China: Tech Self Reliance and Global Dominance

“China Pursues Tech 'Self-Reliance' Fueling Global Unease”, Dec 27, 2021, Joe McDonald (with contributions by Yu Bing & Edith M. Lederer), AP, at <  China pursues tech 'self-reliance,' fueling global unease (msn.com) >

"US has already lost AI fight to China, says ex-Pentagon software chief: Nicolas Chaillan speaks of ‘good reason to be angry’ as Beijing heads for ‘global dominance’ ", Oct 10, 2021, Katrina Manson, Financial Times, at < https://www.ft.com/content/f939db9a-40af-4bd1-b67d-10492535f8e0 >

~~ posted for dmorista ~~

General Introduction to the two articles by dmorista:

A few years ago China announced its Made in China 2025 Program, in which the Chinese leadership stated that they planned to invest in many high technology areas to become competitive with the world's leading companies in many leading scientific and technological fields. In the aftermath of the 2007-2008 Financial Crisis in the West, after 30 years of attracting foreign companies to invest massively in China, the Chinese political leadership realized that the time had come to stop depending entirely on their low – medium technology level industrial export operations. It had become obvious that the “hollowing out” of the West, particularly the U.S., had left the majority of the inhabitants of the West much less prosperous than they had been a generation earlier. They could no longer afford to buy all of the products China's industrial juggernaut could produce. There was an internal struggle in China; the owners of the east coast industrial operations had grown fabulously rich on the “export trade” model and the political leadership had to lay down the law with them. But in general the reality was becoming apparent that the 600 million strong middle class Chinese, out of the 1.4 billion overall population, had now become prosperous enough to constitute the largest consumer market on Earth. Even the working class of China had limited, but still significant aggregate buying power.

The much discussed and criticized Belt and Road Plan was another result of the deliberations of the Chinese political leadership. That was their way of binding the less developed countries and their economies in Eurasia and Africa to China. As it turned out the developed countries were eager to connect up with the prospective High Speed Rail network and to welcome Chinese investment. Israel dearly wants to be one of the major western termini of the Belt and Road network and have been negotiating with the Chinese. With what amounted to pocket change for them the Chinese bought-up the Italian Industrial operations in Northern Italy including the fashion houses of Milan, Fiat and the auto industry there (thus the Chinese actually own the rump of Chrysler) and the port of Genoa. Much like the way the U.S. displaced England and France from their remaining areas of colonial holdings and their last industrial and scientific areas of dominance; China is gradually replacing the U.S., physically in the area of the South China Sea, as well as in many scientific and technological areas.

The first article “China Pursues Tech 'Self-Reliance' Fueling Global Unease”, Dec 27, 2021, Joe McDonald (with contributions by Yu Bing & Edith M. Lederer), AP, looks at some of vicissitudes and accomplishments of the Chinese in this process. The article notes that while China has designed some new cutting edge chips however, it must have them produced by Taiwan. That country's computer chip industry along with the U.S. and some others of its allies, still retains the advantage in the highest level manufacturing. Taiwan and S. Korea are the world's leading high level chip producers with about 45% of total chip production between the two. Even in the much vaunted computer industry around Austin, Texas, that announced with great fanfare a new computer chip fabrication plant in Taylor, Texas near Austin; the new chip plant will be built, owned and operated by a S. Korean company, Samsung. At this point the U.S. and Europe together produce about 20% of computer chips, the East Asian countries Japan, Taiwan, and S. Korea produce nearly 60%, China produces about 15%, and 5% are produced by “others”. In a wide variety of technologies involved in producing computer chips China is rated at being about 10 years behind the technology of the leading companies. The companies with the leading technologies are located in numerous places including, Taiwan, S. Korea, The U.S., the Netherlands, the U.K., Germany and Japan among others. China is trying to break out of the role of assembling many products, in which the most technologically advanced parts are manufactured elsewhere; and are shipped to China for use in the assembly plants. Computer chips are the biggest single issue, but are not the only one. The article points out that China's largest trade deficit is in Computer Chips stating that “Chips are China’s biggest import, ahead of crude oil, at more than $300 billion last year.” The Chinese are flush with cash and frequently try to buy up foreign companies with advanced technology, sometimes they succeed in doing that and sometimes they are blocked.

