ASPI’s Critical Technology Tracker finds China ahead in 37 of 44 technologies evaluated
The Australian Strategic Policy Institute (ASPI finds that China is further ahead in more technologies than has been realized. It’s the leading country in 37 of the 44 technologies evaluated, often producing more than five times as much high-impact research as its closest competitor. This means that only seven of the 44 analysed technologies are currently led by a democratic country, and that country in all instances is the U.S. Of the ten AI and ICT-related technologies examined, China dominates in seven, the study concluded.
The ASPI study is based on an analysis of the top 10% most-cited papers in each area of research published between 2018 and 2022 – a total of 2.2 million papers. It acknowledges that a widely cited piece of research does not automatically translate into successfully deployed technology. The study also does not reflect the current state of commercialization or of technology diffusion. Here’s a table showing China leading technologies:
Source: Australian Strategic Policy Institute
China leads globally in photonic sensors (43% of world’s top 10% high-impact research, 3.41 times the US), quantum communications (31%, 1.89 times the US), advanced optical communications (38%, 2.95 times the US) and post-quantum cryptography (31%, 2.3 times the US). Taken together, these observations increase the risk of Chinese communications going dark83 to the efforts of western intelligence services. This reduces the capacity to plan for contingencies in the event of hostilities85 and tensions.
China has reportedly built the physical infrastructure to claim the world’s largest quantum communication network,86 and has even established quantum communication with moving drones87 and satellites.88 As with many things, the risk is cumulative—the risk increases as China leads in both cryptography resistant to decryption by quantum computers and the ability to share encryption keys via quantum communication. One mitigating factor is the current US lead in quantum computing (34% of world’s top 10% high-impact research output, 2.26 times China).
Here are three key tech areas where China dominates in high-impact research papers:
- In advanced radiofrequency communications, including 5G and 6G, (there is no such thing as 6G radio) China ranks 1st with 29.65% vs 9.50% for the U.S. and 5.2% for the UK.
- In advanced optical communications, China ranks 1st with 37.69% vs. 12.76% for the U.S.
- In artificial intelligence (AI) algorithms and hardware accelerators, China ranks 1st with 36.62% vs. 13.26% for the U.S.
The ASPI report designates China’s lead in these technologies as “high-risk,” meaning it is a long way ahead of its closest competitor and that it is home to most of the world’s leading research bodies in that field.
Quantum communications is another area of strength for China. USTC is the top institution irrespective of the quality metrics, and a total of eight out of 20 top institutions are based in China (see Figure 9). Tsinghua University and Delft University of Technology in the Netherlands occupy the second and third places depending on the quality metrics. China’s lead in quantum communications is especially prominent in the proportion of publications in the top 10% of highly cited papers. China’s quantum research was spearheaded by the Xiangshan Science Forum for quantum information in Beijing in 1998, which resulted in experimental research in quantum information within several Chinese universities and research institutes, including USTC, Shanxi University and the Chinese Academy of Sciences’ Institute of Physics.
USTC scientist Jian-Wei Pan to demonstrate the potential of quantum communications to Xi Jinping and other Politburo members, and he became known as the founder of Chinese quantum science. In China’s Thirteenth Five-Year National Science and Technology Innovation Plan announced in August 2016,163 the CCP strengthened its quantum strategy further by listing quantum communications and computing as major science and technology projects for advances by 2030. USTC demonstrated China’s dominance in quantum communication by building the first fibre-based ‘Beijing–Shanghai Quantum Secure Communication Backbone’ in 2013, connecting Beijing, Shanghai, Jinan Hefei and 32 reliable nodes over a total transmission distance of more than 2,000 kilometres.164 The strength of quantum communications is that it ensures secure communication due to quantum entanglement, which effectively ensures that any quantum information is modified when observed. This effectively makes it difficult to amplify quantum signals in the conventional way used for current optical communications. Pan’s research team made another significant breakthrough in 2017 by using the first quantum satellite (Micius, launched in 2016), and the free space reduced attenuation to transmit image and sound information using quantum keys over 7,600 kilometres between Austria and China.
ASPI warns that China’s advanced research “at the intersection of” photonic sensors, quantum communications, optical communications and post-quantum cryptography could undermine the U.S. led “Five Eyes” global intelligence network.
“Taken together, these observations increase the risk of Chinese communications going dark to the efforts of western intelligence services,” the report said. ASPI said its research will be updated with the aim of assessing the future tech capabilities of nations and to highlight long-term strategic trends.
