Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain, & Cyberspace | Winston Ma

[Music] i'm steve orleans president of the national committee and it's great to welcome everybody and most of all it's great to welcome my friend winston ma the um winston i think it's fair to say is is a man for all seasons he's done so many different things he's been an investor an attorney an author and he's now a professor at nyu teaching about the digital economy he in many ways represents this generation of people who started in china got their college university education in china came to the united states and now play an important role in kind of helping americans understand china and helping chinese understand america and in my view an incredibly important role but we're not here tonight to talk about that role we're here tonight to talk about his new book uh the digital war how china's tech power shapes the future of ai blockchain and cyberspace what we're going to do this evening on the east coast is to have winston give about a 15-minute overview of the book book wet your appetite for it i'm gonna ask him questions and then you're free to submit questions we've already got about 15 questions from the audience so if i don't get to your question i apologize in advance because we have already an overwhelming response to this topic because it is so so current that when he started thinking about the book you couldn't have possibly known how incredibly important it was going to be in the years that passed from when you first conceptualized it but it's wonderful to have you here i won't go through your full bio at first it's on our website so you'll free to do it but i had first met winston when at his last job when he was running north american affairs for cic the sovereign wealth fund of the people's republic of china and he was running all of north america for them he then left there and has gone to to doing good as opposed to doing well so it's it's um it's wonderful to have you um this is this is the book um and why don't you kick it off but thanks for being with us thank you so much steve for the introduction and certainly you know i want to show the back right because your name steve is at the top of the burbs thank you for that and um that's right we should probably read my blurb that the the back of the back of the book is as the united states and china and this is a great promo for the book as the united states and china head down the ill-conceived path of digital and technological decoupling the digital war must be read before these policies become irreversible winston ma's insider view of china's digital develop development takes the reader down the path too rarely tread by those trying to understand china and that was that's absolutely true and what's quite by the way in coven what's been so much fun about re-reading the book so i've now been through it twice is that not being able to go to china i've feel i've become somewhat divorced from the incredible changes that are going on and the book really takes me back there so it's second best to being there and seeing exactly what is going on but it's still it's a wonderful read thank you steve so so let me share the screen and show the uh opening presentation yeah it's all good so so let's get started you know as steve introduced you know my career past last two decades was all about china-u.s cross-border you know i was educated both in china and the u.s and as steve mentioned i would represent a generation of chinese that had undergrad education in china and then uh advanced studies in the u.s in my case you know i did semiconductor physics for under under undergrad and then i also went to the law school at the fuday university in shanghai and then in the us i got to the master law and also mba so i was a lawyer in both china and new york then you know i also got to the wall street training you know mostly from jp morgan and the bar cap in new york before i went to work for cic china sovereign was found uh relating to relating to global investing so it's all about china and the u.s cross border cross-border opportunities and the synergies so it's a it's a it's a tremendous tremendous honor to be able to uh have this fireside chat with steve you know at the committee for u.s china relations now to put our discussion tonight into context i want to ask the the audience one quick question you know when you think about china's internet economy what would you think of what's the picture what coming come to your mind right and for many people probably they will say it's a wechat right that's a good answer because it's it's a super app you know the most popular in china you know it started as a messaging app just like uh facebook's whatsapp but now it'll become an ecosystem right more than just a messaging instead you can do so many things without even leaving that platform or some people will say it's the singles day every year november 11th alibaba jd you know all the e-commerce platforms in china hosted this 24-hour shopping extravaganza and this is the world's largest online shopping day beating the u.s friday shopping you know the thanksgiving friday shopping and a cyber monday shopping combined and not only it is the biggest but it is also the most global because every year you have merchants customers vendors from more than 200 countries participate in singles day so so for many people right this will come to your mind or for someone with financial background like me you were some people would say it is the mobile payment because china is going into a cashless society you know the mobile mobile payment certainly changed china's financial system as well as the whole society fundamentally tremendously you know for example you know tibbett was the first province in china to reach 90 percent mobile payment rate that that means you know for all the online purchases 90 with them by mobile and the answer is the reason is quite simple right because in areas that without traditional infrastructure the mobile mobile internet and the mobile payment provide them a very convenient new infrastructure and today there are nearly one billing internet users in china which means which means