"The tenet that free world trade promotes the spread of liberal institutions is likely to be massively questioned. No good prospects for the Western world.
Chinese platforms such as Alibaba, Tiktok, Shein and Temu have conquered the Western markets impressively quickly in recent years. They benefited from being able to grow in their home market, expand their networks and train their algorithms without being extensively exposed to competition from Western platforms.
They have used this to develop attractive offers for consumers and users outside of China with innovative business models and to continue to grow. A self-reinforcing process, because a large part of the platform processes are based on artificial intelligence, for the further development of which large amounts of data are essential.
So far, these platforms have had largely unrestricted access to Western markets, although there is some debate about data protection compliance.
However, Huawei's market access is now viewed more critically, and for good reason. Huawei does business in digital infrastructure and surveillance, potentially giving it access to critical infrastructure and security-related data.
This is why numerous Western countries have recently denied or at least restricted Huawei access to their markets. In the rest of the world, however, China has also expanded its strong export position in this area. Chinese surveillance and security technology is now used in over 80 countries, from South America to Africa to Southeast Asia, including many autocracies. In 2010 the number was still in the single digits.
This development is no coincidence. Recent studies show that autocracies have an advantage in the development of artificial intelligence and that these AI innovations in turn strengthen them politically. A worrying development is emerging. Until now, it was assumed that autocracies were less innovative than democratic states.
In autocracies, the thinking goes, innovations tend to be suppressed because those in power fear that their power will be increasingly eroded by technological change and growth. However, in a recently published high-profile study, researchers from MIT and Harvard show that this is not the case for certain AI innovations, particularly the development of government control tools such as surveillance software.
Quite the opposite. This type of AI research finds particularly favorable conditions in autocracies because those in power have a particular interest in surveillance technologies such as automatic facial recognition, thus ensuring high demand. This means that the often high fixed costs for training the data models can be quickly compensated for through scale and network effects and development can be accelerated. At the same time, the use of these technologies helps to consolidate the power of those in power. The researchers can indeed demonstrate a mutually reinforcing connection between autocratic government and AI-based surveillance software.
In a second study, the research team documents the export success of Chinese surveillance software. China's self-interest in surveillance technology and the resulting high demand for such products have led to an enormous technological development push by Chinese suppliers. Relative to other (autocratic) states, Chinese providers have developed a competitive advantage, with the result that these states buy surveillance software from China and do not produce it themselves. The high export demand gives China access to ever larger amounts of data and enables further innovation and profit opportunities for the Chinese economy. China's comparative advantage in surveillance technologies is becoming increasingly entrenched.
Chinese companies are not only benefiting from this development in the area of surveillance software. The insights and developments gained can also be used in other areas of application of AI technology and processes and business models can be improved. China already uses more industrial robots than the rest of the world as a whole.
In the future, these will become better, faster and less error-prone as their AI is trained better. Thanks to their international successes in surveillance software, Chinese companies can also improve their AI in other areas and thus become more competitive. This is bad news for Western AI companies because they cannot expect similar government-induced demand.
What is politically worrying is that China is expanding its influence internationally by exporting surveillance software and using its products to help consolidate autocratic structures in other countries. The doctrine that free world trade promotes the spread of liberal institutions is likely to be massively questioned. Not good prospects for the Western world.
Sources:
Beraja, M.; Kao, A.; Yang, D. Y. & Yuchtman, N. "Exporting the surveillance state via trade in AI" Brookings Institution, 2023
Beraja, M.; Kao, A.; Yang, D. Y. & Yuchtman, N. "AI-tocracy" The Quarterly Journal of Economics, Oxford University Press (OUP), 2023, 138, 1349-1402" [1]
1. Chinas Vorteil bei der KI-Entwicklung. Frankfurter Allgemeine Zeitung (online) Frankfurter Allgemeine Zeitung GmbH. Jan 2, 2024 Von Monika Schnitzer
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