The Race for AI — China: 1, US: 0

“The Skynet Funding Bill is passed. The system goes on-line August 4th, 1997. Human decisions are removed from strategic defense. Skynet begins to learn at a geometric rate. It becomes self-aware at 2:14 a.m. Eastern time, August 29th. In a panic, they try to pull the plug.” Terminator 2: Judgement Day, 1991

The name “Skynet,” when used in the context of technology, might conjure images of James Bond or the neural net-based superintelligence from the sci-fi “Terminator” movie franchise. In China today, the latter is close to the truth, and it is no less sinister.

Far from science fiction, Skynet is an active Chinese government initiative that’s using artificial intelligence (AI) integrated with recognition systems to surveil its citizens. CB Insights describes the program that began in 2005 and how advances in technology such as machine learning and facial recognition have improved if not perfected Chinese government efforts to monitor and control its citizens.

Facial recognition is already being used by the government at railway stations in China for ID verification, and smart glasses will be used to spot criminals. According to CB Insights, “cameras track passengers at railway stations, identify homeless people on the streets, and even monitor worshippers in state-approved churches.”

A 2017 Communist Party documentary revealed that China has 20 million CCTV cameras, more than any other country in the world. Also, in 2017, 55 cities participated in an initiative called Xio Liange or “sharp eyes,” where footage from surveillance cameras provided the data for a government plan to assess the “trustworthiness” of its citizens. The plan was called China’s Social Credit System.

The emphasis on video surveillance has increased camera patent applications to 530 for the year 2017 versus just 96 in the United States, and there were over 900 facial recognition patent application in China in 2017.

China can identify any one of the country’s 1.3 billion citizens within three seconds with 90 percent accuracy, and there are plans to have 570 million surveillance cameras installed by 2020, over three times their already-astounding 170 million cameras currently installed.

Strategic Corporate-government Partnerships

It’s not just cameras that are watching people’s every move. Big data mined from e-commerce sites and social media platforms are exposing every move and every detail of every citizen. WeChat, a messaging, social media and mobile payment app developed by Tencent, just hit 1 billion MAU in March of 2018 just seven years after its launch, and it’s no coincidence that it is subsidized by the Chinese government.

With almost 35 percent of its users spending over four hours per day on the platform and almost 75 percent spending over an hour, the data that the government can collect from WeChat is so accessible and prevalent that the platform is now both the world’s most profitable mobile game distributor and a valid form of government ID.

China is also leading the technology advancement in the industry that makes everything happen — payments. In China, facial recognition and surveillance technologies have been integrated with payments systems; Ant Financial already uses facial recognition for payments at Alibaba-owned retail stores.

Both the Chinese government and the leading tech corporations are complicit in a quest to influence and control. The Chinese government has openly funded Tencent and the leading computer vision companies. Cloudwalk was backed to the tune of over $300 million by the Guangzhou Municipal Government for Cloudwalk, and the startup Megvil received $460 million from the Chinese state government’s venture capital fund and the Russian government.

In 2016, Alibaba Group, through Ant Financial, and Foxconn, partnered with Hangzhou city for the “City Brain” initiative, a smart city project that the government claims will manage traffic and monitor water levels.

These partnerships makes corporate-government control all the more likely on a much larger scale beyond domestic boundaries. China is not only gaining complete control and dominance over its own citizens but is setting a precedent globally.

Will other countries follow along this path? What is the United States and other countries to make of this overlap between government and big tech interests, abuse of power, and overreaching use of technology?

China makes no secret that it has planned to use technology to achieve digital domination, in its case, for surveillance purposes; but other countries have a choice. The future can be one where IT advancements are used for societal well being if we can understand how China has leaped to the top of the technology totem pole and can figure out where the United States and the rest of the world plan to go in the global technology context.

The Race to Create Tomorrow

While China is quickly amassing AI capabilities, the United States has stopped to pick daisies.

The world is in the midst of the Fourth Industrial Revolution, where countries who are economically competitive are embracing and catalyzing rapid technology advancements. In the United States, as industries from health care to manufacturing are undergoing massive transformation that requires skilled workers, educators in the United States are way behind the pace of change, and the workforce is poorly prepared.

To compete on the world technology stage, the nation and its upcoming generations rely on education. Math and science are two of the most critical prerequisite disciplines for careers in technology, business, and engineering, but the United States is ranked 38th and 25th for math and science education, respectively, according to Pew Research.

In 2015, the United States’ public education system ranked 34th in the world. In fact, the education system in the United States is so dire that the American Civil Liberties Union uses the phrase “the school to prison pipeline” to describe the current state and predicted outcomes of the U.S. public education system — specifically in regards to the failure to serve students in lower-income neighborhoods.