the the largest ecosystem in the world because they are unified by the same language same culture and the same mobile payments you know they leave so much data on the platform that may on those mobile platforms that china becomes the best lab for fintech applications so for some people you know mobile payment will come to the mind however i would say these are all the screenshots of yesterday yeah because today china's internet economy is much more focused on new digital technologies like what i mean what i used uh my in my book title it's more about ai blockchain cyberspace than mobile internet a few years ago so here's another question what was the inflection point for that transition this question will bring bring us back to 2017 when china hosted the historical match of go chess game between the best human player and the alphago ai algorithm developed by google and deeper mind you know the google's ai played the world's best human player in three games and this game was ripe with suspense and symbolism right you know human versus machine tradition versus modern or intuition versus algorithm and of course east versus west and on top of that you could say it's china versus the us now the significance of this game was because it was that the gold chess game was viewed as so complex that no one believed at that time that ai can beat human you know this theory goes that the gold chess game has more variations than the total number of atoms in the world in the universe so the machines can never learn enough to beat human right so this game attracted huge attention in china in 2017. now the result was sort of surprising but not very surprising it was a three to zero straight win by the machine and it sort of sent a clear message to the chinese internet economy that people should not focus on mobile internet anymore people need to focus on the new data technologies and oh just overnight you know every chinese e-commerce com e-commerce platforms you know internet companies they start talking about the second half of the mobile economy era you know since 2017 the keywords are no longer mobile internet and user traffic you know the new keywords are data and intelligence right instead of mobile first people start talking about intelligence first and that was like the spring of 2017 right maybe it was a coincidence but in the summer of 2017 just a few months after this event china's government came out came up with a super ambitious ai development plan among many things the china government calls for industry investing in ai and vowed to become the the global ai leadership by 2030. so to me you know that was the inflection point of china's mobile economy and it is also the start of the china u.s tech competition now so so that's the background of of my two books you know the the chinese mobile economy was published in 2016 and as a digital war was published the end of last year and the the difference and as i mentioned right is about the different focus 2016 the focus was was on smartphones mobile internet and user traffic now for december 2020 the focus is about new digital technologies like ai blockchain focus on data and and and big data analytics and also the the global cyberspace governance yeah so this is really the the transition from mobile first to digital tech now we just covered ai and the next area of china u.s competition is blockchain you know it's very interesting that china after china prohibited or crypto trading in 2017 in in 2019 two years later chinese president xi actually had a speech calling for more research and investment in blockchain president xi declared that blockchain is a critical technology you know it will play an important role in the next generation tech revolution and this remark represented the the first major economy leader to endorse blockchain you know this high this hugely hyped but not fully proved technology in the world that to some extent represents china's government's thinking towards new technologies these days you know even if a new technology is not yet proven it is important for for for china to get onto it so so this is a new front in the country's growing rivalry with the united states the the the real application out of blockchain is the digital digital currency you know china china's central bank is testing china's sovereign digital currency since last year and which makes china probably the first major economy to introduce a sovereign digital currency you know so far no other major power is as far along with a homegrown digital currency as china because uh because the the china central bank digital currency has been tested in many contexts uh in many cities including beijing capital city itself and it is expected that this year the the test will will even go into more platforms in more scenarios so that's blockchain and next is about the the cyber space for the cyberspace connection certainly 5g network is the most important one and huawei of china is leading that technology now it's it's very interesting you know this is also an area of china-u.s competition uh we have seen uh lots of sanctions on huawei right since trump's trump administration however you know probably very few people realized that the u.s government is now fighting huawei with china-style uh tech technique which is setting up china-style sovereign investment funds in the us actually not only one you know multiple uh you know one one idea was to buy european 5g companies you know nokia and erickson another idea you know was to set up a 5g tech research fund you know in in in the order of multi-million multi-billions multi-billions you know the idea is to promote 5g technology research in the u.s that can provide an alternative to huawei uh suppliers now mostly interesting one is the development finance corporation you know it was set up there in the trump administration it has 60 billion six zero you know billing uh cash so so it can really play a role there and the the idea is that you know dfc will promote global 5g infrastructure investments and according to some media report you know they're even thinking about investing into 60 technology you know ahead of far away so so so this is the the 5g area right but