What Opportunities are Opening up for Russia against the Backdrop of the Tech War between the U.S. and China?

While it may be a little early to talk about the emergence of a bipolar era in the tech world, the question of what policy Russia should follow against the backdrop of the confrontation between the two undisputed tech leaders (the United States and China) is more pressing than ever. Vassily Kashin of the Centre for Comprehensive European and International Studies (CCEIS) at the National Research University Higher School of Economics shared his thoughts on the matter with us.

While it may be a little early to talk about the emergence of a bipolar era in the tech world, the question of what policy Russia should follow against the backdrop of the confrontation between the two undisputed tech leaders (the United States and China) is more pressing than ever. Vassily Kashin of the Centre for Comprehensive European and International Studies (CCEIS) at the National Research University Higher School of Economics shared his thoughts on the matter with us.

How does today’s tech war between the United States and China differ from the one we saw in the 1980s and 1990s between the United States and Japan?

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The main difference is that while Japan was an economic and technological rival of the United States during that time, it continued to be a kind of “junior ally” of that country in the military and political sense. China is not. It has complete independence in its foreign and domestic policies. Japan refrained from making large investments into areas of science and technology that had a military or dual purpose. Take aviation and space exploration, for example. Japan did develop these areas, but in a limited sense, treading very carefully and relying on the United States. China invests heavily in technologies related to the security sector and is making progress in the space industry, missile production, aviation, and so on. This is why the parallels that people often draw to the period of rapid growth in Japan —“well, Japan was all the rage back then, and look how that turned out”— are all contrived. Japan had to work within the confines of a specific framework. And breaking out of this framework was not an option, because that would have entailed changing the entire political system, something it just couldn’t do. The Chinese political system is ready for such a struggle.

How would you characterize the modern technological era?

It’s a technological war between great powers. We’ve never seen anything like this before. Perhaps we can draw a parallel with the economic and technological rivalry between the great powers back in the 19^th century, when Germany was closing the gap on the leaders and even pulling ahead in terms of its developments in the internal combustion engine, new types of cars, electrical equipment and so on. All this was closely linked to the military and political sphere, as well as to the trade wars. A similar thing is happening today — a tech war across all industries that is not happening in isolation, but is rather closely connected to the military sphere, the race for new markets, the information security of states and even their domestic policies.

Can we say, then, that we are witnessing the onset of a bipolar era of technological development?

If we’re talking exclusively about technology, then I think such a conclusion is not entirely justified. A bipolar era implies that the potential of other countries in the technology sphere (those that are not one of the two great powers) is insignificant. This is simply not the case today. The United States has given up a significant amount of ground in this respect, yet China is still lagging behind in many areas. Russia's potential remains great, and significant breakthroughs have been seen in Europe and Japan. There are certain “islands” in ASEAN countries where relatively small countries (for example, Malaysia, Singapore and, of course, South Korea, which is one of the most highly developed countries in the world in terms of technology) have made extraordinary leaps. In addition, countries such as India and even Iran are making rapid progress. Certain spheres are experiencing a development boom in countries that had previously been disregarded completely. All this forms a far more complicated picture than the one we observed during the Cold War.

Why are politicians paying so much attention to 5G technologies, developments in artificial intelligence and quantum computing?

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Progress in these areas can only be made if governments implement the appropriate policies and channel huge amounts of resources into such development. The entire liberal mythology about market principles in the development of new technologies, the leading role of the market and private initiative turned out to be false. And it was always that way, starting from the final decades of the 20^th century. China is pumping huge resources into several breakthrough projects, all at the behest and under the direct supervision of senior officials. What is more, it doesn’t really matter whether these are civilian or military projects, because the distinction between these two types of technologies is gradually being blurred in a number of areas. If you are strong in artificial intelligence, you will be able to use it to equal benefit for military, special services and civilian purposes. One’s ability to survive in the modern world is determined entirely by one’s ability to implement long-term scientific, technological and industrial development strategies at the state level. Everything else plays a more or less secondary role. Important, but secondary. Accordingly, if the issue of state programmes takes precedence, then everything will become politicized. The United States wants to see China’s policy in this area break down and fall into disarray. And its officials do not hide this, nor do they hide the fact that their actions have largely been triggered by China’s development programmes (for example, the Made in China 2025 strategic plan). Meanwhile, Beijing is more concerned with focusing all its resources in order to get ahead, by any means necessary, including through intellectual property violations, subsidies, dumping, protective measures and so on. And, of course, technology is becoming one of the main topics of international politics. It isn’t a highly specialized topic. Now, technology dominates politics, just like the struggle for territories and resources dominated politics in the past. Accordingly, you have to limit the ability of your competition to implement a development policy. This is always a state policy. Above all, your competitors will attempt to undermine your potential.

