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National

The West has a blind spot when it comes to China’s technological advances.

What's happening: Again and again, the West has shown that it misunderstands China's true competence in the technologies of the future — artificial intelligence, quantum science, robotics, and more. Alternatively under- and over-estimating China's progress, the U.S. and Europe are left simply unmoored in terms of tracking their primary geopolitical competition.

In an utterly unexpected announcement last month, a Chinese scientist said he had produced a genetically edited embryo.

In recent years, there has been a headline-grabbing explosion of AI papers from Chinese researchers, followed by analyses suggesting that Chinese research lags significantly behind American and European work when accounting for impact.

Over the last year, major advances have been announced by Chinese companies that most in the West have never heard of — like MiningLamp, a big data company that’s attracted big-name investors.

Several factors contribute to the trans-Pacific information gap:

Unlike military hardware that can be publicly demonstrated, virtual technology like AI and quantum computing is difficult to scrutinize, especially because they are at their core difficult to understand.

The Chinese government deliberately sows confusion in official announcements and state-controlled media. The aim is sometimes to send rivals scrambling toward a dead end, says Elsa Kania, an adjunct fellow at the Center for a New American Security.

A narrow focus on major cities — Beijing, Shanghai, Guangzhou, Shenzhen — that leaves out major universities and data-annotation outfits that contribute to China’s AI rise, says Jeffrey Ding, a researcher at Oxford's Future of Humanity Institute.

Combined, these factors and others have often left the West in the dark. MiningLamp, for example, is barely mentioned in English literature but is well known in China, says Joy Ma, a researcher at UChicago's Paulson Institute. As a result, U.S. and European companies and officials don't know how to respond appropriately.

Now, the West has swung from discounting Chinese innovation to panicking, depicting an unstoppable tech juggernaut. Against this framing, the U.S. is considering ways to preserve the American tech advantage, like imposing export controls. But sanctions can be overkill, too. 

The reality, says Kania, is somewhere in the middle.

Axios science editor Andrew Freedman writes: Policy decisions made now will determine whether the U.S. successfully competes with China for the lead in scientific and engineering research, or squanders it through a mix of underfunding and poorly crafted legislation.

It's conceivable that China, not the U.S., will be the next country to land a human on the Moon, while also rivaling the U.S. and the E.U. in weather prediction in as little as a decade from now — a field with many military applications.

The West’s China blind spot

The blurry view comes with a risk of unpleasant surprise.

Future

China

Technology

Business

Conflicts, policies and powers are intersecting and shaping the world. Breaking news and analysis of national security, foreign policy and global crises.

World

Media Trends

Axios Media Trends

Snap Inc.'s stock fell below $5 per share Thursday, and hit its all time low of $4.85 Friday. The company went public last year at $17 per share and has gradually lost momentum since. 

Why it matters: Despite dodging a bad press cycle that other data-driven ad companies faced, Snap has still failed to win over investors that are skeptical of the company's plan to grow its user base and business. 

The details: On Thursday, Cheddar reported that employees have been told they won’t receive cash bonuses for the second consecutive year. According to Cheddar's Alex Heath, who broke the story, it's because Snap didn't meet internal goals for 2018.

"CEO Evan Spiegel had originally said the goal was to reach break-even in Q4. Snap lost $325 million against $298 million in revenue last quarter and hasn't reported for Q4 yet."

The big picture: Snapchat has had a hard year trying to recover from a poorly received redesign in Q1 and a failure to grow its user base throughout the year. 

In its last quarterly earnings report, Snap reported 186 million daily active users, down 1% from the previous quarter when it had $88 million, also down from 191 million in 2018 Q1. It predicts a decline in for Q4. 

The company has also lost many high-level staffers, including its communications lead, its content lead, its head of engineering, its head of business and its head of marketing. 

Snap stock hits all-time low ahead of the holidays

The company went public last year at $27 per share and has gradually lost momentum since.

illustration of snap logo in front of declining line graph

SnapChat logo is seen on an Android mobile device with a decline loses graph in the background. Photo: Miguel Candela/SOPA Images/LightRocket via Getty Images.

Snap Inc.

Top stories & latest news on the Federal Reserve, real-time data, plus the biggest shifts happening in the U.S. and global economy.

Economy

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

The Supreme Court voted 5-4 Thursday to uphold a federal judge's ruling that blocked the Trump administration from denying asylum to migrants who illegally cross the border between Mexico and the United States, the Washington Post reports. Justice Ruth Bader Ginsburg, who just had surgery removing malignant cancerous growths from her lung, voted from her hospital bed, per NBC News.