you know the flip side of this is you know just like a u.s focusing on 5g alternative uh china is also focusing on became becoming self-sufficient on semiconductor chip production uh you know just like the us needs to import 5g technologies china imports a lot in global in the global chips market especially from the u.s you know for example in 2019 china imported more than 300 billion worth of chips that's about 15 of total china imports so in response china set up a multiple entry you know multiple semiconductor focused funds and the biggest ones you know is called the big bigger fund is like 30 billion dollars and the idea you know just like the u.s tried to develop you know alternative 5g technology china wants to develop independent uh chip production supply chain now the example of this uh is smic you know a semiconductor manufacturing uh and investment corporation you know in in shanghai now see you know this is the this is a series of things just happened like 12 months uh but it's really dramatic you know uh so let's quickly go through this so 2020 right after china sets up those semiconductor funds smsc in shanghai they received more than two billion dollar investments from the china semiconductor fund both from the central central government fund as was from the fund in shanghai and in the summer of 2020 it listed at shanghai's starboard right which is like the nasdaq board of china valuation when went up everything was good but soon also you know just a few months after that it was put on the entity list and as a stock ban list by the u.s government right there's the commerce the commerce department has the entity list which limits smic to have access to american technologies and the stock ban list was what was developed by the u.s defense department which prohibits u.s investors from investing into the stock you know so as a result you know at the beginning of 2021 uh smic was delisted from all u.s exchange you know earlier it removed itself from the ny-sc exchange and at the beginning of 2021 even the otc small trading exchange uh got it removed and and and more importantly because it's a stock in many indexes that also means it has to be removed from the index triggering more selling from indexed products from large u.s us managers like a black rock right um so so the impact is huge uh for both china side and the usa so when you look at this example uh you can see that uh for tech topics you know the sovereign capitals are getting in uh but at the same time you know the other side of the country will take action right whether it's smsc or huawei um and it's not only just the government uh because the implication also trickles down to all the other suppliers to to all the investors and to those the customers so so that's really you know the the the digital wall that we are talking about right uh now as we close as i come to to the end of my opening remarks you know i i showed this picture um certain you know that's when they both uh president xi and president baden were vp of china and the u.s right and now years later they become the president of these two superpowers you know many people expect were expecting that after trump we will see the end of the digital war right but it seems to be it's just a new start it is it's a new start for the next four years because we look at the byte administration you know in february it just announced it just released this executive order to to reevaluate the the the supply chain of semiconductors in the us you know trying to be less reliant on foreign supplies and on the china side right just days ago last week china had the people's congress and the state council delivered the the government work report and in this report uh china decided to increase ind spending by more than seven percent per year between 2021 and 25 in pursuit of major breakthroughs in technology so the the digital was really on or you can say in general the tech competition is really on to to have the complete story you know you have to read the digital war with my another new book because the hunt for unicorns you know how sovereign funds are reshaping investment in the digital economy and the connection of of these two as illustrated in the huawei case and smic case is that china and the us are in in this tech competition and the front line of that competition is the sovereign investment vehicles where there's a common capital of the the government capital is becoming the new venture capitalist you know it can be it can be a huge huge capital supply to the tech investments but at the same time it will also lead to profound implications as we have seen in the case of huawei 5g and smic semiconductor contexts so with this you know i i paused here and uh i gave this back to steve oh terrific i mean that gives everybody a flavor that he's only covered a tiny percentage of what is in this is what is in the book um just a slight aside on this d-listing d-listing only matters if the company was in the process of raising capital it doesn't hurt the company if it's not raising capital i i thought i heard you suggesting that actually mattered my view of these listings is it punishes the nyse it punishes nasdaq it punishes the american lawyers accountants and others and really doesn't do much for the companies because they just issue in hong kong or in singapore or in london or in tokyo yes now i i think you know what what you're saying is is is one part of story so before the stock ban you know uh when there was only the entity list um companies like smic or huawei you know how i was not listed but for smsc right it was listed both in the us and hong kong so you're right uh when it was on the entity list uh did you know they they can de-list from from new york but they still have the hong kong hong kong market for people to trade yeah but but you know when the the u.s defense department puts the company's company's name on the blacklist that means no u.s investors can invest in that company even if it's listed elsewhere so so it's like a two-step two-step sanction it's it's very serious and then and the third implication of this is uh if the company is significant enough uh which probably is true for all the