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‘Data Is the New Strategic Commodity of the 21st Century’: Arthur Herman on China’s Chip Race

In this special episode, we sat down with Arthur Herman, senior fellow at the Hudson Institute and director of the Quantum Alliance Initiative. While microchips have been making the rounds in news headlines, there’s a recent report by the Center for Security and Emerging Technology (CSET) at Georgetown University titled “Managing the Chinese Military’s Access to AI chips.” But what are AI chips, and what happens if China’s military gets a hold of these?

Herman said: “China is not only way ahead of us in terms of developing AI as an important tool for government and for understanding its antagonist—its main antagonist, namely the United States—they’re also thinking about AI as an important technology in a strategic way. And we need to spend more time thinking about that as well, and to understand that AI can be a very powerful, positive tool for America and for American life.”

As for how China gets these chips, Herman noted that “export control laws are complicated because it isn’t just the Chinese who buy these chips. And you don’t want to be in a situation in which you sort of say, ‘Okay, we’re not going to sell these chips anymore to China and we … want to make sure that no one else sends them to China either, or resells them, or repackage them in any kind of way to the Chinese military or Chinese intelligence services or even Chinese universities’—because whatever it is they get, the government says, ‘That’s ours,’ and they’ll help themselves to it. So you don’t want to be in a situation where you’re denying friendly countries, or even neutral countries, chips that are part of their perfectly legitimate AI applications, the way in which they work, in the commercial area or the government.AI is an ever-present technology.”

He added that “data has become the new strategic commodity in the 21st century. It will be as important and as decisive in who is it that prevails in the geopolitical contest between the United States and China, between the free world and what I call the new axis—China, Russia, Iran, and North Korea. It’ll be as decisive as coal and steel was in the wars in the 19th century, and as fossil fuels were decisive in the wars in the 20th century, and in our own era. It’s the future strategic commodity. We need to think about that, plan for it. Otherwise, we are going to find ourselves in a very serious situation where a technology we originated—machine learning and artificial intelligence comes out of American labs and American companies—is used decisively against us by our worst enemies. That’s not a situation we want to be caught up in. And we need to think about that in a very serious way, starting now.”

And we also sat down with David Goldman, deputy editor for Asia Times.

Goldman said, “For the most part, the military does not use the most advanced state-of-the-art chips. What you have in your, if you have a recent model, iPhone or Android, that has much more sophisticated chips in it then go into a jet fighter, for example. The military tends to use older ships, as there are a great many out there and many ways of getting them. So for the vast majority of military applications, stopping China from buying the top of the line chips is not going to make a great difference.”

He added: “Now, what the United States has tried to do recently is to hold back China’s development of its own chip-making capacity. The United States has a great deal of intellectual property in chip manufacturing equipment. And to make a chip, there are a dozen types of different machines, each of which may have 100 different technologies in it. It’s the most incredibly complex and difficult thing that human beings have ever done by the way of manufacturing. China has been scrambling to try to develop its own chip-making industry, but it’s still very much dependent on imported equipment, particularly from the Netherlands. And the United States last week asked the Netherlands to place yet additional restrictions on exports to China.”

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