A U.S.-China Tech Cold War? with Adam Segal

Podcast music: Blindhead and Mick Lexington.

DEVIN STEWART: Hi, I'm Devin Stewart here at Carnegie Council in New York City, and today I'm speaking with Adam Segal. He is director of the Digital and Cyberspace Policy Program at the Council on Foreign Relations here in New York City.

Adam, great to see you here at Carnegie Council. Thanks for coming by.

ADAM SEGAL: Thanks for having me in.

DEVIN STEWART: Today we're speaking about the United States and China, the prospect of a technology Cold War. This is part of an ongoing series of podcasts that we're recording around the theme of Information Warfare.

You are author of a book called The Hacked World Order: How Nations Fight, Trade, Maneuver, and Manipulate in the Digital Age. Before we get into the prospect of a U.S.-China technology Cold War and whether there is such a thing, can you tell us a little bit about your book The Hacked World Order?

ADAM SEGAL: Yes. The book looks at the increasingly contentious geopolitics around cyberspace, so how states are trying to use cyberspace to pursue their goals both through cyber operations—hacking—influence operations, and also how they are trying to control the flow of data for national security, economic, and political reasons.

DEVIN STEWART: So this type of statecraft or strategy in the policy toolbox, if you will, are these being deployed more often by countries simply because the technology is around, or are there other reasons for this use of new techniques?

ADAM SEGAL: I think it's two things. I think it's, one, as you said, capacities are now available. Either they're developing them themselves or they're buying it off the shelf so they can either use contractors or other suppliers to do hacking if they feel like they have national security interests they want to pursue.

But I think also what happened was that the revelations of the National Security Agency contractor Edward Snowden, he reveals lots of documents that show that the United States is uniquely positioned in the Internet because of its ties to the technology companies, and so lots of countries wake up and realize, Oh we're kind of in the middle of this web that the United States gets a lot of security and economic advantages, and they begin to think about, Well, how would we restructure that? Some of that is through removing U.S. product and putting new technology in; some of it is changing the way that the technology and the data flows globally.

DEVIN STEWART: In The Hacked World Order can you give us a cheat sheet on what are your conclusions? Should we be afraid of this hacked world order?

ADAM SEGAL: What I try to do is help people think about what nations want to accomplish in this space. I have a series of questions that states ask themselves:

• Is the risk primarily external, or is it internal? The United States is primarily worried about cyberattacks from the outside. Countries like China and Russia are worried about those types of attacks, but they're also primarily worried about internal threats: How does the Internet empower domestic opposition and threaten regime legitimacy? That's a big question that I think states are asking themselves.
• How do they think about innovation? Is it top-down or is it bottom-up?
• Is the data used for Hobbesian goals? Does it empower the nation-state, or is it a more Lockean perspective like we have in the liberal democracies, which is kind of a contract: I sign over my data to the companies; I expect them to use it this way.
• How do we think about influence? Are we trying to convince people, or do we flood the space with fake information, misinformation, which is what the Russians have tended to do?

Those kinds of questions I think states have asked themselves, and what we've discovered is that, yes, there's lots to be afraid of. The risk of cyberattacks is going up, an attack that causes a destructive outcome, which we've only really seen two of them, the U.S.-Israel attack on the centrifuges at Natanz, which caused those to spin out of control and cause physical destruction, and then Russian-backed hackers turned off the lights in Kiev in December of 2015 and 2016. Those are really the only instances we know of politically motivated attacks causing physical outcomes. Everything else has been espionage, spying, stealing data, and information operations.

DEVIN STEWART: How effective are information operations?

ADAM SEGAL: Uncertain. Certainly in the Russian case they have managed to push on social divisions [that were already there]. They didn't create the wedge, they just pushed it farther in on issues like gun control, abortion, race, and those things. I think the general sense is that they have heightened social division. They certainly didn't expect to elect Donald Trump. They were surprised when he was. I think there has been some argument that maybe if you look at voter repression that they might have had some impact there, but right now I think most people think that influence operations irritate already-existing social divisions but don't create outcomes.

DEVIN STEWART: Do you get a sense that Americans are developing an antibody to influence campaigns?

ADAM SEGAL: Yes. I think that to some extent the reason why 2016 had such a political impact is that people weren't expecting it, even though they should have been. I think now that there's a higher degree of transparency about it the impact has been lessened.