We should note here that the Chinese make their share of mistakes and are not always able to exploit every weakness that develops in the economic, technological, or political conditions in the Western Powers. A major example of thie is are the disastrous Boeing 737-Max crashes; and Boeing's and the FAA's ham handed response to those crashes. That situation provided a significant opening for China's commercial aircraft manufacturing company The Commercial Aircraft Corporation of China, Ltd., (COMAC) to advance its C-919 model's fortunes. The C-919 is designed to compete with the Airbus 320 and the Boeing 737-Max. But despite the chaos at Boeing and the grounding of the 737-Max for 20 months COMAC is having problems with the C-919 and was unable to displace the Boeing 737-Max that is now racking up large numbers of orders from China's largely state-owned airline companies.

The article discussed above “China Pursues Tech 'Self-Reliance' Fueling Global Unease” includes an embedded 5 minute video clip “Video: US intel says China could dominate in advanced technology (FOX News)”. That video is largely an interview with Nicholas Chaillan, who resigned from his position as the first chief software officer at the Department of Defense in September, sending a “blistering letter” in which he criticized the slow response of the Pentagon to the issues of providing safe and secure, up to date, software. His resignation letter “made only cursory reference to advances by China”. But in a later interview with the Financial Times and some other statements Chaillan specifically discussed the increasing Chinese technological prowess. The Financial Times article mostly paraphrased Chaillan remarks about the situation, but it includes a couple of lines of directly quoted material in the third paragraph of this excerpt below.

“The Pentagon’s first chief software officer said he resigned in protest at the slow pace of technological transformation in the US military, and because he could not stand to watch China overtake America.

“In his first interview since leaving the post at the Department of Defense a week ago, Nicolas Chaillan told the Financial Times that the failure of the US to respond to Chinese cyber and other threats was putting his children’s future at risk.

“ 'We have no competing fighting chance against China in 15 to 20 years. Right now, it’s already a done deal; it is already over in my opinion,' he said, adding there was 'good reason to be angry' ”.

“Chaillan, 37, who spent three years on a Pentagon-wide effort to boost cyber security and as first chief software officer for the US Air Force, said Beijing is heading for global dominance because of its advances in artificial intelligence, machine learning and cyber capabilities.” (Emphasis Added)

These quotes above are from the second posted article "US has already lost AI fight to China, says ex-Pentagon software chief: Nicolas Chaillan speaks of ‘good reason to be angry’ as Beijing heads for ‘global dominance’ ", Oct 10, 2021, Katrina Manson, Financial Times, at < https://www.ft.com/content/f939db9a-40af-4bd1-b67d-10492535f8e0 >.

The phenomenon of formerly leading “Global Hegmons” losing their ability to compete in Productive Capitalism and retreating to Financial Capitalism has been extensively discussed by the World Systems Theorists including Immanuel Wallerstein, Giovanni Arrighi, George Modelski, and others. I posted a review here, at The Class Struggle's predecessor website Leftist Politics. of World Systems Theory and related theoretical work, that is available at “Long-Term Global Trends Affecting the U.S.: Analysis of Historical Global Developments and their Relevance to the Internal Situation of the United States”, Sep 28, 2020, dmorista, Leftist Politics, at < https://leftist---politics.blogspot.com/2020/09/historicalglobal-developments-and-their.html >. Overall, it should be no particular surprise to see a new potential Gobal Hegemon rising and harrying the increasingly inept, divided, and recklessly rapacious U.S. ruling class for domination of the state-of-the-art technologies and the control over resources. We need only look back at the long-term changes that took place as the British Empire declined and the U.S. (as well as Germany, and to a lesser degree Japan) took over in industry after industry. The British Empire was bogged down controlling ¼ of the Earth's surface and steadily lost its power and influence. It is also a fact that a regime of “Globalization”, at least as pervasive as the current socio-economic and political arrangements, was the dominant fact on most of the surface of the Earth from about the mid 1880s until it was broken up by World War 1. Just like now, the reigning hegemonic power of the day sponsored and promoted globalization but, except for a limited number of financial operatives in the U.K., the main benefits accrued to companies and capitalists located in the rising powers of that day,  the U.S., Germany, and Japan.