companies on the on the on the blacklist you know they are typically in the index of of you know of of many index providers right uh which means you know for u.s asset managers that provide index products for the broader market for example blackstone let's say blackrock let's say it just makes this up right you say asia tech etf that means uh blackrock cannot hold the stock anymore so black blackrock had to remove the stock from that etf but doesn't doesn't the non-us financial institution then put it that that investors go to non-us financial institutions to buy that etf which includes that company that's that's totally possible steve you know like a for bargaining hunting i don't think it's possible it's what's happening yeah you know exactly yeah yeah i say possible because on one hand you know the bargain hunting uh asset owners uh outside the u.s you know may take this opportunity to buy those shares right but some but you know when when things snowballing with snowboarding you know don't you know the u.s side still has the most of the capital so so so so the non-us capital may or may not be able to take everything yeah i mean i have the same view of these listings as i do on the entity list if the us is the sole source of the technology or the chip we don't export it that has an effect but if there are multiple sources from multiple countries and those other countries are not similarly sanctioning similarly preventing the export what we're doing is simply diverting the export from the united states to the netherlands to japan to south korea to singapore that it's it's it's a it's policies which just hurt america and do nothing for our policy that that that's that's true you know to something it's like a tax shopping right people will move to the lowest tax jurisdiction and here you know technology will can also flow cross-border in a similar way talk about the implications you talk about that digital currency central bank digital currency talk about the implications of that for kind of the rmb globally in and also the tech war and then talk about um you know it's not blockchain in fact in a lot of ways it's the opposite of blockchain that there's no privacy for holders of chinese digital u.n so the central bank knows everything that's going on so how do you deal with those privacy issues and what does it mean in the tech war and the internationalization of the rmb you're uh you're absolutely right that it's not a pure blockchain actually the the official official description from the central bank of china is that the the the china's sovereign digital currency is based on quote unquote blockchain-like technology so so it used some blockchain-like features for data management but you're absolutely right you know in essence it is completely centralized currency it's it's not decentralized as blockchain promised right or bitcoin promised so it's totally different from bitcoin uh in that kind of contest now the implication to the u.s can be pretty profound not not not because it will make renminbi international international overnight because digital is not that magic right but but it may facilitate it may facilitate some of the uh the trends that are already start that that have already started which which means uh more foreign countries are well will choose not to hold as much u.s dollars as as as in before as before now for example right for example uh you know china buys oil from middle east you know at the same time the middle east buys chinese consumer goods right now oil right now is priced in u.s dollars right but for for the middle east you know in the end they're going to buy chinese goods so so people can naturally ask right you know why do we still need the u.s dollar in the middle uh maybe maybe we just use our own currencies for this thing um so so this trend has already started right uh last couple years uh because of many reasons one one of them is the u.s quantitative easing which push pushes the us dollar uh you know to to to this uh to to to to to the brink of you know kind of a crisis you know to some extent the popularity of bitcoin these days reflects that but you know if we focus on the china middle east right you know they would say we would you know for our trades you know we can just uh use our own currencies and i think you know during default for this trend the digital currency because because of its convenience because because of because because of it you know it can be integrated into into cross-border e-commerce smoothly it can accelerate this this process you know accelerate you know the non-us regions uh using more mmb than u.s dollars that's what i see um but let me divert for a second yeah why did how did you have scaramucci write the introduction obviously it's it was somewhat unusual for a book about china and china's digital economy growth um obviously he had his moment his 10 days at the white house i think it was in the trump administration and is now a figure in u.s media but how did that happen thank you steve you know i i know certainly not number one right you know certainly you know that his 11 day white house press secretary was part of the thinking you know uh when i thought of him because uh he he had had the heads of dealing with trump right you know he had the first hand experience of of managing the country with with angry twitters so so i think you know when when i have him to uh uh on the book cover i want to send send message that you know we're we're back to conversations you know instead of angry twitters you know where we you know the two superpowers can behave like a doubts you know go back to conversations you know that's one another another aspect obviously is is because instantly recently uh become the uh becoming becoming a asset manager into bitcoin and crypto assets right and for my book uh uh you know you have my book has the blockchain word in the title and also i started chapter one with the crypto you know the chinese digital currency so it's very suitable for a u.s crypto asset invest investor to to comment on that as well um ryan lewis at middlebury asked something which i was kind of getting at in my initial uh question which was how does china's privacy