Perhaps the fact that the development of the latest technologies is inextricably linked with information security problems adds to the politicization of the issue.

Of course it does. Several areas of telecommunications technologies are becoming rapidly monopolized. The fact of the matter is that most countries need to choose between western and Chinese technologies. What is more, it is abundantly clear that manufacturers of information and communication equipment and software cooperate to some degree with the special services of their countries of “residence.” Any attempt to deny this is simply a lie, not to mention rather impudent and misleading. We know that the only way democratic countries differ from more successful countries in this respect is in the power they have over their own citizens, and even this is not always the case. As far as powers and rights to spy on foreigners is concerned, the United States does not differ at all from the most totalitarian regimes. They can do anything they want. The question of security naturally follows: who to turn to, who to trust and the level of self-sufficiency you can enjoy.

In what ways are the approaches of the United States, China and Russia to promoting and protecting their technology sectors similar? In what ways do they differ?

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Russia is in a vulnerable position. And not only because it has lost much of what it had in the 1990s and the 2000s. Russia has never even had certain technologies. Russia’s biggest weakness is its small domestic market. Even if we count the Eurasian Economic Union, the total population is only slightly more than 180 million people, which means that many projects are just not economically viable or feasible. Russia’s resources are more limited in this respect and are thus concentrated in specific sectors. This works very well in some areas, for example, the military, where military technology is being successfully developed under the direct supervision of the president, the minister of defence and the government. In other areas, we have not quite managed to devise a list of priorities. But it is clear that we can survive by focusing on areas that are truly important, concentrating all our resources on these areas and, within reason, involving our foreign partners (including China) in these programmes. Until we are in a position to do this, however, we need to make sure that foreign players continue to compete on the Russian market. This way, we will not become dependent on a single entity.

What advantages do the United States and China have? And in what areas are they vulnerable?

The biggest advantage that China has is that it is not tied to an electoral cycle and can thus implement extremely long-term programmes to support various areas of science and technology. One example is the State High-Tech Development Plan (better known as the 863 Programme), which was launched in 1986 — that is, over 30 years ago — and is still going on today, albeit in a thoroughly revised and expanded form. This is just one of several similar long-term programmes. On the whole, scientists working on projects that are important to the country and receive government support do not need to worry about the fate of these projects one, two or three years down the line. They are safe in the knowledge that their jobs are secure, and their work is amply funded…

Assuming the country doesn’t experience an economic collapse or similar crises.

Yes, if the country doesn’t somehow fall to its knees economically. But there’s no chance of a new party coming to power following elections and changing the previous government’s programmes. That just doesn’t happen in China. This continuity is a major advantage. On the other hand, independent schools of scientific thought have not had the chance to develop in China. The country continues to rely heavily on borrowing. Chinese specialists are more than capable of processing and improving existing technologies. The thing is, these technologies are, for the most part, foreign-made. The Chinese education system lags behind in terms of developing and encouraging the development of innovation. And the Chinese people readily accept this. As a result, everything looks fantastic statistically — the number of research papers published in scientific journals is huge, and China accounts for more patent applications than any other country in the world. At the same time, however, the quality of these developments often leaves a lot to be desired. Frequently, the object of the research is not scientific discovery, but rather to tick the right boxes.

