democratic values of the United States”.

Intense counterintelligence efforts

Over the past decade, intense counterintelligence efforts have been afoot in Silicon Valley and at universities across the US In 2018, they culminated in the China Initiative, launched by former President Donald Trump’s Department of Justice.

The initiative, dismantled by Pre­sident Joe Biden in early 2022, was a well-funded scheme devised to foil Chinese industrial espionage in cutting-edge research and business. Because, surely, Chinese spies had infiltrated these institutions to steal American tech secrets?

One thing is for sure: China’s tech ambitions are great. In the autumn of 2020, President Xi Jinping revealed China’s new five-year plan. The plan preceding it had set growth targets for a nation still climbing out of relative poverty, and in that five-year span GDP per capita grew by 30%. Millions of Chinese were lifted out of relative poverty, and some became very rich. In 2021, GDP per capita increased in 21% in a single year.

And even if the 2022 congress says little of growth, the Chinese tech sector has proven to be a formidable engine for companies like Baidu, Tencent, Alibaba, Bytedance and Xiaomi becoming to juggernauts feared even in Sili­con Valley.

Wants to learn from the West

The objectives of Chinese innovation are diverse, but they are mainly focused on achieving the Chinese Communist Party’s goals for the nation: prosperity, modernisation and self-reliance.

It should come as no surprise that China wants to learn from the West. The Chinese government is actively working to counteract the brain-drain of Chinese researchers and engineers who are relocating to the US. They have attractive programs in place to encourage repatriation, and Chinese law stipulates that every citizen must co-operate if the authorities ask for assistance – or even trade secrets.

These laws are at the heart of the concerns over Chinese intellectual property (IP) theft. Over the past couple of years, these fears have led to several large Chinese tech companies being sanctioned – and crippled – by the US. Among them, the mobile communications companies ZTE and Huawei.

Chinese authorities invest heavily in key areas and set long-term targets for private and public sector innovation.

Another major difference in innovation strategies is the way Chinese authorities invest heavily in key areas and set long-term targets for private and public sector innovation. They have an ambitious program for conquering space, of course, but there are more strategic endeavours where China hopes to become world leaders. The key fields of strategic importance are transistor technology, quantum computing, superconductors, weapons technology, artificial intelligence and any technology – such as social media and 5G infrastructure – that expands its surveillance capabilities.

Lagging behind

Transistor technology, which is found in the advanced factories in neighbouring Taiwan, is a priority because this underpins all digital technologies. China is currently lagging a few generations behind the state-of-the-art in this field and some western think-tanks argue that maintaining China’s dependence on other countries for advanced chips is crucial.

Quantum computing research is a race where the state that first manage to harness the technology will achieve the capability to decrypt communication today thought to be secure, along with many other exciting applications. The government lists quantum technology as the second priority, after artificial intelligence. It should be noted that this research is still embryonic and by no means a quick fix for China’s chip-making problems.

Superconductors promise to revolutionise our use of electricity as they provide zero-resistance transmission of electricity. China is slowly catching up to the UK and US in this nascent and investment-demanding domain. They are already leaders in the adjacent field of solid-state batteries which, among other things, can increase the range of electric vehicles and drones.

A constant race

Weapons technology is a constant race to stay ahead of the curve, to ensure adequate deterrence against potential attacks. Currently the name of the game is drone tech, battlefield AI and cyber-warfare – all disciplines where Chinese tech is at the bleeding edge.

Social media, payments systems and communications infrastructure are examples of technologies that facilitate mass-scale surveillance. Currently the Five Eyes pact (US, UK, Canada, Au­stralia and New Zealand) is leading this field. However, China has invested heavily in domestic surveillance, in­clu­ding a vast network of CCTV cameras and an equally impressive network of human informants. Recent controversies over TikTok, Huawei 5G and cell phone brands like ZTE and Huawei are indicative of western fears that ubiquitous Chinese tech exports may propel its authorities’ surveillance powers onto the global stage.

While competition is fierce in these fields and beyond, artificial intelligence has emerged as the most hotly contested battleground. State-of-the-art AI – and in a possible future, artificial general intelligence, which is human-level AI and beyond – has the potential to turbocharge all other research.

Much has been made of the vast troves of data that Chinese companies could mine from the nation’s almost one billion internet users. This dataset could be the key to China surpassing the AI efforts of other nations. In a recent report, the Future Today Institute warns that Chinese companies such as Tencent and Baidu have superpowers, thanks to their access to this data “without the privacy and security restrictions common in much of the rest of the world”.

However, the recently enacted Per­sonal Information Protection Law (PIPL) mirrors Europe’s GDPR, affording Chinese users many of the same protections as EU citizens. The communist party has further proven willing to play hardball with its most profitable companies, imposing some of the highest fines ever on its own tech juggernauts. Companies in violation of PIPL may find themselves facing fines of up to five percent of their annual re­ve­nue.

In other words, the national treasure of Chinese data is not free for companies like Tencent and Baidu to mine at their will. That level of power is reserved for the Chinese state itself.

State surveillance is culturally ingrained, a fact of life since the cultural revolution and even long before.

While China’s tech ambitions are a boon to many Chinese, who have seen technology add comfort and convenience to their lives, technology always has the potential to be used for both good and bad. Surveillance is pervasive in China, with a vast network of CCTV cameras surveilling public spaces, and an immense network of human informants keeping track of neighbourhoods throughout the country.

State surveillance is culturally ingrained, a fact of life since the cultural revolution and even long before. China’s controversial social credit system has precursors that date as far back as the third century. Many Chinese seem to accept and even welcome this type of surveillance.

But there is a high cost for minorities such as the Uyghurs in the Xinjiang province, who are systematically targeted, suspected of terrorist affiliations due to their ethnicity alone, and sent to re-education camps if found to be engaging in any sort of behaviour deemed suspicious by authorities.
These human rights concerns make China’s technological rise seem ominous, and they have been rightly criticised by human rights groups and democratic countries in the west. It is ironic then that the United States is likewise using its tech prowess to monitor and target ethnic minorities, like Xiaoxing Xi.

FBI lacked expertise

After the FBI raided Xi’s home, the Temple University professor was suspended from his job and he faced the prospect of spending the rest of his life in prison.
Then, after four months, all charges against him were su­d­den­ly dropped. Xi’s colleagues had convinced the Department of Justice that the schematics he had emailed to China were, in fact, detailing a widely published innovation of his own, which had nothing to do with pocket heater technology. The FBI simply lacked the scientific expertise to understand it.

For Xi, the damage was already done. Not only was his reputation shattered, the suspicion of treason hung over him like a dark cloud. He had lost his sense of belonging and security in his home country, as a naturalised citizen of the United States.

Xi’s case is far from unique. The US finds itself in a predicament in which its companies need Chinese talent to stay competitive, but the US government fears the leaking of trade secrets and intellectual property to the rival nation.

In the past decade, US authorities have targeted hundreds of academics of Chinese descent – many of them American citizens – on suspicion of possible espionage. A few cases have been tried in court. There have been convictions, mostly for the common (but illegal) practice of trying to enrich oneself by transferring intellectual property from a previous employer to a new one.

Not one case has resulted in a conviction for espionage.

As the relationship between China and the US shows no sign of thawing, European countries must decide what role they want to play in this cold war over tech supremacy. China and the US have shown that they are both willing to play dirty to win this race. European countries will have to forge their own path, or risk ending up as collateral damage.