protections or lack thereof impact the development of ai and cyber capabilities in china what does this mean for the ethics of the issues and china's own capabilities sure now this thing come up come up a lot you know i i think for for most people you know uh the perception is that chinese chinese users give up privacy for convenience which leads to huge amount of data left china you know left and collected by chinese internet platforms which become a advantage for chinese ai companies you know frankly you know that that was the uh facebook zuckerberg's testimony at the u.s congress right because zuckerberg's the point the next book's uh position was don't regulate us uh because this will hinder our competition with chinese air companies right but in reality uh you know by 2021 you know china cannot be that that easy excuse for zuckerberg arguing for less regulation you know why because last two three years there was a big shift in the chinese users uh thinking towards data two two reasons you know one big data sometimes leads to price discrimination right that means steve you know if you use iphone to order a airline ticket you know you get a high price quote then someone uses a cheaper smartphone yeah because they they get that they get get that information and also is that true yeah exactly exactly yeah or you know if you if you're booking a a travel to tokyo uh from shanghai you know you get a a higher price quote then then you know i order from a more remote places all right listeners have now learned how to save money you have to smartphones yeah you have to and you use a new phone and as a first time user you know they will recognize you as a first time user they can give you a better price so you can come back later um now so that's one one side right the price discrimination and another side is because of all the talk of of data is the new oil of the new economy chinese people are educated that there's a value in data so so naturally all the users that demand a piece of the value of their own data yeah so so last two three years we see this big push from chinese users the individuals for more protection and more control of their data so what do we see right now is this bifurcation you know this bifurcation you know obviously uh the at the country level out of the national security uh the the the government have access to user data but at the in in the in between the the the internet platforms and and the individual users the chinese government is has started a series of legislation to per to to to limit the power of internet platforms related with respect to data collection and data usage but of course in the case of the central bank digital currency it is the government that has all the data it is the central bank exactly clearly there's some wonderful things about the digital currency including it it should white if it became incredibly widely used it would wipe out corruption but the privacy issues aren't extraordinary it is government has all they know all of you they don't have to go to ally or or tencent to find anything out they have all the data themselves that's true that's true motivation for setting this up well you know i i would say you know at the very beginning they look into the blockchain and and they feel you know this is a good way you know this is important technology to develop this new digital tech currency as a way to be a leadership in this area and and as they develop this right they probably recognize that this is also a great way to to to track all the economic transactions uh and all the people activities in the in the country uh but you know like another way to look at this steve is that you know during the covet right there's a country used alibaba uh tencent uh platforms to send out you know the health codes or to or to uh track uh uh people's you know like a location uh so so so so in aces right these are all uh let's say data monitoring uh in in the in the in the national security contest so so i think you know that's what the the government's position is you know this bifurcation of government monitoring all activities and and at the same time limiting internet platforms power over individuals yeah me being asked does the us or china have the better political structure for technology development is there anything the united states should do differently perhaps learning from how china's industrial policy has worked yes yes you know steve we have seen china government put in huge commitment into tech revolution right you know even even before the 2017 ai commitment you know saying you know in 12 12 12 years you know at that time in 12 years we're going to be the air leadership in the world you know like lots of countries talk about ai revolution but you know very few countries like china make that kind of commitment right and a developer concrete plan for that and i think you know that's probably something very different from between china and the u.s you know before the ai thing you know several years ago uh 2013-ish right when president xi took office uh you know he started this uh information consumption information consumption policy initiative you know which was the start of china transitioning from the old economic model which was based on infrastructure investing and import export into the new economic economic model now which is more based on consumption and innovation right um and we have seen this the same initiative in in blockchain 2019 and the last last 12 months obviously the main story is chips right you know this government-led rnd investments you know certainly it involves lots of waste you know in some cases even corruption but at the same time you know it really creates that momentum to to drive a research and investments in the areas that come and feel it is the priority so i think you know that's really what's interesting that's here to say it's failed that chinese you know plan to to become self-sufficient in chips that's not worked out and now yeah enormous you're not talking about billions tens of billions about hundreds of billions of dollars of weight could have been spent elsewhere yeah yeah i i think in the numbers are there you're right steve you know i