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Huawei reinvents itself via 5G-enabled digitalized services to modernize the backbone of China’s industrial sectors
In northern China sits Tianjin port’s “Smart Hub” – a fully digitalized and automated wharf where quay cranes, gantry cranes, stackers and forklifts are all controlled by a command center miles away. Powered by Huawei Technologies’ 5G telecommunications infrastructure, the smart port can move 36 20-foot equivalent units (TEU) per hour, much faster than humans.
“Digitalization is the industry trend, a direction not just for Chinese ports, but for all global ports,” Yang Jiemin, vice- president of Tianjin Port (Group), said during a recent visit by the South China Morning Post. “Our goal is to build a digital twin to Tianjin port in the next three to five years,” he added. The benefits of automation are clear. A staff of 200 operators and engineers can manage 1 million TEU in annual throughput at Tianjin port’s Terminal C, about 25 per cent of the employees needed in a typical year during its pre-digital age. The future has more in store: artificial intelligence (AI) for predicting congestion, big data analysis for parsing traffic trends and driverless trucks – all made possible by the ultra-fast exchange of data in 5G networks.
Shenzhen-based Huawei, with 195,000 employees in 2021 and one of the world’s largest research budgets, surpassing even that of Google and Microsoft, is now promoting the advantages of 5G-enabled digitalized services to modernize the backbone of China’s industrial production in coal mines, ports and even hospitals.
As U.S. sanctions tightened around Huawei’s access to critical technology, the firm’s smartphone business, which beat Apple to become the world’s second-biggest smartphone maker in 2018, came under tremendous pressure. Deprived of Google’s Android operating system and short of vital components, it sold its Honor budget smartphone business in 2020, the biggest driver behind its spectacular success. Huawei then pivoted back to its mainstay enterprise business, opening up new data-heavy products and services for customers to increase their usage and dependence on its 5G infrastructure.
The company established “legions” to spearhead the effort, a nod to the military parlance much liked by founder Ren Zhengfei, who served in the People’s Liberation Army. These cross-departmental business units were established to help clients digitally transform their products and services in mining, customs clearance and ports, energy savings at data centres, smart highways and the photovoltaic industry.
Last June, Huawei added five legions, bringing the total to 20. While it has not disclosed details about each legion, the chief executive of its airport and road legion, Li Junfeng, said the company was hopeful about the digitalization of transport.
“Airports and roads are also key infrastructure and it is difficult to expand in the overseas market. So we do not have plans for global expansion in the short term, but we will make some changes next year,” Li said in November, according to the state-owned Securities Times financial newspaper.
For Huawei, hopes are high that such industrial infrastructure can turn into a source of steady revenue – at least domestically – although the firm has declined to divulge the financial details of its showcase applications.
Huawei’s efforts to forge deeper ties with traditional industries build on its past work with the world’s private enterprises, leveraging its 5G connectivity and computing power to automate and upgrade various verticals, says Matthew Ball, chief analyst at research firm Canalys.
“Overall, this is an extension of what Huawei has done for years, even before the US sanctions, particularly its enterprise business, which had a strong vertical focus on delivering solutions across its portfolio,” Ball said.
“It’s just that its smartphone business has received more headlines.”
The jury is still out on whether Huawei can survive US sanctions, especially given Western reluctance to allow it future access to potentially sensitive data and network infrastructure contracts on national security grounds. The company has already undergone huge change since Trump added it to a trade blacklist in May 2019, barring it from doing businesses with US partners without special permits.
Huawei’s rotating chairman, Eric Xu, said in a new year’s message that the company had exited “crisis mode” and was ready to go “back to business as usual” in 2023. The bleeding has been staunched after it reported preliminary revenue of 636.9 billion yuan (HK$736.3 billion) for 2022, little changed from the previous year.
The pressure remained on Huawei even after Trump lost his re-election bid. Reports emerged last month that Joe Biden’s administration was considering cutting off Huawei from all its US suppliers, including Intel and Qualcomm, which produce the semiconductors critical to the company’s telecoms gear.
Huawei has been reporting its annual results since 2000 even if it is not subject to public disclosure regulations, a practice from bidding for tender contracts in public telecoms networks.
The share of China revenue in its overall business has increased from about half in 2018 to around two-thirds in 2021 due to a retreat from almost all overseas markets, including the Asia-Pacific, the Americas and Europe, the Middle East and Africa, according to its results.
Its consumer business, mainly smartphones and devices, has been hobbled by a lack of access to advanced chips.
