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US has blamed Chinese companies for stealing cutting-edge tech and accused Russian actors of interfering in its presidential elections through social media manipulations. That the gloves are off in the contest to reassert national dominance in the digital age found yet another indication in a recent report by the US National Counterintelligence and Security Centre (NCSC) that warns against Chinese and Russian-backed efforts to steal a march on US firms by hook or crook in developing critical technologies. From artificial intelligence to semiconductor chips, these areas are crucial to the US maintaining its superpower status, the report says. Here’s what you need to know.
What Is The NCSC Report All About?
The report, ‘Protecting Critical and Emerging US Technologies from Foreign Threats’, bluntly lays down that
“US leadership in emerging technology sectors faces growing challenges from strategic competitors who… have enacted comprehensive national strategies to achieve leadership in these areas”.
NCSC says in view of the threats posed to US tech dominance, it is “prioritising its industry outreach efforts in a select few US technology sectors where the stakes are potentially greatest for US economic and national security”. Significantly, it notes that these sectors “may determine whether America remains the world’s leading superpower or is eclipsed by strategic competitors in the next few years”.
Sounding optimistic and cagey at the same time about the foreign hand, it notes that “while the democratisation of such technologies can be beneficial, it can also be economically, militarily, and socially destabilising”.
What Does It Say About China, Russia?
Noting the new realities of the 21st century global order, the NCSC report says China “ranks as the primary strategic competitor to the US” and that it “employs a wide variety of legal, quasi-legal, and illegal methods to acquire technology and know-how from the US and other nations”.
In March this year, US authorities designated five Chinese companies, including Huawei and ZTE, as posing a threat to national security under a 2019 law aimed at protecting US communications networks. The move followed an August 2020 order barring US federal agencies from buying goods or services from any of the five companies.
In 2020, US classified Huawei and ZTE as national security threats to communications networks and brought in rules that required carriers with ZTE or Huawei equipment to “rip and replace” that equipment. Huawei has describes such actions as being “discriminatory” and unnecessarily punitive”.
The NCSC report said that China, which has a National Intelligence Law mandating all Chinese entities to share technology and information with the country’s authoritarian government, “has a well-resourced and comprehensive strategy to acquire and use technology to advance its national goals”.
As for Russia, the report said it is “targeting US advances through the employment of a variety of licit and illicit technology transfer mechanisms to support national-level efforts, including its military and intelligence programmes”.
The means and strategies employed by these countries to obtain US technologies, NCSC said, include the use of intelligence services, science and technology investments, academic collaboration, joint ventures and mergers and acquisitions as well as “non-traditional collectors” like “co-opted insiders”. Further, these countries could be using talent recruitment, research partnerships and front companies, too, to achieve their ends.
A recent report by Bain and Co. noted that amid the tariff wars and general mistrust between the two countries, overall direct investment vis-a-vis China and US fell by 75 per cent during 2016-2020, from USD 62 billion to USD 16 billion “with the tech sector alone plunging 96 per cent over the period”. The report said that Chinese overall direct investment to the US dropped to USD 7.2 billion in 2020 from USD 48.5 billion in 2016 while US investment in China dropped 35 per cent to USD 8.69 billion over the same period.
What Are The Technologies Under Threat?
The five areas the NCSC has flagged in its report are AI, quantum computing, bioeconomy, semiconductors and autonomous systems.
On AI, the report said it is the “quintessential ‘dual-use’ technology given its role in both civilian and military spheres and that China “possesses the might, talent, and ambition to potentially surpass the US as the world’s leader in AI in the next decade if current trends do not change”. It said that AI is also “deepening the threats” of cyberattacks and disinformation campaigns by Russia, China and others designed to “infiltrate our society, steal our data, and interfere in our democracy”.
Were the likes of China or Russia to crack the quantum computing code, NCSC said, it could “potentially allow for the decryption of most commonly used cybersecurity protocols”. Which means that any country which can sufficiently harness quantum computing power would be able to breach all encryptions and firewalls deployed by US security agencies and companies. “In short, whoever wins the race for quantum computing supremacy could potentially compromise the communications of others,” it said, noting that some countries have the wherewithal to outspend the US to hire talent in this field.
Bioeconomy embraces everything from what Americans eat to the fuels, materials, and products they consume, the report said. But while such technologies drive the creation of better healthcare, they “also can lead to national security and economic vulnerabilities”. NCSC warned of misuse of biotechnology “to create virulent pathogens that can target our food supply or even the human population”.
Amid the pandemic, economies around the world were dealt a heavy jolt by the global semiconductor chip shortage that affected production of everything from smartphones to automobiles. Noting that the “semiconductor-based integrated circuit is the ‘DNA’ of technology”, the report flagged geographic concentration that can serve to create “chokepoints that can result in interruptions and opportunities for foreign adversaries to impair US access to trusted semiconductors”. The report pointed to how the US is “heavily dependent on a single company in Taiwan for producing its leading-edge chips”, the reference no doubt being to the Taiwan Semiconductor Manufacturing Co., which is the world’s leading maker of the item.
As for autonomous systems, the report noted their “broad applications in weapons systems” and how they “present a growing attack surface for malicious cyber actors”. It also pointed to the extensive data such systems collect that makes them “likely to be ripe targets for foreign intelligence collection”.
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