DEVIN STEWART: People are being more skeptical?

ADAM SEGAL: I think there's a skepticism. I think there has been some education. Clearly what the companies themselves have done has not gone far enough, but they have been working on taking down fake accounts and taking down bots and so having some effect on the spread of the fake news.

DEVIN STEWART: Have you heard the expression that the 21st century will be a "battle for people's minds"?

ADAM SEGAL: Yes. I think increasingly we're going back to the idea of information war, as this podcast is about. Traditionally, cybersecurity has been focused on what they call CIA—confidentiality, integrity, and assurance of the data: Can I keep the data secure from somebody else? Can I make sure that nobody else manipulates it? And can I make sure it's available? Can I keep the systems up?

I think what the 2016 elections reminded us is that it's that but also this battle for attention and cognition and information and thinking.

DEVIN STEWART: Do you think there's something to that expression?

ADAM SEGAL: Yes. I think we're definitely engaged in a battle where we want to make sure that—because democracy relies on shared values and shared facts, and it's harder to do that when you rely on the digital space and that digital space is being manipulated.

DEVIN STEWART: Also, before we get into the technology Cold War, sticking on this topic a little bit more, on the information warfare front we're going to look at the United States and China. Which of those two are more effective at that type of warfare?

ADAM SEGAL: If you, like the Chinese and the Russians, believe that the Internet is a U.S. tool for information war, then the United States. I think the Chinese have been successful clearly domestically in the control that they've managed in the Great Firewall.

If we had been having this discussion four years ago or five years ago, we would have seen a more active kind of civil society on the Internet in China. Weibo was seen as a place where you could have more assertive discussions or critiques of the government. I don't think anyone believes that that is happening now.

DEVIN STEWART: It's getting more restrictive.

ADAM SEGAL: It's much more restrictive. Weibo has been restricted. WeChat is also being filtered and censored, so I think that the Communist Party has been very effective at controlling the types of information that it's worried about.

But I don't think the Chinese have been particular effective online influencing the United States or other liberal democracies through their online effects. I think generally the United States has been much more effective in shaping the Internet, which is why the Chinese have reacted as they have.

DEVIN STEWART: You mentioned earlier that some of the international strategies of countries sort of reflect their domestic strategies. One thing that comes to mind—this goes for the way the Chinese Communist Party thinks about propaganda itself. It uses it to control its own people but also is deploying it around the world to affect the way people think about China.

What do you make of the prospects for China's direction of becoming more and more restrictive of its civil society, of its society itself? In the past 10 or 20 years or so, one piece of conventional wisdom among American China watchers has been that if you keep restricting Chinese society, it's going to blow up or pop or something like that, but it never seems to really happen. Is the Chinese direction sustainable?

ADAM SEGAL: I am certainly one of those people who thought that Chinese society as it became richer, as it became more middle class, would make political demands. That was the theory.

DEVIN STEWART: It's sensible. It's like when countries get rich they demand better environmental protections, for example.

ADAM SEGAL: Yes. And I think we looked at the examples of Korea and Taiwan and said this was likely to happen in China, too.

We should remember, though, that it happened in Korea and Taiwan when the per capita income was at about $17,000 or $18,000, and China's per capita is still at $7,000 or $8,000. If you're going to be that kind of mechanical—which I don't think we should be—we still have a while to go on the growth of those societies.

DEVIN STEWART: That's a legitimate point certainly.

ADAM SEGAL: I think we are still seeing those bubbles. You're squeezing the balloon, and there are things that still come out. Between some aspects of civil society, the civil rights lawyers, the Marxists at Beijing University who are working for workers' rights and the Party is cracking down on them, which is pretty ironic, feminist groups, so you are still seeing that, and there's no way they can completely control civil society.

I have been surprised that it has been so successful. I think the Party has been so ruthless in imprisoning and harassing any groups that manage to organize nationally. If you keep the protests local, then the Party can show up and say: "The Party's here to help. This was an instance of local corruption," and it gathers information and can seem to be on the good governance side.

But environmental movements, feminist movements, civil law movements, anything that could possibly have a national umbrella, they've cracked down very, very assertively against. There's just not really a lot of civil society in place now to keep that going, to sustain it.