At one point, Huawei briefly surpassed Apple and Samsung Electronics to become the world’s biggest handset vendor, but it is now out of the top five. By the third quarter of 2022, it finally ran out of less advanced in-house- designed semiconductors for its handsets.
Huawei’s carrier unit, once its bread-and-butter business of selling telecoms gear, has slipped as China’s telecoms operators gradually complete network upgrades. In 2021, its carrier business revenue was 40 per cent lower than in 2019 when China began 5G infrastructure installation.
That leaves enterprise as the only segment with growth, notching up a 2.1 per cent revenue increase in 2022, although its contribution was still less than one-sixth of total sales.
At the beginning of 2021, Huawei founder Ren told employees the company must make cloud computing its priority, and personally endorsed the firm’s partnership with coal mines.
The company is developing customized 5G mobile base stations for the mining industry that are resistant to dust, dampness and even shock waves from explosions. These devices are expected to support stable and fast upload of real-time data from unstaffed machinery, sensors and high-definition cameras, which would help China’s most dangerous industry cut back on the number of people working in the pits. The mining industry would be the first to use the model where scientists and experts from different corporate departments could come together to find solutions to specific industry problems, Ren said in 2021 in the Shanxi provincial capital of Taiyuan.
Enhancing end-to-end user experience, real-time processing of massive data and the operation, maintenance and management of complex networks would all become challenges for the financial industry in the future, according to a June speech by Cao Chong, the head of Huawei’s digital finance legion, the Securities Times reported.
Huawei has also made a foray into the electric-vehicle sector, with the high-profile launch of Aito cars, a brand launched jointly with Chinese electric-car maker Seres. However, competition is cutthroat in China, and Huawei ranked only sixth among the country’s electric-vehicle start-ups with a total of 76,180 units by the end of 2022. The company has also forged ties with a series of carmakers offering smart car components.
The change in Huawei’s business is visible to consumers. On the ground floor of its Shenzhen flagship store, a three-storey building with a huge glass facade, customers approached a row of Aito cars during a recent visit, asking sales representatives about vehicle specifications and available discounts. At the other end of the showroom, Huawei’s latest smartphones and tablets were on display on long wooden tables. While analysts are generally sanguine on Huawei’s new enterprise business moves, the digitalization push is not expected to result in a short-term revolution.
“The enterprise business should be able to generate rapid growth in the next five to 10 years,” said Ivan Lam, a senior analyst at Counterpoint Research. But the threat of US sanctions remains the biggest obstacle for Huawei, according to Lam, especially for products that require advanced computing power such as smartphones, servers and car components.
“Huawei has never treated existing sanctions as the last, and it has been preparing for new restrictions in various ways, such as adoption of domestic technologies. We expect Huawei to reap the benefits of these efforts in coming years and close the gap in key technologies,” ” Lam said.
Separately, the South China Morning Post reported that Huawei Technologies Co chief financial officer Meng Wanzhou, daughter of company founder and chief executive Ren Zhengfei, is expected to take her turn as “rotating chairwoman” in the company from April, according to local media reports, signalling that a succession plan looks to be in place at the struggling Chinese telecommunications giant.
It would mark the first time that Meng, 50, has assumed the role since she was added as one of three rotating chairmen at Huawei in March last year, alongside Eric Xu Zhijun and Ken Hu Houkun. Xu’s current acting chairman term started on October 1 last year and will conclude on March 31.
During her six-month turn as the company’s top leader, Meng, who also serves as deputy chairwoman at Huawei, will head the company’s board of directors and its executive committee.
Meng was hailed as a national hero upon her return to China in a chartered flight in September 2021, following nearly three years under house arrest in Canada where she fought extradition to the US over a bank fraud case. Under a deal reached with US prosecutors, that case and other charges against Meng were dismissed last December.
China to build ground stations in Antartica to support ocean monitoring satellites
China, only the third country to put a man in space after the Soviet Union and United States, is to build ground stations on Antarctica to back its network of ocean monitoring satellites, state media said on Thursday.
Renders of the 43.95 million yuan ($6.52 million) project show four radome-covered antennas at China’s Zhongshan research base in East Antarctica. It is unknown if these are new and additional to antennas already established at the base.
The antennas will assist data acquisition from Chinese satellites that orbit in polar and near-polar orbits. Satellites in these orbits are visible near the poles multiple times a day, allowing more frequent opportunities for downlink than with stations at lower latitudes.