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BEIJING (AP) — To help make China a self-reliant “technology superpower,” the ruling Communist Party is pushing the world's biggest e-commerce company to take on the tricky, expensive business of designing its own processor chips — a business unlike anything Alibaba Group has done before.

© Provided by Associated Press - Sports This photo shows a view of the ARM-structure server processor Yitian 710, developed by Alibaba's in-house semiconductor unit T-Head, at the Apsara Conference, an annual cloud service technology forum hosted by Alibaba Group, in Hangzhou in east China's Zhejiang province on Oct. 19, 2021. To help make China a self-reliant "technology superpower," the ruling Communist Party is pushing the world's biggest e-commerce company to take on the tricky, expensive business of designing its own processor chips, a business unlike anything Alibaba Group has done before. (Chinatopix via AP)

Its 3-year-old chip unit, T-Head, unveiled its third processor in October, the Yitian 710 for Alibaba's cloud computing business. Alibaba says for now, it has no plans to sell the chip to outsiders.

© Provided by Associated Press - Sports This photo shows a view of the ARM-structure server processor Yitian 710, developed by Alibaba's in-house semiconductor unit T-Head, at the Apsara Conference, an annual cloud service technology forum hosted by Alibaba Group, in Hangzhou in east China's Zhejiang province on Oct. 19, 2021. To help make China a self-reliant "technology superpower," the ruling Communist Party is pushing the world's biggest e-commerce company to take on the tricky, expensive business of designing its own processor chips, a business unlike anything Alibaba Group has done before. (Chinatopix via AP)

Other rookie chip developers including Tencent, a games and social media giant, and smartphone brand Xiaomi are pledging billions of dollars in line with official plans to create computing, clean energy and other technology that can build China’s wealth and global influence.

Processor chips play an increasingly critical role in products from smartphones and cars to medical devices and home appliances. Shortages due to the coronavirus pandemic are disrupting global manufacturing and adding to worries about supplies.

© Provided by Associated Press - Sports FILE - A visitor to the 21st China Beijing International High-tech Expo looks at a computer chip through the microscope displayed by the state-controlled Tsinghua Unigroup project which has emerged as a national champion for Beijing's semiconductor ambitions in Beijing, China on May 17, 2018. Chips are a top priority in the ruling Communist Party's marathon campaign to end China's reliance on technology from the United States, Japan and other suppliers Beijing sees as potential economic and strategic rivals. If it succeeds, business and political leaders warn that might slow down innovation, disrupt global trade and make the world poorer. (AP Photo/Ng Han Guan, File)

Chips are a top priority in the ruling Communist Party's marathon campaign to end China's reliance on technology from the United States, Japan and other suppliers Beijing sees as potential economic and strategic rivals. If it succeeds, business and political leaders warn that might slow down innovation, disrupt global trade and make the world poorer.

“Self-reliance is the foundation for the Chinese nation,” President Xi Jinping said in a speech released in March. He called for China to become a “technology superpower” to safeguard “national economic security.”

“We must strive to become the world’s main center of science and the high ground of innovation,” Xi said.

Beijing might be chasing a costly disappointment. Even with huge official investments, businesspeople and analysts say chipmakers and other companies will struggle to compete if they detach from global suppliers of advanced components and technology — a goal no other country is pursuing.

“It’s hard to imagine any one country rebuilding all of that and having the best technology,” said Peter Hanbury, who follows the industry for Bain & Co.

Beijing’s campaign is adding to tension with Washington and Europe, which see China as a strategic competitor and complain it steals technology. They limit access to tools needed to improve its industries.

