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[Research Reports] US-China Technological Rivalry and Security

03-11-2021
Kazuto Suzuki (Professor, The University of Tokyo)
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The Research Group on Security and Emerging Technologies #1

"Research Reports" are compiled by participants in research groups set up at the Japan Institute of International Affairs, and are designed to disseminate, in a timely fashion, the content of presentations made at research group meetings or analyses of current affairs. The "Research Reports" represent their authors' views. In addition to these "Research Reports", individual research groups will publish "Research Bulletins" covering the full range of the group's research themes.

The security in the modern world is not limited to traditional land, sea, and air forces, but also extends to new fields such as the cyberspace, space, and electromagnetic spheres and to emerging technologies that may change the dynamics of these spheres. At present, the Research Group on Security and Emerging Technologies at the Japan Institute of International Affairs, of which the author is the program leader, is taking up technologies that may affect security in the future and examining what security implications these technologies might have and how to manage them. In order to establish a framework for discussion at the Research Group, this paper discusses the relationship between modern security and emerging technologies via the concept of "technological hegemony".

The most prominent issue in this context is the competition for the technological hegemony between the United States and China. The problem is that the United States, whose military superiority has been seemingly maintained through its technological superiority, is being caught up by China, which is rapidly expanding its own technological capabilities. At the same time, it has become difficult to distinguish military technologies from civilian ones, and there are concerns that critical technologies may flow out through global markets as civilian products. Moreover, the United States is becoming increasingly dependent on Chinese products through its global supply chain network. Under these circumstances, technological hegemony does not only concern military confronation but the two countries are engaged in a scramble for superiority in the economic arena as well. Unlike the US-Soviet confrontation in the Cold War era, the competition for technological hegemony in an increasingly interdependent economy cannot be resolved by simply creating a technology control system such as the Cold War-era COCOM (Coordinating Committee for Multilateral Export Controls).

What is "Technological Hegemony"?

Before we begin these discussions, we must establish what technological hegemony means. There are various definitions of "hegemony", but here it refers to the ability to hold the power to overwhelm other countries and to shape the international order. Based on this concept of hegemony, technological hegemony can be described to be "the power by possessing a particular technology that creates circumstances in which no other country can obtain that technology for a long period of time, and to use that technology to shape the international order". This technological hegemony cannot be achieved simply through scientific and technological innovation and technological development capabilities. It is important for countries with technological hegemony to protect their technologies as intellectual property and to restrict access by other countries. However, it is also vital to build and implement social systems and weapons using these technologies, and this will depend on whether these technologies can be converted into capabilities for shaping the international order.

In this light, it is doubtful whether the United States will be able to achieve technological hegemony. The United States is certainly capable of developing new technologies and putting them into practical use, but it cannot be said to have the capacity of applying them in society to shape the international order. On the other hand, China is expanding its share of the global market through its own production capacity and becoming capable of influencing the international order with new technologies. It appears that the current debate on technological hegemony is strongly linked not only to technological development capabilities, but also to accompanying industrial capabilities and the ability to gain global share.

Is 5G a Competition for Technological Supremacy Between the US and China?

The issue of 5G mobile communication is often referred to as an example of technological hegemony competition between the US and China. But is it really a competition for technological hegemony? Technically, 5G is an established technology, and not only Chinese companies but also Nokia and Ericsson in Europe and NEC and Fujitsu in Japan have the technology, and they can offer products similar to Huawei products. In this sense, it is not a matter of denying access to other countries or monopolizing the technology and using it for hegemonic power.

So how should we look at the 5G competition? 5G is a technology sector in which Chinese companies are rapidly increasing their share of the global market, and Chinese companies are more competitive than Western companies. There are thus concerns that, if matters are left to market principles, Chinese products will overwhelm the market and drive Western companies out.

In such a case, the US and its allies would have to depend on the Chinese 5G communication infrastructure, and there is a concern that information exchanged through this communication infrastructure may be leaked to China. There are also worries that if the conflict between China and the United States escalates, Chinese companies may stop providing products or Chinese products may attack socioeconomic infrastructure through code embedded in Chinese products. In other words, the 5G issue is not one of technological hegemony but is instead one of economic security in which dependence on China increases security risks because Chinese companies have an international competitive advantage.