DEVIN STEWART: So, to push you a little bit on the foolish errand of making a prediction, if you had to make a bet on China 10 to 20 years from now or, say, when China's average income reaches that of when Taiwan and Korea reached a threshold, what does that look like to you? You might daydream and think about these things.

ADAM SEGAL: I would still make the bet that there's no reason why Chinese people would not want the same things that Taiwanese or Koreans or Japanese or anybody else would for that matter, which is more say in their government. My gut is that, yes, so far the Party has proven us wrong but that eventually the demands of the society will force some types of political reform.

DEVIN STEWART: That's very interesting.

ADAM SEGAL: I guess the wild card, though, is this kind of digital authoritarianism. As the Party begins to integrate artificial intelligence (AI) and facial surveillance and more and more data gathering—

DEVIN STEWART: A surveillance state.

ADAM SEGAL: Yes. Does it become in some ways both more responsive and more authoritarian and more effective?

DEVIN STEWART: That's the future that a lot of people are predicting.

ADAM SEGAL: Yes.

DEVIN STEWART: But you look skeptical.

ADAM SEGAL: I think right now we hear a lot of hyperbole about the Social Credit System as being this kind of all-encompassing—

DEVIN STEWART: Scary thing.

ADAM SEGAL: —scary thing, and we know what it is is really a bunch of competing different systems, some local, some provincial, some for legitimate credit reasons, and some a dystopian kind of vision.

I became a Sinologist at the time when we were all focused on civil society. That was the big push. So there were a lot of people who did their dissertations on—

DEVIN STEWART: This was the late 1980s?

ADAM SEGAL: Late 1980s, early 1990s, so some of it was influenced by this vision of civil society driving democracy. Where I did my dissertation was at Cornell, and so there was a lot of focus on bottom-up approaches as opposed to kind of elite politics.

So my vision has always been that implementation is really hard. There's always local politics, so that's going to happen with whatever digital system is rolled out, too. There's going to be lots of fighting about it from different ministries and bureaucracies and provinces.

I would be very surprised if we end up with a national system where people are—what's the Tom Cruise movie where they see the future?

DEVIN STEWART: Minority Report.

ADAM SEGAL: Minority Report, yes.

DEVIN STEWART: You made a very interesting point that eventually Chinese people will behave like people anywhere in the world and demand the things that other people around the world want of their governments. What do you think the most important item on the list is? Americans have our own biases, and we think that maybe it's freedom of speech or things that are very core to the American identity. But that might not be the case.

What do you think is the thing we should look for? Is it accountability? Is it having a say on government policy? What is it?

ADAM SEGAL: It's clearly a very American assumption that there are these—and the Chinese would argue that there aren't universal demands.

DEVIN STEWART: Or values.

ADAM SEGAL: Chinese rights, whatever. But I'm going to embrace it and say that there are.

My shorthand used to be transparency, accountability, and rule of law. Those are the things that everybody—

DEVIN STEWART: Across cultures.

ADAM SEGAL: Across cultures, that any system that is going to be based in some legitimacy from the people it rules is going to have to have those things.

DEVIN STEWART: I don't know if I've heard that specific list before. Where did you get that?

ADAM SEGAL: I don't know. I think over the years that's been my shorthand for when I'm interacting with Chinese think tanks or academics, and they're saying, "No, no, you're enforcing democracy."

Basically I'm saying, "I'm not enforcing democracy or free speech or any of those things"—

DEVIN STEWART: Or liberalism.

ADAM SEGAL: "— liberalism on you. I think the least that you would want from a government would be transparency, accountability, and rule of law."

DEVIN STEWART: I think you can have those three items in a non-democratic state.

ADAM SEGAL: The Party used to say it was moving toward all those things. But rule of law became rule by law.

DEVIN STEWART: In other words, use law to control people.

ADAM SEGAL: Yes. Transparency became for the citizens, not for the government. And accountability doesn't really exist, although I guess you could say the anti-corruption campaign is an attempt to reassert accountability.

DEVIN STEWART: Is the anti-corruption campaign that gets a lot of attention in the American press for real?

ADAM SEGAL: I haven't been following it that closely. My sense is yes and no. Clearly the Party was very worried about corruption, and it has brought both—what do they call it in the Chinese, the "tigers and the flies"—some very big-name instances of corruption and some low-level people who were doing it. But still there are plenty of people who are untouched.