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The United States continues to be the undisputed leader in new technologies. However, if you ask me, the management system there is thoroughly disorganized: researchers live in a constant state of uncertainty, where decisions are taken and then abandoned, where those in power cancel programmes for no other reason than the programme was launched at the initiative of the previous administration, where politicians interfere in the work of specialists, and where discussions of military projects are politicized in Congress. I could go on and on. The decision-making mechanism in the United States is more cumbersome, the leadership is disorganized, and the military budget spending is an increasingly emotional topic. At the end of the day, if you look at how much the Americans spend on R&D, you'll see that they get substantially less on the dollar than their Chinese counterparts, and several times less than the Russians. Many expenses seem absurd and point to some systemic issues in how the country manages its innovative industries.

Could the global tech market fragment into notional “American” and “Chinese” segments? If so, what would that mean for Russia?

It’s possible, but we need to understand that it will not happen overnight. It will be a very gradual process, one that will likely last for decades, rather than years.

You mean this kind of fragmentation is only possible in the long run?

That’s precisely what I mean. Take manufacturing, for instance, where China and the United States are practically joined at the hip. The number of production sites in China is huge. They’ve been there forever, and not because Chinese labour is cheap. It’s not cheap by any means. But because China has, over the course of decades, built up an excellent vocational education system and first-class manufacturing infrastructure. Moving production abroad will take years of concerted efforts. What is more, it will be all but impossible to find ready-made personnel outside of China, including in developed countries (the United States too), that can carry out the work at the required level. And it will take years to transfer technical production and build new factories and plants.

Or artificial intelligence will replace humans and ease the problem of transferring technical production…

Artificial intelligence can replace workers. However, you still need a certain number of employees to service the robots — engineering personnel. And China is better equipped to provide these workers than any other country. And it will still take years of serious work to build the technical infrastructure and launch this type of production. Accordingly, given the scale of everything that is happening, this will likely be a gradual process, one that will indeed lead (assuming the current trends in global politics continue) to the kind of “separation” you are talking about — the appearance of different spheres of technological influence. And the sphere that individual countries will fall into will be determined by political factors.

But surely this fragmentation will be detrimental to the world’s technology leaders from the point of view of market share. And in these conditions, China is likely to win, as it has a ready-made market of one billion people, not to mention the markets of its partners.

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We don’t know who will fall into the Chinese sphere of influence and who will join the American one. As far as the United States is concerned, we're not talking about “isolation.” The pressure that the United States puts on the European Union and Japan prompts them to oust the Chinese from their markets effectively. One example of this is not allowing Huawei to compete for technology tenders. China is thus forced to focus on its domestic market, as well as on the markets of friendly countries and those developing countries that are in its orbit. We should note that this is an extremely difficult task for the United States. It will have a hard time trying to push China out of various markets. And it’s too early to tell who will win.

Where is Russia most competitive right now in terms of its technologies? Where is it most vulnerable?

Russia’s nuclear industry has always been very strong. We have great potential in space and certain parts of the defence industry, where we occupy leading positions. And we are also making breakthroughs in artificial intelligence and quantum technologies. However, developments in other areas are thin on the ground. We have to understand that Russia is not a big country in terms of demographics. European countries such as Germany have the entire EU market at their disposal. Japan's population is comparable to that of Russia, but the people are on average far wealthier.

What's more, Japan and South Korea have advanced trade agreements with the United States. There's no way that Russia can compete in this respect. Having said that, it’s clear that we need to develop microelectronics in some form or other. And in certain areas of industry and science, we will just have to rely on cooperation with other countries.

What opportunities does the tech war between the U.S. and China open up for Russia?

As far as the American side is concerned, there is no benefit to creating a situation in which Russia is fully entrenched with China technologically. And the Americans understand this—although this, of course, does not mean that they will take any concrete actions. But the very fact that they have a certain grasp of the situation is already a plus. Meanwhile, the Chinese side is increasingly interested in cooperation with Russia. There is a growing trend to conduct R&D in Russia, with the involvement of Russian experts. China also invests in hi-tech assets here. In addition, a number of Chinese companies have started moving production to Russia. This means that we are now able to localize the production of certain products and get our hands on vital technologies. But we need to tread thoughtfully and astutely in terms of our diplomacy while being careful not to become dependent on anyone or take either side. It is important that our government agencies and companies act in an extremely calm, deliberate and coordinated manner.

Interviewed by Anastasia Tolstukhina, Programme Coordinator and Website Editor at the Russian International Affairs Council.