© Provided by Associated Press - Sports Visitors wearing masks look at the ARM-structure server processor Yitian 710, developed by Alibaba's in-house semiconductor unit T-Head, at the Apsara Conference, an annual cloud service technology forum hosted by Alibaba Group, in Hangzhou in east China's Zhejiang province on Oct. 19, 2021. To help make China a self-reliant "technology superpower," the ruling Communist Party is pushing the world's biggest e-commerce company to take on the tricky, expensive business of designing its own processor chips, a business unlike anything Alibaba Group has done before. (Chinatopix via AP)

If the world were to decouple, or split into markets with incompatible standards and products, U.S.- or European-made parts might not work in Chinese computers or cars. Smartphone makers who have a single dominant global operating system and two network standards might need to make unique versions for different markets. That could slow down development.

© Provided by Associated Press - Sports FILE - A Chinese microchip is seen through a microscope set up at the booth for the state-controlled Tsinghua Unigroup project which is driving China's semiconductor ambitions during the 21st China Beijing International High-tech Expo in Beijing, China, on May 17, 2018. Chips are a top priority in the ruling Communist Party's marathon campaign to end China's reliance on technology from the United States, Japan and other suppliers Beijing sees as potential economic and strategic rivals. If it succeeds, business and political leaders warn that might slow down innovation, disrupt global trade and make the world poorer. (AP Photo/Ng Han Guan, File)

Washington and Beijing need to “avoid that the world becomes separated,” U.N. Secretary-General Antonio Guterres told The Associated Press in September.

China's factories assemble the world’s smartphones and tablet computers but need components from the United States, Europe, Japan, Taiwan and South Korea. Chips are China’s biggest import, ahead of crude oil, at more than $300 billion last year.

© Provided by Associated Press - Sports A woman wearing a face mask browses her smartphone at a booth displaying various chips developed by Beijing's Tsing Micro at the China Beijing International High-Tech Expo in Beijing on Sept. 26, 2021. Chips are a top priority in the ruling Communist Party's marathon campaign to end China's reliance on technology from the United States, Japan and other suppliers Beijing sees as potential economic and strategic rivals. If it succeeds, business and political leaders warn that might slow down innovation, disrupt global trade and make the world poorer. (AP Photo/Andy Wong)

Official urgency over that grew after Huawei Technologies Ltd., China’s first global tech brand, lost access to U.S. chips and other technology in 2018 under sanctions imposed by the White House.

That crippled the telecom equipment maker’s ambition to be a leader in next-generation smartphones. American officials say Huawei is a security risk and might aid Chinese spying, an accusation the company denies.

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US intel says China could dominate in advanced technology

Huawei and some Chinese rivals are close to matching Intel Corp., Qualcomm Inc., South Korea’s Samsung Electronics and Britain’s Arm Ltd. at being able to design “bleeding edge” logic chips for smartphones, according to industry analysts.

© Provided by Associated Press - Sports Visitors to a mall walk past a Huawei store in Beijing, China, on Aug. 26, 2021. Chips are a top priority in the ruling Communist Party's marathon campaign to end China's reliance on technology from the United States and official urgency over that grew after Huawei Technologies Ltd., China's first global tech brand, lost access to U.S. chips and other technology in 2018 under sanctions imposed by the White House. (AP Photo/Ng Han Guan)

But when it comes to making them, foundries such as state-owned SMIC in Shanghai are up to a decade behind industry leaders including TSMC, or Taiwan Semiconductor Manufacturing Corp., which produces chips for Apple Inc. and other global brands.

© Provided by Associated Press - Sports An exhibitor wearing a face mask looks on near a Changan 510 chip developed by the Beijing Academy of Blockchain and Edge Computing displayed at the China Beijing International High-Tech Expo in Beijing, China, on Sept. 26, 2021. Chips are a top priority in the ruling Communist Party's marathon campaign to end China's reliance on technology from the United States, Japan and other suppliers Beijing sees as potential economic and strategic rivals. If it succeeds, business and political leaders warn that might slow down innovation, disrupt global trade and make the world poorer. (AP Photo/Andy Wong)

Even companies such as Alibaba that can design chips likely will need Taiwanese or other foreign foundries to make them. Alibaba's Yitian 710 requires precision no Chinese foundry can achieve. The company declined to say which foreign producer it will use.