I don't remember the study, but there's a pretty sharp overlap between people who would be a political threat to Xi Jinping and who is persecuted for corruption reasons. So clearly, it's also driven by factionalism as well.

DEVIN STEWART: When you're talking about China, there always seems to be an animal metaphor, a lot of them.

Turning to Washington, DC, there has been a mood shift about China. As we know, Michael Pillsbury has become increasingly influential apparently with the White House under Trump.

Some presumptions over the past 10-20 years have been severely challenged about China. I think the almost cliché about China in Washington, DC, or among East Coast policy types was that if you engage with China for a long time, the long game, and could be patient, eventually those sorts of demands for rights, if you will, will just inevitably bubble up within Chinese society and then we'll be two free countries trading with one another happily ever after, and it's all peace, and we're both "responsible stakeholders," as Bob Zoellick said.

So that whole story has been challenged recently, in the past few years. The new story is much more confrontational and less patient, looking at what Americans perceive as unfair practices, whether it's within trading routes in the open seas, whether it's building islands in the Pacific, or trade practices, or stealing intellectual property or technology.

What do you make of the mood right now in Washington, DC, toward China? Can you give it a sort of assessment? Is it the right mood, or is it going too far?

ADAM SEGAL: I think, yes, clearly the mood has shifted to be much more confrontational or competitive with China. I'm a little skeptical of the story that we all got it completely wrong.

DEVIN STEWART: Okay. That's interesting.

ADAM SEGAL: I think even, yes, the discussion was engagement, but there was always a hedge behind the engagement.

DEVIN STEWART: Right.

ADAM SEGAL: My colleague Elizabeth Economy has also made the point that the story is not all about us.

DEVIN STEWART: Wait. Are you sure?

ADAM SEGAL: I know it's hard to believe.

DEVIN STEWART: To an American audience this might be shocking.

ADAM SEGAL: We were reacting to politics inside of China. There were reasons why under Wen Jiabao and Jiang Zemin and Hu Jintao and others that we thought that the policy of engagement with a hedge—there was still a hedge—made sense.

Then Xi Jinping came along. It's not that the politics around Xi—they have nothing to do with how we react. Xi came along, and he's acting in a way that should make us rethink the policy.

I don't completely disagree that perhaps we were naïve about how we could socialize China into the international order and they could become a responsible stakeholder. But I think also there's a kind of sense that we should beat up everything that happened beforehand, and I don't think that's true.

I'll just use the example, which is a good example of the conflict now and one of the things that the Trump administration I think is rightfully pushing back on, of the tech war, to make the pivot to that. It is true that there are lots and lots of behaviors on the Chinese side—the theft of intellectual property, the forced technology transfer, the use of mercantilist policies to move up the value chain—but the fact is there was a debate in China about it. You can trace a lot of these policies back a long time but more immediately to what was called the 2006 Mid-to-Long-Term Plan.

The 2006 Mid-to-Long-Term Plan introduces the idea of indigenous innovation or puts it in the Guidelines, and that's the idea that you're going to reduce your dependence on foreign technology and create Chinese technology so you move up the value chain. So no longer are you using Cisco, but you're using Huawei. You're not using IBM, you're using Inspur. You're not using Apple, you're using Xiaomi.

The 2006 Guidelines are very technonationalist. But the Guidelines are really of two minds. There's a whole second section in the Guidelines that talks about bottom-up innovation and supporting technological entrepreneurship and protecting intellectual property rights, and it sounds like what you would want to do is recreate California and Silicon Valley. But that part of the plan was never followed. The politics really got behind the indigenous innovation and the technonationalism inside of China.

My point is only that there were debates in China, and there continue to be debates. We have to react because China went down the indigenous innovation path. But maybe it could have gone down the other path, having nothing to do with us.

DEVIN STEWART: Is it a sequence question? Are the bureaucrats going to eventually get to the part that we like of the plan?

ADAM SEGAL: That would be the optimistic bent. There are those who think still think for some reason that Xi eventually is going to tack left or right, depending upon which way your politics go, and then start addressing it.

I don't think so. I think Xi clearly has embraced a technonationalist view of the world, and I think the Party for a long time has thought, We are way too dependent on the U.S. and Japan and the European Union for critical technologies.