Competition over Emerging Technologies

The fight for technological hegemony is not about 5G as generally believed. The contest for technological supremacy is taking place in areas of technology that will have a major impact on socioeconomic activities in the future as well as contribute to military capabilities. These new areas are created by emerging technologies, and the US Export Control Reform Act (ECRA) has identified 14 such areas: (1) biotechnology, (2) artificial intelligence and machine learning technologies, (3) navigation, positioning and timing, (4) microprocessor technologies, (5) advanced computational technologies, (6) data analysis technologies, (7) quantum information and sensing technologies, (8) logistics technologies, (9) 3D printing, (10) robotics, (11) brain-computer interfaces, (12) supersonic, (13) advanced materials, and (14) advanced surveillance technologies.

In some of these areas, the United States and its allies have the technological advantage, but China is rapidly expanding its technological capabilities and gaining the upper hand in some areas (for example quantum technologies and advanced surveillance technologies such as face recognition). There is no doubt that these emerging technologies will have a major impact on socioeconomic activities. However, if these technologies are applied militarily, military capabilities may be improved and cause the security order to change along with them.

Of course, the presence or absence of technology alone does not determine technological supremacy. Even if new technologies are created via research and development, there is a gap called the "Death Valley" in the process of putting them into practical use. There are further hurdles before practical technologies can be incorporated into social and military systems. Emerging technologies are called "emerging" because they have not yet reached the stage of practical application or social implementation. At this point, there is a competition between the United States and China over whose technology is superior and whose can be applied to social and military systems first. This is where the race for technological hegemony is to be found.

Changes in the Security Dimension Caused by Emerging Technologies

As emerging technologies are introduced into society and become established as social systems, there is a high probability that major changes will occur in the military and security arenas. They may not necessarily be "game changers" like nuclear weapons, but the presence or absence of such technologies will most likely lead at the very least to changes in warfighting methods and the means for establishing military superiority through dramatic improvements in information gathering capabilities and the acceleration of decision-making through improved information processing capabilities. The question then becomes how to control and prevent the outflow of technology in order to establish technological supremacy. Since the Cold War era, technology transfers have been controlled in order to prevent the proliferation of weapons of mass destruction as well as conventional weapons technologies through various export control regimes, including COCOM and the Wassenaar Arrangement. These technology controls have been managed through a voluntary export control regimes formed by a coalition of countries with technologies that can be applied to weapons. However, these technology controls mainly cover high-spec dual-use military and civilian products that can be used as military technologies and technologies directly applicable to weapons. In principle, products with specifications lower than those thresholds are recognized as general-purpose products that can be distributed on the global market, thereby ensuring compatibility between global business and security.

However, emerging technologies were originally developed as civilian and commercial technologies in the private sector, making it difficult to separate military and civilian technologies based on specifications. Technologies developed as civilian can be of far higher specifications than militarily developed technologies so, civilian technologies are being incorporated into military technologies in reverse direction. This is because, like artificial intelligence (AI), these technologies are advanced by collecting and applying data over a broader range and they thus need to be widely used as consumer technologies.

These technologies are also integrated into the global supply chain and are developed and manufactured using parts and components produced in different countries. In addition, the development of such new technologies cannot be achieved by researchers in a single country alone, and they are often created through joint research with foreign students and researchers from other countries. Therefore, if these technologies are to be controlled, it is necessary to control products distributed through the global market, control the global supply chain, and control the movement of researchers--very comple situation.

Furthermore, since it is not yet clear in what form these technologies contribute to security, it is difficult to distinguish between sensitive technologies and general-purpose products as clearly as those related to weapons of mass destruction, and it is also difficult to control technologies by hindering business on the grounds of security.

When military and civilian technologies were clearly distinguishable, states were able to develop technologies with high specifications and control them under the name of "military technologies". However, this has now become difficult. In this sense, while China has a state-led economic system and its technology management is relatively easy, countries with democratic and open economic systems such as the United States and its allies find it difficult to have their governments manage technologies in an authoritarian manner.

Is China a technological superpower?

Then, will China achieve technologial hegemony in the future? China has sought to catch up technologically and has operated its economy on a model of economic development through foreign investment. However, China has been focusing on technological development in the midst of a "middle-income trap". China is no longer able to rely on cheap labor so it should move into more value-added industries using high technology. Furthermore, in order to solve the problems of an aging society with a low birth rate that are becoming serious issues in China, efforts have been made in fields such as robotics and AI to achieve unmanned operation and labor saving. In other words, as the working population decreases, research and development is focused mainly on the development of technologies to replace human labor with machines.