The big picture: The rule was initially blocked by U.S. District Court Judge Jon Tigar, who ruled that President Trump "may not rewrite the immigration laws to impose a condition that Congress has expressly forbidden." Justices Clarence Thomas, Samuel Alito, Neil Gorsuch and Brett Kavanaugh voted in favor of allowing the Trump administration's new asylum rules to go into effect, making chief Justice John Roberts the deciding vote against the ban.

Supreme Court upholds block against Trump's asylum ban

Chief Justice John Roberts was the deciding vote against the ban.

The migrant caravan on the move into the United States

Central American migrants on the move into the United States. Photo: Ulises Ruiz/AFP via Getty Images

Politics

Supreme Court

Latin America and Latinos

2024 will be an election year like no other, as President Biden seeks re-election amid economic uncertainty, two wars and questions about his age. His likely foe, former President Trump, faces felony charges and vows revenge on his political enemies. Meanwhile, Americans generally are dissatisfied with those choices and are divided over immigration, race, education and more.

Politics & Policy

Senate Majority Leader Mitch McConnell came away from his meeting at the White House this morning with President Trump and other Senate Republican leaders with no new deal for Democrats, and said the Senate will vote today on the House's short-term spending bill, which includes $5.7 billion for border security.

The big picture: The bill, which McConnell — toeing the Trump line — called "uncontroversial," is extremely unlikely to pass, and a partial government shutdown will go into effect at midnight if no deal is reached. Trump, who rejected the initial short-term spending bill that the Senate passed earlier this week for not including enough money for his wall, tweeted earlier that Democrats are to blame if the government shuts down. Last week, he vowed to take full responsibility for a shutdown over funding for the border wall.

McConnell says Senate will vote on House's short-term funding bill

Senate Majority Leader Mitch McConnell at the U.S. Capitol

Senate Majority Leader Mitch McConnell at the U.S. Capitol. Photo:  Saul Loeb/AFP via Getty Images

Government shutdown

China's annual Central Economic Work Conference (CEWC) that sets the overall direction for the next year's economic policies just concluded in Beijing. 

Why it matters: The signals from this meeting suggest, among other things, increased efforts to stimulate the economy and work out a trade deal with the U.S.

Caixin has the details — Top Economic Meeting Ends With Pledges of ‘Greater’ Tax Cuts, ‘Reasonably Ample’ Liquidity:

"The leaders pledged to cut taxes and fees “on a greater scale,” increase the issuance of special-purpose local government bonds by “a relatively large margin,” and strike a balance between monetary tightening and easing to ensure “reasonably ample liquidity,” as they promised to continue to take measures to address the financing difficulties faced by private and small companies. The measures are part of official efforts to “strengthen counter-cyclical policy adjustments,” which refers to government support to boost economic growth, according to Xinhua. Proceeds from sales of special-purpose local government bonds are often used to fund infrastructure investment, a key driver of economic expansion."

"They noted that the world is facing a “once-in-a-century” change that entails both crisis and opportunities. They urged the nation to “turn crisis into opportunities” by improving its technology and innovation capabilities, deepening reforms and opening up further, participating in global economic governance system overhaul, and speeding up a transition to high-quality growth, the report said."

My thought bubble: The Chinese economy is struggling, the debt mess is unresolved and the impact from the U.S. tariffs has barely begun. There are obvious downside risks but there is also the risk of being too bearish going into 2019.

The Communist Party will do everything it can to juice the economy and the message out of this meeting appears to confirm that multiple forms of stimuli will be forthcoming. Whether or not significant economic reforms will now also be forthcoming, and not just more promises, is the trillion dollar question.

Go deeper: China Pledges More Stimulus in 2019 as Economy Seeks Bottom —Bloomberg and the official English-language readout from Xinhua

China commits to juicing its economy in 2019

That may include a trade deal with the U.S.

Whats Next

Axios What's Next

Automated vehicle technology is moving fast — too fast to regulate, some would argue — but there are ways the industry can collaborate to ensure safety without stifling innovation.

The big picture: Tech and automotive companies are developing proprietary AV driving systems and strategies, from robo-taxis to delivery pods to heavy-duty trucks. If each shared their own critical safety data collected during testing, experts say they could use it to define standards and practices to guide future development.

What's happening: Congress was set to adjourn for the year without voting on a bill on self-driving cars, leaving in place a patchwork of state regulations but no overarching standards.

The National Highway Traffic Safety Administration (NHTSA) did signal, however, that it plans to make it easier to test self-driving vehicles without pedals or steering wheels, which will keep development moving.

What we're hearing: Some AV developers say it's not the end of the world that Congress failed to pass the AV Start bill, as long as there are other ways to standardize the technology and ensure safety.