DEVIN STEWART: You've written about the prospect of a U.S.-China technology Cold War. This might be one of the most buzzworthy expressions I've been hearing recently. [There was] an Intelligence Squared debate about this with Michèle Flournoy and Parag Khanna and Ian Bremmer.

Also, you've written a Foreign Affairs article called "When China Dominates the Web." You've also written about the indictments of Huawei and the potential impact on 5G rollout.

I guess the first question about all this is: Are we headed for a U.S.-China technology Cold War, and what would that look like?

ADAM SEGAL: I think what we're seeing is that there are probably no two countries that benefited more from the globalization of science and technology other than China and the United States.

China gained access to foreign investment and foreign technology. Companies shifted supply chains to China, all of which helped China become more of a scientific and technology power.

The United States gained access to the same supply chains, lowered costs, and gained access to people, a huge amount of talent. U.S.-born citizens don't generally go on to degrees in physics and engineering, and science, technology, engineering, and math (STEM). So the United States imported people from India and China, and they staffed U.S. labs and Ph.D. departments.

But then basically both sides decided that the vulnerability that came from that globalization was too much from a security and economic perspective. The Chinese, partly after Snowden, but just as we've been talking about before, long-term decided they wanted to move up the value chain, and the United States, even at the end of the Obama administration but certainly under President Trump said: "We're losing too much technology. The threat is too big, and so we need to start thinking about how do we protect our technology."

I think we are seeing both sides rethink that interconnection.

DEVIN STEWART: Just to interrupt real quick, and please proceed after this little interjection here. I'm wondering, is it also sort of going to be a natural correction of the gospel of globalization during the 1990s and so forth?

ADAM SEGAL: It might be. There were certainly costs, and we're seeing the backlash against that.

The system was based on the idea that the United States would continue innovating and leaving certain sectors behind as China moved into them. So we wouldn't make furniture any longer, but we'd make TVs. Well, we don't make TVs any longer. Oh, we make semiconductors. Well, we don't make semiconductors anymore, we just do platforms. But the problem is that those things don't employ as many people, and they don't give you the life that a manufacturing job would in the 1960s and 1970s, which was a middle-class life. Instagram before it was sold employed 15 people, 20 people. It was not in the thousands or tens of thousands.

DEVIN STEWART: Facebook is not Ford Motor Company.

ADAM SEGAL: Exactly. It doesn't have a supply chain, so it doesn't have all these things.

So there were certainly costs, and yes, I think there was a correction.

But I think what we're seeing now is that the United States in particular under the Trump administration has decided that to have China dominate the technology sectors and in particular the next wave of innovation in artificial intelligence and quantum and 5G, the fifth-generation telecommunications, is a real security and economic threat, and what we're seeing is the competition at the technological level, at the way that states behave in cyberspace, and over the rules of how those technologies should be governed.

DEVIN STEWART: Is it akin to the Cold War?

ADAM SEGAL: I think the Cold War metaphor slightly doesn't work because the United States and the Soviets did something like $4 million in trade a year, and the United States and China do multiples of that. There were no supply chains connecting them, and there were no people flowing back and forth, so that doesn't really work.

I think people use the Cold War metaphor just to say: "Here are two big countries competing, and other countries may have to make a decision," which we're beginning to see in all these stories we've been having in the last month about Huawei, of the United States going to other countries and saying, "We want you to keep Huawei, the Chinese telecommunications company, out of your systems."

Countries are having to decide: "Are we going to do it? Huawei is cheap. It's good. Are we going to continue using them?"

DEVIN STEWART: Can you explain the Huawei indictment case and the detainment of the CFO?

ADAM SEGAL: Huawei is in the news now basically for three reasons: the detention of the CFO is primarily driven by the argument that Huawei tried to avoid sanctions on Iran. It was basically set up as a front company, it was lying to investors in Europe, and was doing business with Iran through that thing. That's the main reason Meng has been detained.

DEVIN STEWART: Is that the real reason?

ADAM SEGAL: Yes, I think that's the real reason.

DEVIN STEWART: So it's not made up?

ADAM SEGAL: No. Right now the evidence seems to suggest that that actually happened.

DEVIN STEWART: But the CFO, Meng—

ADAM SEGAL: Meng Wanzhou.

DEVIN STEWART: This person is not nobody.

