….. The Industrial Revolution enabled Britain to surpass its European rivals and become the world’s largest empire, a position it held for almost two centuries.
There are some parallels between Britain’s rise to world domination and China’s ambitions to achieve the same. Artificial Intelligence is to China’s twenty-first-century rise to power what the Industrial Revolution was to Britain’s ascendance in the late 1700s.
However, unlike Britain, China’s recent rise to power is not its first experience of historical greatness. China has a long history as a preeminent nation with an advanced, regionally dominant civilization. Through ancient and medieval times, China enjoyed a high culture that produced technological innovations such as paper, movable-type printing, gunpowder, the compass, the mechanical clock, silk, acupuncture and porcelain. Few inventions are developed entirely in isolation; for millennia China enjoyed bidirectional intellectual trade with other countries that further enhanced some of its technologies.
Later on, China declined and became impoverished over several centuries. At the end of the Second World War, China’s people had been entrenched in poverty for several generations. China’s recent rise is a redevelopment—that is, China is a redeveloping, not a developing, nation. The ancient roots of its earlier prominence play an increasingly important role in defining its future identity on the world stage.
What is an entirely new kind of experience for China—in which it has a long learning curve ahead—is to build an empire that is global and not just in its geographical neighborhood. In this respect, its projection of hard power into far-flung places like Africa and Latin America are bold experiments.
….. The new AI-based power centers are located firmly in the US and China. A new era of colonization—namely, digital colonization—is already underway. The associated economic, social and political effects will devastate other countries, which will be relegated to the status of colonies or satellites. And China’s grip on its colonies will strengthen—including large parts of Africa and Latin America as well as Asian countries like Pakistan.
….. The AI investments in recent years, as well as forecasts for the future, have resulted in a heavy concentration of intellectual property, industrial assets and wealth generation in the US and China. PricewaterhouseCoopers has forecasted that the total world GDP will increase by up to 14% by the year 2030 as a result of AI, suggesting that almost sixteen trillion dollars of additional economic activity will be added to the world economy during this decade alone.
A United Nations 2019 report also offers an interesting perspective on technological dominance.
“China, the United States and Japan together account for 78 per cent of all AI patent filings in the world. USA and China account for 75 per cent of all patents related to blockchain technologies, 50 per cent of global spending on internet-of-things, at least 75 per cent of the cloud computing market, and 90 per cent of the market capitalization value of the world’s 70 largest digital platform companies.” (United Nations Conference on Trade and Development, Digital Economy Report 2019, 8-9, xvi.)
..… In summary, AI-driven disruptions will precipitate the dawn of the age of digital colonialism. Because economies of scale figure significantly in the development and management of AI technology, the haves and have-nots in AI will be a decisive factor in determining the fate of nations. Some will win big, and others will be forced out of the race. The countries with the biggest databases, the largest budgets, and the most experience with deployment will eclipse others in AI. Digital domination will translate into profits and, consequently, increased investment capacity over those that fall behind. The gap between leaders and laggards will be practically impossible to close; in fact, due to the exponential growth of technology, the gap is likely to widen. The low-wage comparative advantage of developing countries is rapidly fading away because AI-based automation will eliminate most low-level factory jobs.
Those countries left behind are destined for digital colonization in the same way the Industrial Revolutions enslaved many parts of the world. Countries starting late in the AI race will eventually give up, forced to accept their fate as a second-tier player and becoming, in effect, a dependent nation or even a virtual colony.
….. Poor countries lack the sophistication and clarity to negotiate, and therefore their valuable data is pilfered by foreign parties over whom they have no control. In most cases, these countries do not even know who has taken what data or how it is being used. Consequently, they are unable to assert sovereignty claims over their own native data. Rich countries, led by the US, aggressively complain about stolen intellectual property, but they have conveniently avoided classifying data as intellectual property.
Perhaps the most egregious form of economic exploitation today is the export of free raw data and the import of value-added information products that use this data. In some cases, biased agreements spell out how developing countries receive modest amounts of technology and network connectivity in exchange for giving up vast amounts of data. Zimbabwe, for example, has signed such a deal with the Chinese company CloudWalk. The Zimbabwean government receives surveillance technology, and in return CloudWalk receives facial recognition data on Zimbabwe citizens. The Chinese will effectively own and control private data on Zimbabwe’s citizens, a potentially powerful political weapon in the future.
….. Google’s high-altitude balloons and Facebook’s drones are projects that those companies claim will benefit millions in Africa by connecting them onto the global knowledge highways. But such deception merely panders to the feel-good headspace of ignorant politicians of poor countries that happily give up their data sovereignty.
We know about the horrible debt traps that have yoked many developing countries to creditors in rich countries. The UN warns that in the future, “Developing countries may risk ending up in a ‘data trap,’ at the lower levels of the data value chains and become dependent on global digital platforms”.
