INTERVIEW WITH PROF. GIANCARLO ELIA VALORI

Honorable de l’Académie des Sciences de l’Institut de France

Honorary Professor at Peking University

Date: August 2023

"At the heart of our mission is the commitment to fostering critical thinking and exploration of diverse perspectives. In this spirit, we present an insightful dialogue with Prof. Giancarlo Elia Valori, Honorable de l’Académie des Sciences de l’Institut de France and Honorary Professor at Peking University.

Our goal is to provide a platform for thought-provoking insights and well-articulated arguments that contribute to a deeper understanding of the complex dynamics at play. The responses shared by Prof. Valori represent his expert views and perspectives, and while they may challenge conventional notions, they enrich the discourse on these intricate topics.”

Thematic Section 1: China's Technological Innovation And Implications For The World

In this section, I engage in a conversation with Prof. Giancarlo Elia Valori to explore his insights on China's technological innovation, with a specific focus on artificial intelligence (AI) and its profound implications for the global landscape.

According to Prof. Valori, "In recent years, China has delved into the importance and development prospects of artificial intelligence (AI) in many important fields. Stepping up the development of a new generation of AI is an important strategic starting point to stay ahead in the global technology competition. The current gap between AI development and the advanced international level is not very wide, but the quality of companies must be 'matched' by their number. Efforts are therefore being made to expand application scenarios, by strengthening data and algorithm security."

Furthermore, statistics from the latest AI Index Report highlight China's significant contributions to the field of AI. In 2021, China accounted for an impressive

39.78% of the global AI journal publications and 29.07% of the world AI journal citations.

These numbers reflect the remarkable progress China has made in AI research and its commitment to innovation.

Question Restrepo: China has been investing heavily in technological innovation, particularly in areas such as artificial intelligence and 5G. How do you see China's technology industry evolving in the coming years, and what implications could this have for the rest of the world?

Response Valori:

In recent years China has delved into the importance and development prospects of artificial intelligence (AI) in many important fields. Stepping up the development of a new generation of AI is an important strategic starting point to stay ahead in the global technology competition.

The current gap between AI development and the advanced international level is not very wide, but the quality of companies must be “matched” by their number. Efforts are therefore being made to expand application scenarios, by strengthening data and algorithm security.

The concept of third-generation AI is already advancing and there are hopes that the security problem will be solved through technical means other than policies and regulations, i.e., mere talk.

AI is a driving force for the new stages of technological revolution and industrial transformation. Accelerating the development of a new generation of AI is a strategic issue for China to seize new opportunities for organising industrial transformation.

It is commonly argued that AI has gone through two generations so far. AI1 is knowledge-based, also known as “symbolism”, whereas AI2 is based on data, e.g. big data, and their “deep learning”.

AI started to be developed in the 1950s with the famous Test by Alan Turing (1912-1954), and the first studies on it started in China in 1978. In AI1, however, progress was relatively small. Real progress has been made mainly over the last 20 yearshence AI2. AI is known for the traditional IT industry, typically the Internet companies. It has accumulated a large number of users in the development process, thus establishing corresponding patterns or profiles based on these acquisitions, i.e. the so-called “users’ taste knowledge graph” of users.

4 matched and optimised by means of AI algorithms. This obviously enhances trade efficacy and the speed of delivery.

By updating and upgrading traditional industries in this way, great benefits have been achieved. In this respect, China is leading the way: facial recognition, smart speakers, intelligent customer service, etc. In recent years, not only has an increasing number of companies started to apply AI, but AI itself has also become one of the professional directions that most worries candidates in university entrance exams. According to statistics, there are 40 AI companies in the world with a turnover of more than $1 billion, 20 of them in the USA and 15 in China.

The core AI sector should be independent of the IT industry, but open up more to transport, medicine, the urban substrate, and industries directed autonomously by AI technology. These sectors are already being developed in China.

China accounts for more than a third of the world's start-ups in the AI field. While the quantity is high, the quality still needs to be improved, although there are signs that it will evolve geometrically. The AI implications in today's world are therefore knowledge and technological advantages that determine - to a large extent - the differences in the management of international politics.

The increase in a country's intellectual power directly defines an increase in its economic power, thus changing its positioning in the international competition for dominance.

The politics of power - first in the agricultural era and later in the industrial era - was characterised by military and then economic hegemony, while the politics of power in the information era gradually reveals the characteristics of knowledge-based hegemony at the scientific level, which will indeed be essentially based on artificial intelligence.

Thematic Section 2: China's Trade Practices and Accountability In this section, I delve into the topic of China's trade practices and the accusations of unfairness, exploring Prof. Valori's perspective on the matter. As Prof. Valori explains, "In fact, many Western media report that China is circumventing or breaking trade rules. Its economic manipulations have cost millions of US jobs, hurting workers and companies there but also around the world. Media also report that the United States will reject market -distorting policies and practices, such as subsidies and barriers to market access, which the Chinese government has used for years to gain a competitive advantage.”