ADAM SEGAL: No. She is the daughter of the founder of Huawei, and so that certainly raises the stakes.

DEVIN STEWART: But this person is politically connected as well.

ADAM SEGAL: She's the daughter, and then she was supposedly traveling also on a passport that said she was a public official, like a government passport.

DEVIN STEWART: She is a member of the Chinese Communist Party, too, right?

ADAM SEGAL: That I don't know for sure, but the fact that she was traveling on this passport complicates things because Huawei always says it's a private company. So why did she have this passport that says she's a public official? That's one story about Huawei.

Then there was a set of indictments last week that had to do about intellectual property theft. Huawei had a cooperative agreement with T-Mobile, and supposedly they stole the plans to a robot called Tappy, which just clicked on the screen over and over again.

DEVIN STEWART: The Chinese were asking all kinds of awkward questions about this robot.

ADAM SEGAL: They took pictures of it.

DEVIN STEWART: It paints a funny picture.

ADAM SEGAL: Yes. And they supposedly also had an internal system where if you stole intellectual property, you were rewarded. So there's that aspect of it, too.

Then the third and final part is the cybersecurity threat, which is what I was alluding to before, which is that as we move—right now the systems we're using are 4G, fourth generation, and some third generation, for mobile, for telecommunications. We're moving to the fifth generation, 5G.

DEVIN STEWART: What is that exactly?

ADAM SEGAL: That is going to be many, manyfold more times data. It's basically going to be like having Wi-Fi all the time, but even much faster than that, and it's going to enable the next generation of data transfer, which is going to be important not so much for downloading videos and talking to each other, but for machine-machine communications, so the Internet of Things or autonomous cars are going to drive on 5G. We're going to need it everywhere.

The argument is that the architecture of 5G makes security very hard, harder than it was for 4G and 3G. You have to trust the manufacturer much more than you did before.

Because of Huawei's relations with the Chinese government, which are complicated and opaque, people say we can't trust them.

DEVIN STEWART: Who are those people?

ADAM SEGAL: The security community.

DEVIN STEWART: Within the United States.

ADAM SEGAL: Within the United States.

DEVIN STEWART: Canada.

ADAM SEGAL: Canada.

DEVIN STEWART: Europe.

ADAM SEGAL: Australia. The British used to have a relationship where they said, "We can trust Huawei if they allow us to inspect them and we keep them out of the core of networks," which is what they did with 4G. But with 5G, for the most part British intelligence has said, "We're not sure any longer."

DEVIN STEWART: Just too ubiquitous?

ADAM SEGAL: It's the amount of data that goes back and forth. The periphery will have a huge amount of data in it, too.

DEVIN STEWART: You mentioned in one of the articles about this topic that one prospect is that there will be one Chinese system and one American system for 5G, and it will basically come down to price. Is that a realistic possibility? So then poor countries will go to the Chinese?

ADAM SEGAL: The big players in this space are Huawei, ZTE, another Chinese company, Nokia and Ericsson, which are both European, and then Samsung. So right now it's not as if there's a huge American player that can step in and play this space. It's very likely that a lot of countries will go for cost, for who's cheaper. I think also a lot of third countries will say: "Look. We're going to be spied on by somebody, either the United States or China, or both."

DEVIN STEWART: Does it really matter?

ADAM SEGAL: "We don't really care that much."

DEVIN STEWART: What about for censorship and control of information?

ADAM SEGAL: That only comes down to if the countries decide that they want to be helped in censoring, which people have argued and said, "Well, you know, if Huawei builds it out, and the local government or whoever it is, an authoritarian state, says we want help censoring, then Huawei's going to help censor." I don't think the presence of Huawei makes you more likely to censor.

DEVIN STEWART: Will the Chinese government influence Huawei's decision making or make it easier for the Chinese government to actually have an influence on the flow of information in these other countries?

ADAM SEGAL: One, there's the concern of the relationship between Huawei and the government.

DEVIN STEWART: Right. So it's hard to tell.

ADAM SEGAL: Huawei has said: "We have no relationship. We would never do that. We would never violate our customers' trust."

But there's lots of reasons why, given Chinese law, if the government came and said, "Give us the data," then Huawei would have to agree. So there's that risk.

Then I think there are people who say it gives China influence because people will then kind of say, "Oh, help us build a China-like model of information control."