"Everything is moving so quickly, by the time you regulate it, it would be totally obsolete. What we need is a path from innovation to data-driven best practices and that will set the path for regulations in the future."

Mark Rosekind, chief safety innovation officer at AV start-up Zoox and former NHTSA Administrator

What's needed, says Rosekind, who led NHTSA from 2014 to 2016, is for companies to share what they've learned from their mistakes, so others don't make them, too.

The airline industry is a good model, he says.

The Federal Aviation Administration has a database of lessons learned from civil aviation accidents to try to promote the open exchange of safety information.

Unlike automakers, airlines don't compete on who has the best safety features.

The U.S. hasn't recorded a fatal airline passenger jet crash since February 2009.

The auto industry has a lousy record of sharing information that will make cars safer.

NHTSA's Fatality Analysis Reporting System (FARS) has data on U.S. traffic fatalities going back to 1975.

But it failed to help detect a pattern of fatalities in the late 1990s that led to the Ford-Firestone tire debacle.

In response, Congress in 2000 enacted the TREAD Act, which included an "early warning" requirement to report potential safety issues.

Still, problems persisted. GM, Honda and Fiat Chrysler all were hit with record penalties for not reporting safety issues in a timely manner.

What's different now: Connected, autonomous vehicles can be fixed quickly through over-the-air updates. Although there can be security risks, safety problems can be addressed quickly this way.

The bottom line: AV technology continues to advance, but consumer trust — as much as the technology's readiness — will determine how quickly AVs are adopted. Absent government regulation, the industry may need to set its own standards to gain consumer confidence. 

Autonomous vehicle makers want to set their own standards

Automated vehicle technology is moving fast — too fast to regulate, some would argue.

Transportation

Autonomous vehicle technology

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From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

In crafting new privacy laws to cover tech giants' vast appetite for user data, lawmakers are finding that they're having to draw up new rules for the old-fashioned brick-and-mortar world, too.

Why it matters: Consumer data is now the most valuable asset for nearly all companies — not just digital ones. Most large businesses operate simultaneously in both realms, and the boundaries between data's use online and offline have blurred.

The big picture: Consumers understand that Google and Facebook track them, but the same kind of profiling increasingly happens in the physical world — from facial recognition at Taylor Swift concerts to Amazon's cashier-less convenience store. Any new privacy law will have to reckon with questions about transparency and consumer choice not only in apps and on websites but as we walk through stores and drive down streets. 

By the numbers: Companies across the economy gather data on consumers in the physical world for a wide range of business purposes.

Euclid, which tracks customers who go to physical stores by connecting with their smartphones, announced this summer that its database had crossed the 120 million active devices mark.

Over the next 3 years, Amazon is considering building as many as 3,000 of its Amazon Go convenience stores, which use hundreds of cameras to let customers take items off the shelf and buy them without ever interacting with a cashier, per Bloomberg. (The company reportedly doesn't use facial recognition software to run the stores.)

Relentless Recovery, a company featured in a Washington Post article earlier this year, reportedly used scanner technology to read 28 million license plates in 2017 as it looked for vehicles to repossess.

Offline data collection can then be merged with online targeting — and nowhere is this more evident than with location data.

“It’s not a coincidence that when you’re in Walmart they’re showing you a Dove ad," said Serge Matta, the president of location tracking firm GroundTruth, at an Axios event earlier this year.

“A lot of people, admittedly so, will think this is a bit creepy," he said later.

Why you'll hear about this again: Federal lawmakers are under pressure to write a national privacy law, spurred on by data scandals at Facebook and Google.

Industry also hopes that Congress will supersede a new California privacy law before it goes into effect in 2020. Other states are expected to write their own rules, too.

Lawmakers said in recent weeks that they were still figuring out how to make sure their work could apply outside the bounds of the web:

Sen. Jerry Moran (R-Kansas) said that examples of offline data collection show this is a "broader issue than the big tech companies that are so at the forefront of the conversation" and a reminder of "how difficult it is for us to craft legislation that covers all circumstances."

Your corner store could be Congress' next privacy challenge

Data collection is being baked into the world around you.

Axios

Friday's top stories

The West’s China blind spot

Snap stock hits all-time low ahead of the holidays

Supreme Court upholds block against Trump's asylum ban

McConnell says Senate will vote on House's short-term funding bill

China commits to juicing its economy in 2019

Autonomous vehicle makers want to set their own standards

Your corner store could be Congress' next privacy challenge

Pre-Christmas Trump: Rebuked, rampaging

What should worry Trump most: Republican allies are turning on him

The warnings of escalation in the Russia-Ukraine standoff

Why the spotlight on generic drug prices is getting brighter

House passes short-term funding bill with $5.7 billion for border wall