- - Tuesday, March 13, 2018

It takes technology to be a great nation, and President Trump’s notable policy successes on corporate taxes and deregulation are not enough. He has to deliver on trade and investment with China or it will dominate artificial intelligence and the global economy

China has used mercantilist tools — regulation of imports and foreign investment, forced foreign technology transfers and subsidies for domestic product development, investment and exports — to steal dominance in one industry after another — aluminum, solar panels, electric cars and soon, AI.

Its policies create huge trade surpluses and a trillion dollar war chest. Its multinationals — whose executive ranks are salted with members of the Communist Party — use those funds to buy foreign technology companies.

Geely Automotive purchased Volvo in 2010 and will only sell electric vehicles starting next year. U.S. automakers must take joint venture partners in China and through those, its indigenous manufacturers gain access to American driverless vehicle technology.

As importantly, Beijing is corrupting core American resistance to authoritarian state-directed capitalism by co-opting companies like Apple — which has agreed to store sensitive encryption keys in China — and Marriott — which has agreed to global communications, corporate education and employee screening in line with Beijing’s propaganda strategies.

Google is seeking meaningful market re-entry, after its search engine was blocked in 2010, by establishing an AI development lab in China that will develop local talent and transfer knowhow to private developers.

AI enabled devices and software power through huge troves of behavioral data and physical observations, and distill vast bodies of scientific and social research, to dramatically accelerate or replace human decision making.

AI is IBM’s Watson teaming with H&R Block to prepare tax returns to avoid IRS penalties and audits and assisting rural oncologists in treating rare cancers, absent time-consuming collaboration with highly specialized colleagues at faraway teaching hospitals.

AI is a personal assistant tailoring office music and temperature settings, drafting an itinerary for the day, setting up meetings and booking restaurant reservations.

AI is the brains behind self-driving vehicles and drones overhead and ultimately traffic management systems in cities with millions of those in operation.

More ominously, AI is bots that help create authentic-looking tweets and fake news stories the Russians use to subvert American and European elections, and inflame racial and ethnic tensions.

AI is the software behind China’s millions of facial scanners that identify Uighur dissonants in Xinjiang province and tracks everyday activities of its citizens everywhere — against their internet trails — to identify those who embrace unwanted political ideas or engage in behavior threatening the blind acceptance of the Maoist order.

In 10 years, it won’t be possible to design, produce or sell anything without super-fast microprocessors and dazzling software that make today’s smartphones and apps look like the Gutenberg Press and illuminated manuscripts.

AI will be the backbone of democratic nations’ capacity to defend their borders, communications and transportation infrastructure, and cultural and political institutions from invaders. For repressive states, AI is fast becoming the means to control what their citizens and corporate leaders abroad do, say and think.

China has targeted global dominance in AI by 2030 and with hundreds of billions of dollars in government and private capital and the most ambitious young talent, all reminiscent of American efforts to build the 19th century transcontinental railroads and 20th century aircraft industry.

Beijing and local governments, with the collaboration of its technology giants, are funneling hundreds of billions of dollars into startups and big company projects that enjoy remarkably more economic freedom than Western companies — they are not bothered by privacy rules, hectored by politicians about employment practices or a liberal press calling for the breakup of large players.

China provides not merely a rich, legitimate market for commercial applications but also the analog to our defense market in aircraft for the AI instruments of social control.

China has a vast pool of engineering talent, much of it trained by American universities sympathetic to Beijing’s socialist/anti-democratic agenda and assisted by American multinationals with wavering allegiance toward flag and country.

The U.S. and other Western governments have blocked some proposed Chinese acquisitions of Western technology companies.

But with American universities and multinationals co-opted and Washington seemingly clueless about the stakes, the smart money is on China in the race for dominance of AI dominance and global commerce.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.

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