China’s SenseTime, the most valuable AI start-up in the world, plans to raise over $2 billion in 2019. Its “Viper” project collects, connects, and analyzes information from security surveillance, live camera feeds embedded in ATMs, traffic cameras, and office face scanners. And the firm’s presence extends well beyond China. SenseTime is rapidly building a network of international offices, partnerships, and R&D hubs, including several in the U.S. SenseTime explicitly aims to be “the global dominant force in facial recognition.”
The company’s pervasive presence is the fruit of a decade of meticulous Chinese Communist Party (CCP) planning and provisioning — and its aim is to undergird every layer of the burgeoning Internet of Things (IoT).
The catch-all term “Internet of Things” refers to the interconnected devices you use every day, their industrial analogs, as well as the networks, data, and computational processing supporting them. For Beijing, that means more than phone-controlled thermostats. The CCP is transforming the IoT into one of the most potent strategic weapons of the contemporary world — into a form of self-fueling power projection; self-enforcing international rule-setting; and silent, secured global conquest.
Then-premier Wen Jiabao institutionalized this IoT strategy in 2009, when he announced the launch of “Perceive China.” A network of sensors — including but not limited to surveillance cameras, car navigation systems, and smart electricity monitors — would be placed throughout the country, sending information to the China Academy of Science (CAS). The PRC calls this the “Internet of Things with Chinese characteristics.” CAS explains that the system is a “test zone for a global network.”
Wen’s move preceded the Made in China 2025 initiative by six years, the AI National Plan by eight, and concerns over Huawei by a decade. But it represents the core of those later frameworks and of Beijing’s techno-economic strategy, what President Xi Jinping now calls the “network great power strategy.”
The concept is bold and simple. China seeks a world-wide, integrated system of information collection and dissemination. Universal sensors gather data, PRC-penetrated or -owned networks carry it, and Beijing-controlled hubs aggregate, analyze, and store it. The overall goal is to “predict, develop, and control” the world, per CAS.
Global resources — physical and virtual — are increasingly exchanged along information networks. If China succeeds in its effort, it will be able to hold military, diplomatic, and economic transactions hostage. It will decide the media that global information networks disseminate. Beijing will set standards that reward domestic champions over foreign competitors. It will shape personal, commercial, and government incentives to serve its interests.
Imagine a high-tech Bretton Woods, unilaterally decided and designed to distort rather than to balance.
“In the face of international competition,” Wen declared in 2009, “we must plan the future earlier and apply the core technology first.” The emerging IoT meant a wholly “new, integrated information system.” The Party saw what it called a “rare strategic opportunity.” In a power vacuum, it recognized that it could leapfrog its global competitors. If Beijing claimed the IoT, it could subvert the traditional internet and the American monopoly over it. “Whoever masters the IoT will master the commanding heights in the world’s new round of scientific and technological revolution,” declared a 2010 National People’s Congress delegate.
This competition is nothing like the Cold War. The struggles of that period were over material objects: troops, armaments, territory, tangible goods. China’s chosen battlefield is largely virtual. The world will remain integrated. Beijing’s goal is to structure that integration asymmetrically in China’s favor. Rather than seizing physical space, China seeks to influence space. And global leverage comes not from owning the most resources but from controlling the infrastructures of their exchange. With that comes the power to claim, to distribute, or to restrict those resources. Such control also grants access to data on every exchange. Beijing’s network thus acquires returns, and outsize ones: it becomes a positive, recurring feedback loop. And the PRC’s position is secure. The world system relies on global exchange. Global exchange relies on Beijing. China becomes indispensable.
The U.S., its allies, and its partners are increasingly aware of China’s broader competitive threat and specifically of its information technology dimensions. The White House warns of a new type of arms race, featuring commercial technology. The U.S., Japan, and Australia have all discussed banning Huawei products. Yet the nature, scope, and implications of China’s techno-economic threat remain poorly understood. Washington focuses on trap doors and IP theft. The United Kingdom and Germany have spoken in the same, limited terms, rejecting U.S. pressure to ban Huawei from their networks on the grounds that they can mitigate the espionage risk.
To focus on espionage is to miss the point. The Party’s ultimate vision is far larger.
Beijing is not wielding innovation, force, or even wealth in the traditional sense. It is applying borrowed technology to build a new global structure rigged in its own favor.
Domestically, Beijing’s IoT strategy manifests today in the “social credit system.” The Party uses its ubiquitous information collection to generate a score for every citizen. Bad driving might mean demerits. So might playing too many video games or taking too much toilet paper from a public restroom — or speaking ill of the government. Poor scores bear consequences. The Party can use them to limit travel, job eligibility, internet speeds, and even animal ownership.
Xi’s Network Great Power Strategy aspires to translate that domestic stranglehold into a geopolitical one — less explicit a grip but more existential a danger. Beijing fiercely exports its network, standards, and sensors worldwide. At home the Party decides who can own a labradoodle. Internationally it intends to determine where the U.S. military can operate, which phone company can be compatible with 5G standards, which fintech transaction goes through, what story the newspaper tells.
Beijing is already well on its way to doing this, albeit surreptitiously and in ways that the U.S. struggles to discern. China’s technological and commercial sectors focus on developing and exporting IoT architectures. This encompasses not only Huawei and 5G; it encompasses Beidou, China’s military and commercial space giant, and its next generation internet protocols (IPv6). It encompasses the systems that dock into those architectures, too — the “things” that comprise the Internet of Things. Think car navigation platforms, bike and scooter shares, online financial transactions, wearable health monitors, commercial drones, and electricity monitors.