i'm under my undergrad major right with semiconductor so so so my classmates you know they stayed in the industry and they're still you know like the engineers in shanghai so if you think about the money they put in uh last uh two decades you know it's truly about is like hundreds of billions of dollars size and personally you know i i think um it is you know i i want to quote like the president kennedy talking about going to the moon right it is not because they're lazy it is because it is hard um so i think you know the the money obviously uh had some waste there but you know this is a such a complex supply chain uh so so you know if you don't put that kind of uh investment there you know that you won't see you you don't you don't get any anywhere you don't get anywhere so so it's so i think you know it's still too early to to to see whether it is problem success subsidies distort the global market but the us restrictions on chip exports distort the global market also so it's correct we're heading down a path yeah it hurts everyone yeah um tom robertson at microsoft asks um you know china's speak to the relationship between this innovation china's indigenous innovation push and the possible restrictions that may be placed on the export of such technology technologies from china in response to the u.s government's export control restrictions yeah you know i i think what we see is this uh regulatory escalation on both sides uh you know china is copying the u.s side of regulations you know uh to restrict you know cross-border investments uh to cross to to restrict export control you know the the latest application of the of this export control was in the tick tock cases tick tock case you know under trump's executive order you know by the way it is still effective right we will see how how how biden's administration gonna implement it for 60 days that's right that's right so according to trump's executive order tick tock's u.s operation must be restructured so that the u.s side will have the control of the data and the company um now in connection with this restructuring order right uh the a huge question was what about the tick tocks algorithm right which uses big data to make users addicted to the platform because you know you analyze people's big data and then keep feeding you that there's the stuff that you like yeah uh so so so so so there's a lot of value in that algorithm because it was trained by a huge number of users data now the china government came up with this export rule to say this is this this is the high tech of china so this is subject to china's regulation therefore you know if you want to sell this to microsoft or or walmart or somebody else or oracle right we we must approve it we must approve it and to me you know steve i think this will create super complex situations for companies running businesses uh in in multiple markets let's say microsoft and especially for technologies that are trained uh by data from both markets right so so you know in the case of tech talk you know essentially the algorithm is is is is maintained at the headquarters in beijing but it also benefited from the u.s users data and i can imagine a similar scenario that microsoft you know had the most ind in the us but it also get got to the benefit of china of the researchers in in the in the microsoft china office or the or the user data of the china market this will create super complex issues for companies functioning in both markets yeah they had obviously it's all stayed now but we'll see how it ends up they had come up with a solution where oracle controlled all of the u.s data so the data never left the united and everything else were controlled but how did they then process that data in a way that the customers were still happy do we know how that was resolved no we don't we don't actually you know that's really the the crescent crux of the matter steve like what does all control means right uh because control can mean you know the physical access to to the to the data storage facility you know that's one way to think about it another another way to think about it you know the control means uh the the company cannot use the data in in in the same way as before right like you know their usage of the data needs to be subject to the u.s side of reviews or something so but but the punchline is we don't know what that control mean yeah because in terms of data localization uh even before trump's executive order tick tock already put everything outside of china but uh you know the the the the trump's exact order means that's still not enough you know you still need to have another another layer of control with respect to to the data it's not only just about keeping data out of china it's also about who can access it and who can use the data that gets the value of the data even though the the by dance investors were predominantly american that's that's right that's right i i believe you know general atlantic is you know is a major investor there you know i'm i'm pretty sure you know they would they would have suggest uh at least you know no matter what we should get a term sheet because if we don't have if we if the if the if the app will be it needs to be shut down as trump initially suggested then the validation of it like a 50 billion will go to zero yeah yeah um as we mentioned we had a questionnaire from microsoft and rongshur has asked uh how do you miss the impact of the incident that that chinese hackers compromised microsoft exchanges experts call this the second largest incident next to the solar wind hack of last year do you think cyber security will be an area that the bind administration is going to compete cooperate or confront china yeah it's such a such a tough one now first of all steve you know i was asked by cnn to comment on this so i first thought first let me give you the comment i gave to cnn um you know what what i what you know when cia contact me you know i really find this is a thorny issue uh because on one side right you know microsoft got attacked um and you know you know for such a such a big player right you know if they feel threatened it must be something even more powerful so so there's something