China has already launched eight Haiyang series ocean observation satellites into sun-synchronous orbits between 2002 and 2021, and plans more in the coming years. The first new-generation Haiyang-3 satellite is scheduled for launch this year, according the China’s main space contractor, CASC.
China Satellites and Balloons used for Espionage?
China’s global network of ground stations to support a growing number of satellites and outer space ambitions has drawn concern from some nations that it could be used for espionage, a suggestion China rejects.
In 2020, Sweden’s state-owned space company, which had provided ground stations that helped fly Chinese spacecraft and transmit data, declined to renew contracts with China or accept new Chinese business due to “changes” in geopolitics.
The United States military shot down a Chinese spy balloon on Saturday that had spent the last week traversing the country. The balloon, which spent five days traveling in a diagonal southeast route from Idaho to the Carolinas, had moved off the coast by midday Saturday and was shot down within moments of its arrival over the Atlantic Ocean.
One of two F-22 fighter jets from Langley Air Force Base fired a Sidewinder air-to-air missile, downing the balloon, which was flying at an altitude of 60,000 to 65,000 feet. The F-22s were at 58,000 feet, with other American fighters in support.
In announcing the cancellation of his trip to China, U.S. Secretary of State, Antony J. Blinken said the entry of the spy balloon was a “clear violation of U.S. sovereignty and international law.”
China Aerospace Science and Technology Group Co. is to build the stations at the Zhongshan research base, one of two permanent Chinese research stations on Antarctica, after winning the tender with its 43.95 million yuan ($6.53 million) bid, state-controlled China Space News reported.
Liftoff of a Long March 2C from Taiyuan carrying the Haiyang-1D ocean observation satellite on June 10, 2020. Image Credit: CASC
No technical details of the project were given in the report, though China Space News published two accompanying illustrations of an artist’s rendering that shows four ground stations at Zhongshan, located by Prydz Bay in East Antarctica, south of the Indian Ocean.
The project was part of broader initiatives aimed at building China’s marine economy and turning China into a marine power, according to China Space News.
China is global IoT Superpower with 1.8 billion connections as of Dec 2022
As of December 2022, the number of connections for cellular Internet of Things (IoT) services hit 1.8 billion in China, accounting for 70 percent of the world’s total, according to the country’s Ministry of Industry and Information Technology (MIIT).
MIIT’s figures, which are based on data from three major telecommunication companies in China, show that the total number of terminal connections for mobile network have reached 3.528 billion, among which 1.845 billion are cellular IoT end users. The biggest proportion of the IoT services in China are using NB-IoT (the most popular 3GPP and ITU-R standard for cellular IoT), rather than LTE-M or other cellular IoT variant.
The ministry says four NB-IoT use cases have scaled to more than 10 million connections: water meters, gas meters, smoke detectors and tracking. Another seven, including agriculture and streetlights, have crossed the 1 million mark. The MIIT has also issued a breakdown of end-user terminal numbers, with 496 million deployed in public services, 375 million in internet of vehicles, 350 million in smart retail and 192 million in smart home. In area without service coverage, NB-IoT is deployed to achieve connectivity, such as soil sensors for smart agriculture.
China’s cellular IoT end users, for the first time, have surpassed that of mobile phone users by 161 million, accounting for 52.3 percent of the total, MIIT said.
Cellular IoT connects a wide variety of machines and devices, allowing them to communicate with each other by piggybacking on the cellular networks often used. Simply put, it facilitates massive data streams among sensors, actuators, etc., without building additional physical infrastructure.
While the IoT services are heavily applied across a myriad of industries, such as manufacturing, logistics, agriculture and transportation, cellular IoT modules fulfill a critical role as part of IoT systems or products in serving as the gateway for data transfer through 5G, 4G and LTE.
Government think tank CAICT predicts that by 2030 China will have tens of billions mobile IoT connections. The three operators, with their monopoly over communications infrastructure, will be at the center of this growth story.
In 2021 China Mobile reported 11.4 billion Chinese yuan (US$1.57 billion) in revenue from its IoT business, a 21% year-over-year (YoY) rise, with the number of connections 20% higher. It hasn’t yet reported revenue from 2022 but says total connections rose 14% to 1.2 billion, website C114 reported.
China Telecom’s 2021 IoT revenue was 2.9 billion yuan, while in the first three quarters of 2022, China Unicom claimed 366 million connections and 6.2 billion yuan in revenue, up 26% YoY.