But the quality of the education system is only part of the problem. Students lack confidence, and many graduates are saddled with debt that will stay with them throughout their lives. A 2017 Strada-Gallup poll found that just 34 percent of college students believe they will graduate with the skills and knowledge to be successful in the job market, and almost all of those college graduates are strapped with what they consider an insurmountable amount of debt — an average of over $30,000 per borrower, according to USA Today.

The quality of education in the country with the world’s largest economy is embarrassing, but poverty levels in the United States are even worse. According to OECD data, the United States has the second-highest rate of poverty among rich countries, and 23 percent of U.S. children live in poverty, a statistic that is over 30 percent for black or Hispanic children.

Before the nation can compete at an advanced level in technology, it must first pull its citizens out of the base level of poverty. That means giving them equal opportunities starting with a decent, relevant education.

Tackling Social Ills

The battle to fight the tight grip of poverty starts early for children in the United States, but the battlefield is not a fair one. Statistics imply that unless you come from a privileged background, the odds are stacked against you when it comes to equal opportunity.

Although the word “equal” does not appear in the Constitution, it does appear in the Fourteenth Amendment, which states, “no state shall . . . deny to any person within its jurisdiction the equal protection of the laws.” If equal treatment under the law equates to equal opportunity — this nation is falling far short of its tenets.

Fundamental to equal treatment is access to a quality education, but it is becoming increasingly likely that the right to a quality education, and healthcare for that matter, will only be available to the privileged. Wealth inequality is at near record levels, according to Alicia Adamczyk, Time contributor. And, under the current economic and political trajectory, it is only expected to worsen, which does not bode well for an educated future workforce.

China’s Route to Digital Dominance

China, unlike its competitors such as the United States, has looked to the future and invested in public education, renewable energy, and AI. The government’s ambitious surveillance plans have been boosted by heavy investment and support of big tech giants like Alibaba and Tencent, startup partnerships, and elaborate government policies that have favored national security over privacy.

The Chinese government has held the hand of Alibaba and Tencent, shielding them from foreign competition, turning a blind eye to counterfeit goods, and using the platforms for public services so that it can build one of the most sophisticated surveillance systems in the world with access to citizens’ communications, shopping behaviors, thoughts, emotions, ambitions, and education.

The result has been a booming economy and the emergence of a global competitor in trade and technology.

Alibaba continues to dominate China’s e-commerce market after its record $25 billion IPO in 2014. Alibaba Group’s original product,, controls over 40 percent of B2B e-commerce in China, according to Statista. The Group’s TaoBao (C2C) and Alibaba (B2B) control 90 percent and 57 percent of their markets, respectively.

Combined, analysts estimate Alibaba accounts for 75 percent of e-commerce sales and over 10 percent of overall retail in China, according to contributors to Fortune. Amazon’s 44 percent of e-commerce and 4 percent of retail pales in comparison. And Alibaba’s reach doesn’t stop at retail. With fellow behemoth Tencent, Alibaba controls almost 95 percent of the 500 million-people mobile payments market, according to Alyssa Abkowitz, contributor to the Wall Street Journal.

Source: The Economist, 2017

As China dominates its domestic realm, is America and the rest of the world to become the cheap labor force for Asia’s rising commercial power?

It’s already clear that China is charging ahead in the e-commerce/tech race, and its lack of democracy has been a facilitator. While China may have heavy-handedly invested in its future due to a lack of checks and balances, the United States had done just the opposite.

Can the United States right the ship?

The Silent, Digital Battlefield

We are engaged in a new Cold War with Russia and China, an economic and digital one. While the danger with the original Cold War with Russia was weapon proliferation toward mutually assured destruction (MAD), the danger with the current Cold War is control of the digital systems that run our infrastructure.

This war is silent and poorly understood. Digital bullets are being fired daily; Stuxnet was a particularly powerful piece of digital weaponry that attacked centrifuges at the Natanz uranium enrichment plan in Iran, and the U.S. civilian aviation industry was attacked by Russian hackers in 2017.

According to Brian Naylor of NPR, Russia has hacked our power grid, and it could be “lights out” at any time. Seven days without power would be enough for U.S. citizens to start shooting each other for food and water and would be proof that U.S. democracy has failed.

But despite these sobering facts, the stories are largely invisible because corporate profits demand that the media be consumed only with the news that will garner the highest ratings.

Perhaps the lack of attention to the war is because the United States is no innocent party. These pain points are either too provocative or not provocative enough. The Guardian reported in 2015 that the U.S. National Security Agency had listened to the phone calls of German Chancellor Angela Merkel, and Edward Snowden, ex-CIA contractor revealed extensive communication surveillance by the U.S. on its allies and adversaries.