“My country still faces a big gap in chip technology,” said industry analyst Liu Chuntian of Zero Power Intelligence Group.

China accounts for 23% of global chip production capacity but only 7.6% of sales.

Packing millions of transistors onto a fingernail-size sliver of silicon requires some 1,500 steps, microscopic precision and arcane technologies owned by a handful of U.S., European, Japanese and other suppliers.

They include KLA Corp. in California for super-precise measurement and Japan’s TEL for machines to apply coatings a few molecules thick. Many are covered by restrictions on “dual use” technologies that can be used in weapons.

China “lags significantly” in tools, materials and production technology, the Semiconductor Industry Association said in a report this year.

Washington and Europe, citing security worries, block access to the most advanced tools Chinese chipmakers need to match global leaders in precision and efficiency.

Without those, China is falling farther behind, said Bain’s Hanbury.

“The TSMC horse is sprinting away and the Chinese horse is stopped,” he said. “They can’t move forward.”

Washington stepped up pressure on Huawei last year by barring global foundries from using American technology to produce its chips. U.S. vendors can sell chips to the company, but not for next-generation “5G” smartphones.

For its part, the European Union said it will review foreign investments after complaints China was eroding Europe’s technology lead by purchasing important assets such as German robot maker Kuka.

Alibaba’s Yitian 710 is based on architecture from Britain’s Arm, highlighting China’s enduring need for foreign know-how. Alibaba said it still will work closely with longtime foreign suppliers Intel, Arm, Nvidia Corp. and Advanced Micro Devices, Inc.

T-Head’s first chip, the Hanguang 800, was announced in 2019 for artificial intelligence. Its second, the XuanTie 910, is for self-driving cars and other functions.

In November, Tencent Holding, which operates the WeChat messaging service, announced its first three chips for artificial intelligence, cloud computing and video.

© Provided by Associated Press - Sports A technician stands at the entrance to a Huawei 5G data server center at the Guangdong Second Provincial General Hospital in Guangzhou, in southern China's Guangdong province on Sept. 26, 2021. Chips are a top priority in the ruling Communist Party's marathon campaign to end China's reliance on technology from the United States and official urgency over that grew after Huawei Technologies Ltd., China's first global tech brand, lost access to U.S. chips and other technology in 2018 under sanctions imposed by the White House. (AP Photo/Ng Han Guan)

Beijing says it will spend $150 billion from 2014 through 2030 to develop its chip industry, but even that is a fraction of what global leaders invest. TSMC plans to spend $100 billion in the next three years on research and manufacturing.

China is trying to buy experience by hiring engineers from TSMC and other Taiwanese producers. Taiwan, which Beijing claims as part of its territory and has threatened to attack, has responded by imposing curbs on job advertising.

Beijing encourages smartphone and other manufacturers to use suppliers within China, even if they cost more, but officials deny China wants to detach from global industries.

“We will never go back in history by seeking to decouple,” Xi said in a speech by video link to a November meeting of Asia-Pacific leaders in Malaysia.

The latest conflict is over photolithography, which uses ultraviolet light to etch circuits into silicon on a scale measured in nanometers, or billionths of a meter.

The leader is ASML in the Netherlands, which makes machines that can etch transistors just 5 nanometers apart. That would pack 2 million into a space one centimeter wide.

China’s SMIC is about one-third as precise at 14 nanometers. Taiwan’s TSMC is preparing to increase its precision to 2 nanometers.

SMIC wants to upgrade by purchasing ASML’s latest machine, but the Dutch government has yet to agree.

“We will wait for their decision,” said an ASML spokeswoman, Monica Mols, in an email.

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AP researcher Yu Bing in Beijing and AP Writer Edith M. Lederer at the United Nations contributed.