there uh but at the same time you know microsoft is still like expanding china has significant business in china uh so it's it's a really a thorny issue so what i what i gave cnn was was that the fact that microsoft is expanding its clouded business in china via a joint venture with the chinese company called the 21 vietnam and actually microsoft is planning to expand uh its cloud business in china in in the coming a year or two yeah so so so what i commented as seen is that you know it seems that that microsoft is actually continuing to cooperate with china including data management and cyber security uh cloud of cyber security you know that that that's the quote i gave right uh now since it's today you know it's it's you know it's it's not written it's not the end so i i go a little further i would say uh you could you could imagine that in in the context of this tech tech competition that the the administration will take different approach to different categories you know so so for example you know relating to related data uh probably it will be more of a conversation uh to is more engagement to to figure out a a protocol for cross-border business like the tick tock situation right um then you know for some uh for for some for some technologies actually you know the the collaboration may still be possible maybe it may still be possible like for for example a semiconductor because uh the global chain supply chain is so intertwined i think you know they may come to some some some agreement you know some some agreement um but for cyber security i i i think you know the buy administration may take more confrontational approach that's my guess you know different categories you know different approach you know confrontation engagement and collaboration for different categories i should tell our listeners that the national if you go to the national committee website we have a track to dialogue on digital economy issues where we and and the chinese our chinese counterpart make recommendations to uh the us government on how we should proceed in these areas and that's all public and all available on our website since you mentioned china's use of the health code could you talk more about the implications of the tech war if any for the management of kovit in both china and the united states as well as globally yeah you know the uh i i think it has several implications and one it is about the the price you know the balance between privacy and and and the coveted uh activities um i i think you know at the very beginning you know many countries uh disliked this cold idea but now these days more and more countries are talking about you know so called a vaccination passport right passport with vaccine vaccination information and and medical history uh so so just understand you know the the china's health code provided this first trial or in this context and and frankly i think some of the countries will adopt it some some countries may never adopt it just because of the different uh viewpoint uh but i think another layer to to this health coast thing is about the digital identification going forward um you know beyond you know pandemic context just normal life right you know this raised the question about digital identification and on one hand you know people you know you know people still talk about the privacy issue but more and more you know especially relating to the crypto assets uh the more and more uh conversation about digital identification coming up coming up so the health code actually may be also a test for digital identification in the broader context like going forward are we going to uh you know mostly rely on digital format identification since we have more and more activities going online and we're going to have more and more assets online so so as steve i think you know this this health code actually uh is it is more relevant you know in in the later context as we go forward yeah um which leads nicely to leah boardley's question which and you know the at un international telecommunications union for facial recognition video monitoring city and vehicle surveillance is trying they're trying to develop standards for surveillance technology chinese companies have been vocal in providing suggestions for global standards but u.s and other democracies have been largely silent what are the implications of this failure of the us to contribute to this global discussion and allowing china to set the standards for surveillance technology so that that's a great comment that's a great comment you know i i think uh you know different countries may have different approach but uh it it would be it's just uh you know unimaginable that the u.s is no longer in the leadership position you know for the global thought you know thought to leadership for digital economy you know certainly the during the four years of trump and regime there's very little development there right in terms of privacy you know the u.s still does not have a federal privacy law um in terms of anti-trust uh the u.s has no like meaningful actions against the big tax right and in terms of like in in terms of anti-trust legislation you know there's not even any discussion about about the new new anti-trust thinking you know in the u.s uh digital context you know lots of the existing u.s anti-trust law it is still relating to like a price uh price rise you know the you know the the old anti-trust thinking is is that interest will lead to price increase right but this doesn't apply to the the to the big internet platforms that build up their empire by giving free services you know uh so so so the us is is surprisingly missing from the uh the new cyberspace governance discussion i think this is just a fact to steve uh i'd like to give you a perfect example you know the about bitcoin and black bitcoin and blockchain you know india is having the bitcoin discussion at its apartment right now right most likely most likely it is probably it's a sure thing now uh most likely india will go with the china approach you know say blockchain is a technology but we're going to prohibit all crypto trading right so so you know since we're still at the early stage of the digital economy i i