Surprise reason we’re on the brink of a new ‘arms race’

We’ve been focused on the rising tensions between the US and China — but there’s a much bigger issue we’ve ignored entirely.

The US-China trade war has dominated headlines for months now — but apparently, there is a completely different conflict between the superpowers that’s even more urgent.

That’s according to renowned economic historian Niall Ferguson, who told guests at the Australian Financial Review’s business summit yesterday, the more important battle was being waged over technology and artificial intelligence.

He said China’s quick rise as a tech force to be reckoned with was a concern for America, which has long dominated the field.

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“The real conflict between the US and China is now a tech war — that’s the real interesting war that’s developing,” Mr Ferguson said. “In the tech war, there is no peace in sight — there is only escalation.”

He also likened the focus on artificial intelligence to the “nuclear arms race of the initial Cold War”.

British economic historian Niall Ferguson says we’re in the midst of a new ‘Cold War’. Picture: Hollie Adams/The Australian

“The AI arms race is like the nuclear arms race of the original Cold War, but it doesn’t sound so scary because there’s no nuclear warheads, only data and how to use it,” he said.

“But it has dawned on the US that China is catching up, certainly in terms of the volume of research on AI, even if the US retains the lead on quality frontier research.”

Mr Ferguson, a senior fellow at the Hoover Institution, said if China were to win the technological “arms race” it could threaten America's global dominance, but said the Chinese government faced an uphill battle.

“Beijing has to ramp up stimulus as the trade and tech wars hit the Chinese economy — they have to work hard to keep the economic show on the road,” he said.

The “tech war” is the biggest threat to US-China relations, an expert has claimed. Picture: iStock

“At the end of 2017 (China) thought they had Trump figured out — they just had to flatter him and they were done. But suddenly, kabam, in 2018 Trump starts ratcheting up tariffs and escalating the tech wars and China is on the back foot at the moment,” he said.

Meanwhile, London School of Economics professor Keyu Jin, who also fronted the summit, said it was in China’s best interests to avoid an “outright collision” with America.

And despite the tensions between Donald Trump and Chinese President Xi Jinping, she said the US President was actually a “strategic gift to China”.

“He is not the worst nightmare for China — the worst nightmare is a competent, capable American president who is able to strengthen relationships with allies,” she said.

“China’s worst nightmare is to be ousted from the global economic system.

US President Donald Trump has been described as a ‘strategic gift’ to China. Picture: Mandel Ngan/AFP

“Trump is not only fighting China on all fronts but also causing political crises within his own country … to some sense, China has interests in keeping him around.”

She said moving forward, one of Australia’s biggest challenges would be to choose a side between the sparring global powers.

“This is a profound dilemma for Australia, which for reasons of history, naturally gravitates to the US, but for reasons economic, is powerfully drawn to China,” she said.

“It is going to become a central problem of Australian politics, regardless of who is prime minister.”

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