Building generative AI in China

Regarding generative AI, Chinese tech companies with the capability to build advanced models are encountering a multifaceted dilemma.

Chinese tech companies rely almost entirely on underlying AI models from the United States.

China lags behind the United States in generative AI by at least a year and may need many years to catch up and surpass America's Big Tech.

Even as the United States has tried to slow China's tech computing advancements by limiting the sale of microchips and curbing investments, the US government has not restricted allowing America's Big Tech from openly releasing open-source AI software globally to encourage its adoption.

"When Chinese companies are leveraging American open-source technologies to play catch-up, the questions become very complicated — wrapped up in issues of national security and geopolitics," according to Oren Etzioni, a University of Washington professor specializing in AI.

This challenge is further compounded by evolving regulations in China that shape how AI models are trained and deployed. As the Chinese tech industry grapples with these complexities, leaders find themselves at a crossroads, balancing innovation with regulatory compliance.

For one, the inherent unpredictability of generative AI models poses a significant hurdle for Chinese tech giants.

The fear of unintended consequences, where a chatbot might express inappropriate or problematic content, looms large, like saying how horrible the Chinese Communist Party is, for example. In a New York Times article, Andrew Ng, a computer science professor at Stanford and former Baidu executive, acknowledges the difficulty in eliminating these issues, highlighting the intricate nature of managing the expressions of AI systems.

Chinese tech giants are also navigating a regulatory landscape that is continually evolving. New regulations impose constraints on the data sets for training AI models, dictate acceptable applications, and require government registration of AI models.

The pressure for quick returns on AI investments in China has led to a shift in focus.

Chinese tech investors prioritize easily executable applications over more ambitious projects centered on fundamental research. Notably, up to 50 percent of China's AI investment is in computer vision technology, crucial for surveillance purposes, rather than laying the groundwork for generative AI models.

As Chinese tech companies grapple with the complexities of generative AI, finding the right balance between innovation and Chinese Communist Party compliance will dampen their ability to scale in this environment.

Enjoy the ride + plan accordingly.

-Marc

The Biden administration's $20 billion plan to replace China-made cranes at US ports

Pitched to bolster national security, the Biden administration has announced a groundbreaking investment of over $20 billion to replace Chinese-made cranes at America's ports. This strategic initiative comes in response to growing concerns about potential security threats posed by using Chinese-manufactured cranes, which defense specialists believe can be susceptible to remote control.

According to the Wall Street Journal, fears in the American defense community have arisen that Chinese-made shipping cranes could be remotely controlled, presenting a significant risk to the security of hundreds of sites across the United States. Recognizing the urgency of addressing this vulnerability, the Biden administration is taking proactive measures to invest in domestic manufacturing, thereby reducing reliance on potentially compromised foreign technologies.

In addition to the substantial financial commitment, President Joe Biden signed a new executive order to strengthen cybersecurity measures at US ports. The executive order will grant the Department of Homeland Security enhanced powers to address and mitigate cybersecurity threats, particularly those from foreign adversaries like China. This move aligns with the administration's broader efforts to safeguard critical infrastructure from cyberattacks.

To ensure a more proactive and vigilant response to cybersecurity threats, vessels and maritime facilities must report any cyberattacks promptly. This EO marks a significant step in establishing a comprehensive cybersecurity framework for the maritime industry, enabling authorities to respond to and neutralize potential threats swiftly.

The Biden administration is making moves that strengthen the resilience of America's ports and send a clear message about the importance of securing vital assets in an increasingly interconnected business environment and digitally reliant world.

Enjoy the ride + plan accordingly.

-Marc

Communications and the 60th Munich Security Conference

This weekend, the historic Hotel Bayerischer Hof in Munich will again host many of the world's leading security policymakers, diplomats, and thought leaders for the 60th Munich Security Conference (MSC).

From February 16 - 18, 2024, the MSC will be the platform for high-level discussions on the most pressing global security challenges, marking a significant milestone in its six-decade history.

A world getting more real - The MSC communications environment:

The 2024 MSC takes place against a backdrop of immense global uncertainty.

From the Munich Security Report 2024 - executive summary:

"Amid growing geopolitical tensions and rising economic uncertainty, many governments no longer focus on the absolute benefits of global cooperation but are increasingly concerned that they are gaining less than others.

"Prioritizing relative payoffs may well spur lose-lose dynamics – jeopardizing cooperation and undermining an order that, despite its obvious flaws, can still help grow the proverbial pie for the benefit of all.

"... people in all G7 countries polled for the Munich Security Index 2024 expect China and other powers from the Global South to become much more powerful in the next ten years while they see their own countries stagnating or declining. As more and more states define their success relative to others, a vicious cycle of relative-gains thinking, prosperity losses, and growing geopolitical tensions threatens to unroll. The resulting lose-lose dynamics are already unfolding in many policy fields and engulfing various regions."

Key global business issues likely to dominate discussions at the MSC:

• The Ukraine War + Moscow's imperial ambitions

• China's growing militarization + Beijing trying to convert East Asia into its exclusive sphere of influence

• Escalation of violence, terrorist attacks + the humanitarian emergency in the Middle East

• Losing the chance for peace + democratic progress in the Sahel

• Geopolitical tensions transforming globalization + the rise of "de-risking" economic relationships

• Climate policy + the rollout of green technologies

• Geopolitical tensions fragmenting the tech sector + much-needed global regulations on AI and data security

Who to watch:

The MSC regularly attracts high-profile attendees, including heads of state and government, foreign ministers, defense ministers, and renowned security experts. This year, key figures to watch include Ukrainian President Volodymyr Zelenskyy, US Secretary of State Antony Blinken, German Chancellor Olaf Scholz, and Chinese Foreign Minister Qin Gang (unconfirmed).

Why watch the MSC?

The 60th Munich Security Conference promises to be a pivotal event, offering valuable insights into the state of global security and shaping the international agenda for this year and beyond.

Sure, there will be lots of lofty speeches, chinwagging, and few deliverables, but a multilateral, high-profile policy event like the MSC is worth paying attention to.

The MSC will provide insights into what complex topics keep senior government officials awake at night and identify global business issues that will challenge the C-Suite for the next five to ten years.