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https://www.ft.com/content/f939db9a-40af-4bd1-b67d-10492535f8e0

"US Department of Defense US has already lost AI fight to China, says ex-Pentagon software chief Nicolas Chaillan speaks of ‘good reason to be angry’ as Beijing heads for ‘global dominance’ "

Katrina Manson October 10 2021 Financial Times

Nicolas Chaillan speaks of ‘good reason to be angry’ as Beijing heads for ‘global dominance’

Nicolas Chaillan: US cyber defences in some government departments are at ‘kindergarten level’ © Monica King

The Pentagon’s first chief software officer said he resigned in protest at the slow pace of technological transformation in the US military, and because he could not stand to watch China overtake America.

In his first interview since leaving the post at the Department of Defense a week ago, Nicolas Chaillan told the Financial Times that the failure of the US to respond to Chinese cyber and other threats was putting his children’s future at risk.

“We have no competing fighting chance against China in 15 to 20 years. Right now, it’s already a done deal; it is already over in my opinion,” he said, adding there was “good reason to be angry”.

Chaillan, 37, who spent three years on a Pentagon-wide effort to boost cyber security and as first chief software officer for the US Air Force, said Beijing is heading for global dominance because of its advances in artificial intelligence, machine learning and cyber capabilities.

He argued these emerging technologies were far more critical to America’s future than hardware such as big-budget fifth-generation fighter jets such as the F-35.

“Whether it takes a war or not is kind of anecdotal,” he said, arguing China was set to dominate the future of the world, controlling everything from media narratives to geopolitics. He added US cyber defences in some government departments were at “kindergarten level”.

He also blamed the reluctance of Google to work with the US defence department on AI, and extensive debates over AI ethics for slowing the US down. By contrast, he said Chinese companies are obliged to work with Beijing, and were making “massive investment” into AI without regard to ethics.

Chaillan said he plans to testify to Congress about the Chinese cyber threat to US supremacy, including in classified briefings, over the coming weeks.

He acknowledged the US still outspends China by three times on defence, but said the extra cash was immaterial because US procurement costs were so high and spent in the wrong areas, while bureaucracy and overregulation stood in the way of much-needed change at the Pentagon.

Chaillan’s comments came after a congressionally-mandated US national security commission warned earlier this year that China could surpass the US as the world’s AI superpower within the next decade.

Senior defence officials have acknowledged they “must do better” to attract, train and retain young cyber talent, but have defended what they argue is their responsible approach to the adoption of AI.

Michael Groen, a Marine Corps lieutenant general and director of the defence department’s Joint Artificial Intelligence Center, told a conference last week he wanted to field AI across the military in an incremental way, saying its adoption would require a culture shift within the military.

His comments come after US secretary of defence Lloyd Austin said in July his department “urgently needs” to develop responsible artificial intelligence as a priority, adding a new $1.5bn investment would accelerate the Pentagon’s adoption of AI over the next five years and that 600 AI efforts were already under way.

But he committed that his department would not “cut corners on safety, security, or ethics”.

A spokesperson for the Department of the Air Force said Frank Kendall, secretary of the US Air Force, had discussed with Chaillan his recommendations for the Department’s future software development following his resignation and thanked him for his contributions.

Chaillan announced his resignation in a blistering letter at the start of September, saying military officials were repeatedly put in charge of cyber initiatives for which they lacked experience, decrying Pentagon “laggards” and absence of funding.

“[W]e are setting up critical infrastructure to fail,” he said in his letter, which made only cursory reference to advances by China. “We would not put a pilot in the cockpit without extensive flight training; why would we expect someone with no IT experience to be close to successful? [ . . .]While we wasted time in bureaucracy, our adversaries moved further ahead.”

Robert Spalding, a retired Air Force brigadier general who served as defence attaché in Beijing, said Chaillan had “rightfully” complained and added he too had resigned early in order to create his own encrypted defence technology solutions after being frustrated by “archaic” systems while flying B-2 stealth bombers at work.

Chaillan, who naturalised as a US citizen in 2016 and led efforts to install “zero trust” cyber security measures at the Department of Homeland Security before joining the Pentagon, said he was a polarising force at the Department of Defense and that he alarmed some senior officials who thought he should keep his complaints “in the family”.

The serial technological entrepreneur, who started his first business at 15 in France, said he also began to feel stale because he spent his three-year stint “fixing basic cloud things and laptops” instead of innovating.