From what I can tell, that's indirect. If you're already moving in the authoritarian direction, you already kind of think that you want to control the Internet, then you have a Chinese supplier, and you say, "Yes, help us."

DEVIN STEWART: So it's a matter of degree?

ADAM SEGAL: There was a study done I think out of a South African university that basically said, it wasn't like the Huawei guys showed up and said, "We think your Internet should be more tightly controlled."

DEVIN STEWART: Right.

ADAM SEGAL: It was people looking for solutions, and Huawei provided them, and they were happy to do that.

DEVIN STEWART: Interesting.

You've made a couple of I wouldn't say predictions but allusions to predictions. One is your article about when China dominates the Web, and the other one is about China's aim of being the top artificial intelligence center by 2030, which gets a lot of attention, which is this dystopian future where China has a billion data points at its disposal. It has everyone's DNA data; it has a mass surveillance state, so endless data on behavior through the mobile apps, so they can monitor purchases and track movement of people. All this will feed into an all-knowing AI that can make decisions about the future much more efficiently than a democracy could ever do.

ADAM SEGAL: Right.

DEVIN STEWART: Also, there was a recent video about countryside cities in the hinterland in China of young professionals feeding the AI by teaching it how to identify things.

ADAM SEGAL: Tagging, yes.

DEVIN STEWART: What do you make of those sorts of prospects?

ADAM SEGAL: We hear a lot about AI races and a Cold War. I think, one, it's important to remember that like with the computer and IT systems, the U.S. AI and China AI are very interconnected. We see individuals who have gone back and forth between Google and Baidu and Stanford. There's a lot of circulation and a lot of interconnection.

The debate about who's going to win has been shaped by Kai-Fu Lee, the Chinese entrepreneur. He was at Microsoft and was at Google and now is at a company called Sinovation Ventures and wrote a book on the AI race.

In the book, Kai-Fu says: "I believe that the age of discovery in AI is over, and what really matters is implementation, building the system." With that assumption, what matters is huge amounts of data, a very competitive tech environment or culture where companies are always pushing the envelope and putting out new uses, and a regulatory framework that doesn't really care about privacy and allows for widespread use of data. But that assumption might not be true, and Kai-Fu Lee in the book himself says, "If I'm wrong about this assumption, then the United States will lead." If you believe that innovation is still going to drive AI, then the United States in particular is still in a very, very strong place, both on talent, the paper production, and in particular on computational strength.

If you think about AI as data versus chips, yes, China has lots of data, but it doesn't have chips, and the United States has computational power. With computational power you can do lots of things with little data.

The United States and others are training lots of systems on smaller amounts of data, so it may be in the end that big data is not this massive advantage that everyone thinks it is for China, and the Chinese do develop lots of systems that work well in China, but the United States, the United Kingdom, Canada, Sweden, Finland, and other players in this space still have lots of very, very innovative uses that are used widely as well.

DEVIN STEWART: This has been great, Adam. Thank you so much.

Maybe just to end, what would you advise democracies to do, given the challenges that you've outlined today?

ADAM SEGAL: On one hand, the Trump administration is in fact to be commended for what it has done for thinking about how do we protect what's at home and to make sure that there's not a leakage of technology that we want to control better. The problem is, there's no way we're going to slow the Chinese down. Focusing just on that I think is the wrong balance. The obvious thing to do is to make sure that we always still run faster than everybody else.

DEVIN STEWART: How do you do that?

ADAM SEGAL: That means things like spending more on research and development and ensuring that we have immigration and visa policies so that the best people still want to come and stay here. It means not picking battles with your friends because the Europeans also have concerns about Chinese technology and policy, so not levying trade barriers on EU partners when you should be working together to deal with China.

There's no way we're ever going to beat China on scale. They're just always going to spend more than we are, so that means you have to cooperate with the Europeans and others on scientific discovery and invention.

I would like to see a more positive story about what we're going to do as opposed to just how we're going to hamstring the Chinese.

DEVIN STEWART: I totally agree, Adam. Thank you so much.

ADAM SEGAL: My pleasure.

DEVIN STEWART: Adam Segal is director of the Digital and Cyberspace Policy Program at the Council on Foreign Relations here in New York City.

Adam, great to see you.

ADAM SEGAL: Thanks very much.