….. The AI-based concentration of power has taken on a terrifying new aspect. When we think of global power, countries like the US, China, and Russia readily come to mind. But today, private companies are accumulating immense power based on their ability to leverage AI and big data as tools to influence, manipulate and even control the minds of people.
Some of these private companies may soon become more powerful than many nation-states, but the shift will not be obvious. They will not fly a flag or manage a currency (although some are attempting to launch their own cryptocurrency), and they will not wield military power, at least not directly. However, their unprecedented knowledge of people and things around the world, coupled with their ability to disrupt and alter the physical world and manipulate people’s choices, will lead to a new nexus of power. Such companies will decide who will, and who will not, be given access to this new form of power, and on what terms.
Not one Indian company is a player in this league. Most unfortunate is that a large number of talented Indians work for American and Chinese companies in an individual capacity, including in top executive positions, but not as owners. Indians who do own companies tend to sell their stake when the right offer comes along. Whenever innovative entrepreneurs anywhere in the world develop a promising breakthrough, digital giants or venture firms that serve as their proxies are waiting to buy them out. As a result, hundreds of instant millionaires are being created at the individual level, including many living in India.
I view this trend as the return of Britain’s East India Company, which started out in 1600 as a modest private company for the purpose of making profit from lucrative trade with India. Over its 250-year history, the East India Company became the world’s largest private business, amassing more wealth, income and military power than even its own British government. Despite being a private company, it became a colonial power—collecting taxes, operating courts, and running the military and other functions of state across many kingdoms within India. At the time, the East India Company had more ships, soldiers, money and territory under its control than any European government, though now it is remembered as a rogue machine. Since then, the lines between government and private companies have often blurred.
….. China started out with a long-term strategy for climbing the ladder of higher value-added manufacturing. Its strategic planners identified futuristic industries to target and with remarkable precision, determined which technologies would become critical to the future AI revolution. Today’s game-changing technologies were anticipated by China ahead of most countries and the country positioned itself based on that vision.
….. China’s vision statements are not just talking points meant to impress audiences and make the public feel good. These strategies are implemented at the deepest levels of society and its institutions. China has stronger government–industry alliances than any other major country, its R&D investments are paying off, its standard of public-school education has been rising at a rate typical of world leaders, it has harnessed more data into its AI systems than any other country, and its population is sold on the idea that surveillance using big data is in the long-term national interest.
China innovates in several cutting-edge technologies. At the center of the advanced technology being developed and produced in China is AI, and the technology permeates each industry to its core. In fact, China is currently producing more patents in certain advanced technologies than any other country, including the US.
The export surplus from manufacturing has stocked China’s treasury with cash to finance an impressive war chest. In fact, China is currently a major lender to the US government and utilizes this economic clout to successfully negotiate with US authorities, both governmental and corporate.
The Chinese government made a bold bet by placing AI at the center of its strategic vision to leapfrog ahead of the US in every major field by 2050. Its ambitious plan established milestones and measurable benchmarks to assess progress along the way. They have achieved their benchmarks thus far. China is committed to becoming the worldwide center of AI innovation by the year 2030, including not only AI itself but also the wide array of breakthrough technologies enabled by, and associated with it, such as quantum computing and microchip design.
These comprehensive plans address educating the Chinese people in the latest technologies as well as deploying these technologies in every aspect of their public and private lives. To this end, Chinese venture capital investing in AI constituted a massive 48% of global venture funding in 2017, surpassing the US for the first time.
China’s ambition is based on forecasts that predict AI technologies will engender a productivity leap on a scale comparable to that of the eighteenth-century Industrial Revolution. It is estimated that AI-related products and services will cause a sixteen trillion-dollar increase in global GDP by 2030. The Chinese intend to capture almost half of this total increase, approximately $7 trillion, while North America’s share is estimated to be lower at $3.7 trillion.
Though China was quite open about its global ambitions during the past two decades, the US did not consider it a serious threat until recently. The US had bought into China’s public posture that both would be friendly superpowers and the rise of China would expand the global economy for the benefit of all. Also, the US felt that converting China into free market capitalism would be a moral and ideological victory.
….. The US government is now actively throwing its weight to counteract China’s AI initiatives that pose a national security threat. For instance, the hardware technology for AI has been declared a national security asset by the US and bans have been imposed to prevent this technology from getting into Chinese hands.
….. What this means to the book’s thesis is that all other countries, especially India, will feel the impact of the US vs China cold war. India will face increasing challenges in its attempt to become a totally independent and neutral country with superpower status. At the same time, India is far too large and complex to become a satellite of either the US or China. The impact on other countries will be severe as well. There is a real danger of the world slipping into a phase of recolonization in which the US and China compete for territories and imperialistic influences just as the European powers—Britain, France, Holland, Portugal and Spain—did in the sixteenth to nineteenth centuries. The strategic weapons that were the game changers were devices like navigation and canons. Now there are the new technologies we have been discussing—with AI as the umbrella bringing them together and serving as the force multiplier.