Moreover, it's important to consider the broader economic context. Bilateral trade between China and the United States exceeded a record USD 750 billion in 2021, highlighting the intricate economic relationship between the two countries. The US-China Business Council's Export Report 2022 revealed that exports of goods to China grew by 21% to USD 149 billion in 2021, supporting 858,000 US jobs.

Question Restrepo: Some people have accused China of engaging in unfair trade practices, such as dumping goods on foreign markets or stealing intellectual property. What is your opinion on these allegations, and do you believe China should be held accountable for these actions?

Response Valori: In fact, many Western media report that China is circumventing or breaking trade rules. Its economic manipulations have cost millions of US jobs, hurting workers and companies there but also around the world.

Media also report that the United States will reject marketdistorting policies and practices, such as subsidies and barriers to market access, which the Chinese government has used for years to gain a competitive advantage.

In fact, China has faithfully fulfilled the commitments made when it joined the World Trade Organisation (WTO). China supports, builds and contributes to the multilateral trading system. Economic and trade relations between China and the United States are mutually beneficial. Nevertheless, the economic war between the People's Republic of China and the United States in the trade and investment areas has been the main cause of trade frictions between the two countries, which harm others without benefiting themselves either.

Over the last twenty years since joining the WTO, China has seriously fulfilled the commitments made upon accession. It has extended the pre-determined national treatment management system to the national level.

It has continued to expand market access. It has reduced the overall tariff level from 15.3 to 7.4 per cent, and opened up nearly 120 service sectors. In October 2021 the WTO conducted its eighth review of China's trade policies and practices. The review report fully recognised China’s efforts in supporting the multilateral trading system and its active role within the WTO.

A leading official of the UN Conference on Trade and Development pointed out that, over the past two decades, China has firmly supported the rules-based multilateral trading system; practiced genuine multilateralism; fully participated in WTO negotiations; led talks in areas such as investment facilitation and e-commerce, and worked for up-to-date WTO rules.

China and the United States have highly complementary economies, deeply integrated interests, and mutually beneficial economic and trade ties. In 2021 bilateral trade exceeded a record USD 750 billion. The US Export Report 2022 released by the US-China Business Council showed that in 2021 exports of goods to China grew by 21% to USD 149 billion, supporting 858,000 US jobs. The Annual Business Survey 2020 report on Chinese companies in the United States, released by the China General Chamber of Commerce-USA, indicated that, as of 2019, Chinese CGCC member companies cumulatively invested more than USD 123 billion, as well as employed over 220 thousand people, and supported more than one million jobs in the United States. A study by the US-China Business Council showed that Chinese exports helped reduce consumer prices in the USA by 1 to 1.5 per cent, saving each US household USD 850 a year.

A report by Moody's Investor Service was quoted as saying that US consumers bear 92.4% of the cost of imposing tariffs on Chinese products. Paul Krugman - 2008 Nobel Prize-winning economist - has incisively pointed out that the US trade policy towards China is disadvantageous and tariffs hurt the USA more than its intended targets.

On 18 May 2022 the National Retail Federation (NRF) wrote to President Biden asking for the removal of tariffs which, as outlined in the letter, could reduce consumer prices by up to 1.3%. The US Secretary of the Treasury, Janet Yellen, said that some tariffs on China’s products harm US consumers and businesses and that it is worth considering cutting them to lower inflation in the USA.

I believe that - like any war - a trade war is detrimental to both sides and that - unlike the Cold War, when an opponent wanted to impose its own ideologies and forms of government and State on the other - here we end up with a country, namely China, that only demands trade and does not advocate any political revolution.

Thematic Section 3: China's Evolving Military Strategy and Technological Advancements In this section, Prof. Giancarlo

Elia Valori offers a comprehensive perspective on China's ambitious military expansion and its strategic focus on technological advancements, including hypersonic missiles and aircraft carriers. According to Prof. Valori, "With a country of 1.4 billion inhabitants, the Chinese armed forces are inevitably bound to expand and strengthen.

Throughout Chinese history, the military has been a fundamental factor not only in the existence of the State but also in the liberation struggles against Japan and the various doctrines that later tried to isolate the People's Republic of China, such as Containment, etc.

Prof. Giancarlo Elia Valori offers insights into China's strategic military expansion and technological prowess. China's naval capabilities have seen remarkable growth, with a fleet of around 350 ships and submarines, including indigenous aircraft carriers. Notably, China has made significant strides in hypersonic missile technology, testing vehicles

capable of Mach 5 speeds

. Geopolitically, China's Belt and Road Initiative enhances its maritime reach, securing vital sea routes and establishing bases, such as in Djibouti. China's defense budget has consistently increased, reaching approximately $250 billion in 2020, while its presence in the South China Sea raises concerns over territorial disputes. The commissioning of domestically built aircraft carriers underscores China's intent to project power beyond its borders. Prof. Valori's insights shed light on China's evolving military posture, reflecting its aspiration for a prominent global role.