This is the situation in which the United States and China began to compete for supremacy in technology, and the United States restricted technology transfers to China, making it impossible for China to rely on the United States and Western countries for the benefits of the global supply chain that it had previously enjoyed, including advanced materials and semiconductor manufacturing equipment. Therefore, it has been necessary to pursue technologies that enable the development and manufacture of high-value-added products constituting the upstream of the production process.

Under these circumstances, China has begun to recognize the importance of economic security, and to realize that its technology is leading the world. This can be seen in the lecture given by President Xi Jinping in April 2020 in which he stated the goal of fostering "killer technology", thereby creating a situation in which other countries "rely on Chinese technology". China has also enacted a series of laws, including the National Intelligence Law and the Export Control Law, out of concern for the risks posed by transfers of its technology to other countries. At the same time, China is believed to be capable of taking countermeasures if the United States and other Western countries restrict exports through application of some kind of technology control regulations. In addition, China has amended its National Defense Law to designate cyberspace and outer space as combat zones, with the aim of strengthening its military capabilities in these areas. It has also demonstrated its readiness to mobilize the PLA to counter cyber attacks and attacks on space infrastructure.

In this way, China is moving to establish economic security by promoting its own technology management and seeking to gain technological hegemony. By making clear that not only it can protect its technology but also use it to take aggressive measures against other countries, China can be seen as challenging the US to a competition for technological supremacy.

However, as seen in the issue of semiconductors, China's strength lies in the downstream of the production process, that is, in mass production. That suggests that China still does not have sufficient competitiveness in not so large but strategically important technological fields further upstream in the production process such as semicondutor manufacturing machines or advanced materials, and is in the process of catching up. However, the United States is competing for technological supremacy and limiting transfers of technology to China, forcing China to improve its autonomous technological capabilities. Under these circumstances, China will rapidly catch up by mobilizing resources through state-led efforts. In that case, there is a high possibility that a "sanctions dilemma" will occur, in which taking stricter measures against China will, in turn, enhance China's capabilities.

However, it will be difficult for China to seize technological hegemony simply by improving its technological prowess. Even if the best technology is attractive, the incentive to introduce it will not increase if the social system using it is not attractive, too. For example, France once developed a value-added information service called Minitel, which can be considered the predecessor of the Internet, but it disappeared without expanding internationally. Its faults were not so much with technical problems as with the social systems created by the technology. Some Japanese mobile phones have been called "Galapagos cell phones", because although the level of their technology and services such as "i-mode" were advanced, simpler mobile phones such as Nokia have become more popular internationally. For Chinese technology to gain international support, the society that uses it must be attractive. If China uses technology in a way that monitors its people's activities and blocks criticism of the government, it may be attractive to some autocratic countries, but it will be difficult to spread it to many democratic countries.

Japan's Economic Security

Finally, let us consider Japan's position in the technological competition between the United States and China. As an ally of the United States, Japan is placed to confront China and cooperate with the United States in the struggle for technological supremacy. At the same time, however, Japan has a deep economic relationship with China, and it is not desirable for Japan to impede business with China, nor for China to strengthen its technological control and make business with Japan difficult.

Under these circumstances, Japan should focus on its ability to be autonomous in the US-China race for technological hegemony and use this as leverage vis-à-vis both countries. In other words, it is necessary to thoroughly refine technologies upstream in the production process such as advanced materials, robotics, and machine tools, areas in which Japan has advantage. As mentioned earlier, technologies related to upstream production processes tend to be monopolized and easier to control by specifications, and the level of other countries' reliacne on Japan higher. When Japan tightened its controls on exports to South Korea in July 2019, South Korea strongly objected to the switch from comprehensive licensing to individual licensing for hydrogen fluoride and two other products, because it was strongly dependent on Japan for these, and restricted access to these products would hamper South Korea's mainstay industry of semiconductor production. Prompted by these measures, South Korea strengthened its export control system as requested by Japan, so the measures taken by Japan were effective as leverage in transforming South Korea's behavior. However, the Japanese government has not changed the individual licensing requirement for South Korea back to comprehensive licensing.

In any case, Japan is in a position to wield its influence over other countries by improving its technologies in the upper stream of the production process, thereby gaining a certain degree of deterrence that will prevent it from becoming involved in the intensifying competition for technological supremacy between the United States and China. At the same time, it will be important to lessen Japan's dependence on China and reduce its vulnerability in a manner similar to the "Supply Chain Diversification Subsidies" offered by the Ministry of Economy, Trade and Industry (METI). The main of this Study Group is to try to find an optimum course for Japan to take amid US-China competition for technolological hegemony.