think you know if the us is missing from the global thought leadership the china model will take over yeah yeah what do you think do you want to comment more on this steve i i think to some degree it's a reflection of the last of the previous administration not wanting to be engaged in international law of rulemaking so i think partly that and it's partly um we have not been leading on this for for quite some time but you mentioned india obviously india has now blocked uh hundreds of chinese abs as a result of the political situation between india and china the death of of 20 indian soldiers and four in the himalayas how much is that kind of relationship between china and others going to affect the abilities of its companies to expand globally i i think you know the uh the indian ban banning you know the chinese apps uh it is a very interesting reminder that there are still other other polars in the world if you will in steve you know like people are so familiar with this china u.s digital war but you know uh a lot of times we were we've forgot right there's there are still a few more pillars out there uh and i think you know as china u.s in the middle you know in the middle of this tension you know the the third-party markets will become increasingly important um not only for the next billion users for the for the for the internet giants either in china the us but also relating to the to the future market standards setting yeah uh because you know if china and u.s are not really trading to each other uh in the digital context uh that means you know more and more transactions will be with the third-party countries like especially emerging markets like the belt-road countries right so because of the digital silk road connection and also because of like the singles day thing you know like when we talk about 200 countries participate in the 11 november 11 singles day you know that that means you know like a lot of countries right are trading with alibaba and china you know during this process you know china is also developing cross-border transactional governance standards with the third-party countries i think you know those countries will be will be increasingly important in the context of china u.s trade digital war yeah i mean today we had a meeting or it's scheduled or it's occurring um between the modi uh the prime minister of australia japan and so it's very much you know think and obviously they didn't say it's about china but i'm sure china plays out important all right we have a very few minutes left let me quick quick answers to these uh ethan golding's ass kaipu lee makes the argument that china is already so far ahead of others in terms of ai implementation as opposed to research where the u.s is still leader that other countries will never catch up do you share that assessment i think i would say half and half yeah you know i think that types believe campus thinking was you know what was mostly relating to that uh kind of the positive feeding cycle of data right you know the you know for most of the for lots of the ai you know the more that they have you know the more training you get you know the better the algorithm you get more users you get more data and as a cycle repeats right so in that case uh you know he he argues that china has that data advantage and that advantage will just compound become even bigger i think that's one side right but you know the the other side of the equation is you know we uh we there's always more innovation algorithm itself so down the road data may not be the only determination for algorithm yeah but jay wong because your buck your book does cover this so i want to ask the question jay wong asked about the digital agricultural economy and that's been prioritized by the chinese government but obviously talk very briefly about how black chain will play a role that's right you know actually that's the new frontier of chinese digital economy you know last year the number one uh uh the the number one policy from from china's central government at the beginning of 2020 was about digital china uh you know the the background of this is even though china has nearly 1 billion and 1 billion users you know that also means like you know near nearly half a billion people do not even have the basic internet connectivity and most of them are in the rural area right so so the so the uh uh so so the digital village you know for the for the most part is to get those rural farmers into the digital economy because otherwise they lose a lot and so i you know so that's the fundamental thing and now on top of that right you know you can talk about uh turning farmers into into entrepreneurials you know they can become e-commerce entrepreneurs themselves or you can say uh you know they they can use digital technologies to improve their productions right for example uh use blockchain to track the the chicken's growth so that people can be sure that the chickens are truly organic or you know they can use ai technology for plantation you know like pindodo uh you know the e-commerce company you know they last year they sponsored a a strawberry plantation competition and the ai team actually beat the traditional team by using new technology so i think there's a lot of room for development there yeah well it's a perfect way you know this hour has gone by so quickly it's hard to imagine we're already out of time but it it really gives you all a taste of of what is in this book the digital wars it's a wonderful read this has been a wonderful hour winston i can't thank you enough for writing all of these great books which we all thoroughly enjoy and somebody kind of you know splits his time and expertise between you know investing lawyering and educating americans and chinese about the future but thank you so much and everybody thank you so much for joining us tonight buy the book you can it's posted how you get it on our uh on the chat right now thank you much appreciate it and i look forward to more discussions me too thank you

Channel: National Committee on U.S.-China Relations

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Id: 9txbXZbZaX4

Length: 61min 29sec (3689 seconds)

Published: Thu Mar 18 2021