These statistics can help provide context to the discussion on China's military expansion and technological advancements.

• Naval Expansion:

• China's navy, the People's Liberation Army Navy (PLAN), is considered the world's largest by ship count, with approximately 350 ships and submarines.

• The PLAN has been rapidly modernizing, with its first domestically built aircraft carrier, the Liaoning, commissioned in 2012, and subsequent indigenous carriers under construction.

• China's navy has conducted a significant number of exercises and operations in the South China Sea, showcasing its expanding maritime capabilities.

• Hypersonic Missile Development:

• China has made strides in hypersonic missile technology, with successful tests of hypersonic glide vehicles (HGVs) capable of traveling at speeds exceeding Mach 5.

• Hypersonic missiles offer enhanced precision, maneuverability, and the ability to bypass existing missile defense systems.

• Geopolitical Focus:

• China's Belt and Road Initiative (BRI) has strategic implications for its military posture. The initiative's maritime component aims to secure vital sea routes for trade and energy transportation.

• China's expanding network of ports and bases, including in the Indian Ocean region, supports its geopolitical interests and security.

Naval Presence:

• China's presence in the Indian Ocean region has increased, with the establishment of its first overseas military base in Djibouti in 2017. This base facilitates logistical support and protection for China's overseas interests.

• Military Expenditure:

• China's military budget has seen consistent increases over the years. In 2020, China's defense budget reached approximately $250 billion, making it the second-largest military spender globally after the United States.

• Maritime Strategy:

• China's maritime strategy includes the development of island bases and outposts in the South China Sea. This has raised concerns among neighboring countries and prompted disputes over territorial claims.

• Aircraft Carrier Program: s our conversation with Prof. Giancarlo Elia Valori draws to a close, we've gained invaluable insights into China's technological advancements, trade practices, and military strategies. Prof. Valori's expertise has shed light on the complexities of these topics, prompting us to consider the dynamic landscape of China's role on the global stage.

• China's aircraft carrier program reflects its ambitions to project power beyond its borders. The commissioning of the Shandong, its first domestically built aircraft carrier, showcases China's growing naval capabilities.

Question Restrepo: China has been rapidly expanding its military capabilities in recent years, with a focus on developing new technologies such as hypersonic missiles and aircraft carriers. What do you think is driving this expansion, and how do you see China's military posture evolving in the coming years?

Response Valeri: With a country of 1.4 billion inhabitants, the Chinese armed forces are inevitably bound to expand and strengthen. Throughout Chinese history, the military has been a fundamental factor not only in the existence of the State, but also in the liberation struggles against Japan and the various doctrines that later tried to isolate the People's Republic of China, such as Containment, etc.

China is certainly one of the States that aspire to play at least an equal role in international relations with the USA. The military force that China has been developing over the past fifteen years has seen a significant expansion of its fleet. According to a US study, the need to secure the islands in the South China Sea would be the crux of the whole project. The Chinese island of Hainan is in fact the starting point of a maritime route that would connect China with Pakistan in the Middle East and with Djibouti in the Horn of Africa.

The Chinese strategy is to invest in civil (and not military) infrastructure such as ports, oil pipelines, roads, gas pipelines within allied countries that would thus ensure security and allied bases in the Indian Ocean.

Security is a crucial factor in understanding this strategy because since 1993 China has become a net importer of oil (i.e. China’s oil demand is greater than supply) and oil is imported both by land and by sea. The latter option is obviously used with African and Middle Eastern countries, but the trade route is in one of the areas with the highest concentration of sabotage, kidnapping and violence by pirates. Having allies with whom to ensure security in enemy waters becomes therefore crucial. Allied bases, however, also have the function of enabling Chinese ships to have easy and quick passage through three of the world's richest and most dangerous straits, namely the Bab al Mandeb Strait (between Yemen and Djibouti), the Aden Strait (between Iran and Oman) and the Malacca Strait (between Indonesia and Malaysia).

I do not see why China should not strengthen its strategic potential, since all countries – from the strongest to the medium ones - do so on a regular basis, as a function of planned commercial development. It is only natural that this should also involve the development of new technologies such as hypersonic missiles and aircraft carriers, as denying this smacks of a fairy tale told to children.

In the coming weeks, we will continue our exploration of China's multifaceted influence, delving deeper into its economic strategies, regional engagements, and broader implications for the international community. Stay tuned for the next installment, where we will once again engage with Prof. Valori to unravel the intricate tapestry that is China's evolving position in the modern world.