Geopolitical Competition

Dunnmon, a CISAC affiliate and senior advisor to the director of the Defense Innovation Unit, spoke about the “holistic geopolitical competition” among world powers in the AI realm as these systems offer “unprecedented speed and unprecedented scale.”

“Within that security lens, there’s actually competition across the entirety of the technical AI stack,” he said.

Dunnmon said an underlying security question involves whether a given AI software is running on top of libraries that are sourced from Western companies then if software is being built on top of an underlying library stack owned by state enterprises. “That’s a different world.”

He said that “countries are competing for data, and it’s becoming a battlefield of geopolitical competition.”

Societal, Environmental Implications

Lobell, a senior fellow at FSI and the director of the Center for Food Security and the Environment, said his biggest concern is about how AI might change the functioning of societies as well as possible bioterrorism.

“Any environment issue is basically a collective action problem, and you need well-functioning societies with good governance and political institutions, and if that crumbles, I don’t think we have much hope.”

On the positive aspects of AI, he said the combination of AI and synthetic biology and gene editing are starting to produce much faster production cycles of agricultural products, new breeds of animals, and novel foods. One company found how to make a good substitute for milk if pineapple, cabbage and other ingredients are used.

Lobell said that AI can understand which ships are actually illegally capturing seafood, and then they can trace that back to where they eventually offload such cargo. In addition, AI can help create deforestation-free supply chains, and AI mounted on farm tractors can help reduce 90% of the chemicals being used that pose environmental risks.

“There’s clear tangible progress being made with these technologies in the realm of the environment, and we can continue to build on that,” he added.
 

AI and Democracy

Persily, a senior fellow and co-director of FSI’s Cyber Policy Center, said, “AI amplifies the abilities of all good and bad actors in the system to achieve all the same goals they’ve always had.”

He noted, “AI is not social media,” even though it can interact with social media. Persily said AI is so much more pervasive and significant than a given platform such as Facebook. Problems arise in the areas of privacy, antitrust, bias and disinformation, but AI issues are “characteristically different” than social media.

“One of the ways that AI is different than social media is the fact that they are open-source tools. We need to think about this in a little bit of a different way, which is that it is not just a few companies that can be regulated on closed systems,” Persily said.

As a result, AI tools are available to all of us, he said. “There is the possibility that some of the benefits of AI could be realized more globally,” but there are also risks. For example, in the year and a half since OpenAI released ChatGPT, which is open sourced, child pornography has multiplied on the Internet.

“The democratization of AI will lead to fundamental challenges to establish legacy infrastructure for the governance of the propagation of content,” Persily said.

Balance of AI Power

Fukuyama pointed out that an AI lab at Stanford could not afford leading-edge technology, yet countries such as the U.S. and China have deeper resources to fund AI endeavors.

“This is something obviously that people are worried about,” he said, “whether these two countries are going to dominate the AI race and the AI world and disadvantage everybody.”

Manuel said that most of AI is now operating with voluntary governance – “patchwork” – and that dangerous things involving AI can be done now. “In the end, we’re going to have to adopt a negotiation and an arms control approach to the national security side of this.” 

Lobell said that while it might seem universities can’t stay up to speed with industry, people have shown they can reproduce those models’ performances just days after their releases.
 

On regulation — the European Union is currently weighing legislation — Persily said it would be difficult to enforce regulations and interpret risk assessments, so what is needed is a “transparency regime” and an infrastructure so civil entities have a clear view on what models are being released – yet this will be complex.

“I don’t think we even really understand what a sophisticated, full-on AI audit of these systems would look like,” he said.

Dunnmon suggested that an AI governance entity could be created that’s similar to how the U.S. Food and Drug Agency reviews pharmaceuticals before release.

In terms of AI and military conflicts, he spoke about the need for AI and humans to understand the rewards and risks involved, and in the case of the latter, how the risk compares to the “next best option.”

“How do you communicate that risk, how do you assess that risk, and how do you make sure the right person with the right equities and the right understanding of those risks is making that risk trade-off decision?” he asked.

The Ford Dorsey Master’s in International Policy program was established in 1982 to provide students with the knowledge and skills necessary to analyze and address complex global challenges in a rapidly changing world, and to prepare the next generation of leaders for public and private sector careers in international policymaking and implementation.

Allen began with an anecdote about a conversation with the governor of one of China's poorest agricultural provinces. When asked about his economic priorities, the governor cited advanced technologies such as semiconductors and biotechnology, mirroring the sectors highlighted in the Made in China 2025 plan. This response underscored China's government's relentless focus on technological advancement across all levels of government, which Allen described as a "techno-utopian quest."

Allen traced the roots of China's techno-utopianism back over a century ago to the May 4th Movement, which called for a new culture based on science and democracy. He argued that this vision aligns perfectly with Marxist ideology and the Communist Party's current policies. "China’s leaders have long believed in the transformative power of technology," Allen noted, "a belief that is deeply embedded in their political and ideological fabric."

Allen emphasized that China is not just an "innovation sponge" but has also become a leader in its own right. "China’s definition of innovation is tailored to its needs," he said, "differing significantly from the Silicon Valley model." He outlined five key points about the new productive forces that may distinguish Shenzhen from Silicon Valley:

1. China recognizes that it is facing an acute labor shortage and is thus focusing on factory automation and efficient production in mature industries.
2. China wants to spur innovation and create new industries at almost any cost.
3. There is an overwhelming mandate for self-reliance and import substitution. 
4. There is plenty of government money.  
5. China plans to turn “data” into the “fifth factor of production”, behind – land, capital, labor, and entrepreneurship. 
    

China’s innovation is evident in its ambitious industrial policies, which are supported by substantial government funding and a strategic focus on self-reliance and import substitution.

Allen continued to discuss the implications of the U.S. export controls aimed at decoupling from China, highlighting the unintended consequences for American companies. He pointed out that unilateral export controls often harm U.S. firms more than their intended targets by reducing their customer base and long-term competitiveness. "We must recognize that these controls can backfire, hurting our own industries while China accelerates its push for technological independence," Allen warned.

Another critical issue raised by Allen was the regulation of data flows. China's Cyber Administration has introduced stringent controls over cross-border data transfers. "The regulatory environment is becoming increasingly complex," Allen explained, "making it challenging for companies to maintain operational connectivity and compliance across borders."

From a corporate perspective, Allen urged companies to recognize the political realities and prepare for potential conflicts that could disrupt international trade. Many American firms are already scenario planning for severe sanctions, similar to those imposed on Russia, to ensure business continuity. "Strategic foresight is essential," he advised, "as geopolitical tensions between the U.S. and China show no signs of abating."

Craig Allen's remarks were a reminder of the far-reaching implications of the competition for technology leadership between the U.S. and China. His insights underscored the need for a nuanced understanding of China's ambitions and the strategic adjustments required for American businesses to navigate this complex landscape. As the world witnesses unprecedented techno-economic competition, the stakes for both nations and the global economy could not be higher.

All views Craig Allen shared are his own and do not reflect the positions of the US-China Business Council.
 

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