It’s sobering to think that everyone remembers the failed shoe-bomber and domestic terrorism attacks, but the average American citizen does not understand the power of technology in controlling the everyday systems that we rely on for food, water, shelter and, ultimately, peace.

We live in a world driven by algorithms, and no one understands how to abuse the algorithms better than Russia and China — but the United States and its allies are also engaging in cyber warfare. Everyone wants to use technology to its best advantage, and everyone is in a race to find out how.

So, we’re back to education.

Few people understand how technology companies operate; schools do not teach it. Few (if any) college professors have real-world experience successfully working in a technology company, let alone entrepreneurship. The books that are written about technology are inherently technical — making the content and their teachings inaccessible to the lay reader.

Moreover, the institutions that are effective in teaching modern technology — Carnegie Mellon, Stanford, MIT — are so exclusive and expensive that they are practically inaccessible to the majority of students.

We have a new caste system in the United States. Our society is now composed of two types of people. The first type are early adopters of technology who were privileged enough to have access to a technology education at a young age and who have accelerated their own personal and professional development. The second type of person is the vast majority of the citizens of the United States of America.

Let me add that the former type is affluent, meaning that they attended schools in desirable neighborhoods, landed jobs in growing companies, and were typically raised by parents who instilled discipline, potentially even pushing a child toward a career in math and science

The Digitally and Non-digitally Enlighten — A New Caste System

Digital platforms and AI are contributing to a paradigm where people’s lives are optimizing the outcomes of a few. This new caste system, which categorizes individuals depending on their level of enlightenment concerning the digital and big data ecosystem:

  • Level 1: People at this level are building systems that increasingly understand, constrain, predict, and control consumer choice and behavior.
  • Level 2: People at this level are educated enough to realize where the influence lies and are participating in multiple platforms/vendors to optimize their own and their family’s life outcomes.
  • Level 3: At this level, people choose to overlook where influence lies due to digital, physical, metaphysical, or religious preferences. But this assumes people have control over those preferences. As environments become more intelligent, preferences will quickly be overcome as systems diversify their understanding and manipulation of cultural differences and consequent preferences.
  • Level 4: People at level 4 are unaware they are being influenced and are easily manipulated and controlled.
  • Level 5: People at Level 5 are disconnected and will align with those who reject the system, hopefully toward equality and not erosion of equality.

In a nutshell, people at level 1 are learning and progressing. People in level 2 are trying to catch up. People in level 3 are ignorant. People in level 4 are integrated into the systems, and people in level 5 are Luddites.

Humor me while I confuse you even more. If you are in level 5 and disconnected, you may think that you will mitigating the impact of AI on society. However, as things stand, you are wrong. You will be left in the dust as technology advances further controlling the future.

However, if society changes and provides equal opportunity, people in level 5 who are disconnected can be effective in mitigating the control of consumers by autocracies. Then, people stand a chance of leveraging technology for the communal good and maintaining a level of choice.

If society does not change, and people in Level 5 fail to mitigate autocratic control, it’s only a matter of time before those in levels 2 through 5 are influenced and return or end up in level 4.

This theory implies a new caste/class system — people who are born with access and understanding to levels 1 and 2, and those who are segmented and/or disenfranchised by levels 3 to 5.

Here’s another brain teaser.

Which of the following is true?

  • A) American corporations automate our decisions using big data and intelligent systems to monitor and change thinking and behavior.
  • B) American government automates our decisions via American corporations.
  • C) Chinese or Russian governments automate our decisions through their companies (which are, to a great extent, owned by their governments).
  • D) Americans build systems that allow for systemic and opened-sourced collection, aggregation, analysis, application, and transmission of decisions.
  • E) All of the above

If you answered all of the above, you’d be right. But, here’s the good news.

As I said, we are in the middle of the Fourth Industrial Revolution. In the next 20 years, technology will eliminate up to 50 percent of the jobs humans currently occupy, according to Oxford University. However, at the same time, technology has the potential to create millions of new jobs while providing many new solutions to some of our most foundational personal, social, health, and economic problems.

Building a Digitally Equal Society

It’s my belief that China will continue along creating a surveillance state while becoming increasingly controlling of domestic corporations. Technology should not be aligned with profit-seeking corporations and immoral government pursuits for domestic or world dominance. Greed and selfishness are destructive. Rather, technology should be aligned with democracy, capitalism, freedom, and equality because there is no “self” without friends, family, and community, at least no self that I could recognize.

I believe that we live in a unique time because we have an opportunity through technology to compete at a higher level than ever before. We have better data, more flexible, cheaper technology, more simple solutions to common problems, and increasing access to technology — the 3P/used market for smartphones is a perfect example.

The future is about optimizing for anomalous performance. Let’s change the norms, let’s use technology to win the battle for a greater future. But, it starts with equal opportunity.



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