The revenue numbers are low and will probably remain relatively so, but with this sort of growth rate, and with no external competitors, the telcos will be expecting their IoT portfolios to become a healthy niche income stream. However, while the growth numbers are good, we have no insight into the underlying cost or profitability of these IoT services. The obvious parallel is 5G, where the telcos have built networks and user numbers at huge scale but with limited returns so far.
China also leads in IoT silicon:
China also leads the world in supply of IoT chips. Counterpoint Research data shows that three Chinese companies – Quectel, Fibocom and Sunsea – accounted for half of the global mobile IoT module market in Q3. The no. 5 supplier is China Mobile, which has developed two types of RISC-V chips, and has shipped more than 100 million IoT chips. It has also sold more than 30 million OneOS operating system terminals.
With the expansion of 5G coverage, China is set to expand its IoT industry that covers chips, modules, terminals, software, platform and service. Meanwhile, its NB-IoT has been applied for smart metering, sensing, tracking and smart agriculture.
FBI and MI5 Chiefs Issue Joint Warning: Chinese Cyber Espionage on Tech & Telecom Firms
Chinese government-backed hackers have attacked major telecom businesses throughout the world in a cyber-espionage effort that has lasted at least two years and has successfully compromised at least 13 telecommunications groups.
In a recent advisory, the FBI, NSA and CISA stated that hackers linked to the People’s Republic of China (PRC) had targeted and hacked major telecommunications businesses by exploiting simple and well-known network and system vulnerabilities.
According to the report, Chinese espionage is often initiated with hackers surveying target networks and exploring the manufacturers, models, versions, and known vulnerabilities of routers and networking equipment using open-source scanning tools such as RouterSploit and RouterScan. The Chinese government consistently disputes charges of hacking.
The heads of the FBI and Britain’s domestic security service have just issued sharply worded warnings to business leaders about the threats posed by Chinese espionage, especially spying aimed at stealing Western technology companies’ intellectual property.
In a rare joint appearance on Wednesday July 6th at the headquarters of MI5 in the UK, Christopher Wray, director of the Federal Bureau of Investigation (FBI), and Ken McCallum, director-general of MI5, urged executives not to underestimate the scale and sophistication of Beijing’s campaign.
“The Chinese government is set on stealing your technology—whatever it is that makes your industry tick—and using it to undercut your business and dominate your market,” Mr. Wray told the audience of business people.
“They’re set on using every tool at their disposal to do it.” China uses state-sponsored hacking on a large scale, along with a global network of intelligence operatives in its quest to gain access to technology it considers important, Messrs. Wray and McCallum said.
“The Chinese government poses an even more serious threat to Western businesses than even many sophisticated business people realize,” Mr. Wray added.
PHOTO CREDIT: DOMINIC LIPINSKI/ASSOCIATED PRESS
“We want to send the clearest signal we can on a massive shared challenge—China,” Mr. Wray said in his appearance with his U.K. counterpart. Tackling the threat is essential, he said, “if we are to protect our economies, our institutions and our democratic values.”
“The most game-changing challenge we face comes from the Chinese Communist Party,” Mr. McCallum said. “It’s covertly applying pressure across the globe. This might feel abstract, but it is real and it is pressing.”
China is engaged in “a coordinated campaign on a grand scale” that represents “a strategic contest across decades,” Mr. McCallum said. “We need to act.”
While American law enforcement and intelligence officials have been warning about the problem for years, it is a far more recent phenomenon for British security officials, who until last year made few public comments about the Chinese threat.
MI5 is running seven times more investigations involving Chinese espionage than it did in 2018, and plans to double the current number in the coming years, Mr. McCallum said.
The statement from the American security agencies did not name the victims of the hacking, nor did it specify the extent of the damage. However, US authorities did list specific networking equipment, such as routers and switches, that Chinese hackers are suspected of routinely targeting, exploiting serious and well-known flaws that basically gave the attackers full control over their targets.
Cisco, Citrix, Fortinet and Netgear equipment were among the most often attacked devices. Cisco and Netgear, according to the warning, have already published software updates for the majority of the identified vulnerabilities. The organizations recommended that operators take certain actions to minimize possible threats in addition to applying available patches and system upgrades. These include removing or isolating suspected compromised devices as soon as possible, segmenting the network to limit or prevent lateral movement, disabling unused or unnecessary network services, ports, protocols, and devices, and requiring multi-factor authentication for all users, including those connected via a VPN.
For intelligence organizations, telecommunications companies are particularly valuable targets. These service providers develop and operate the majority of the Internet’s infrastructure, as well as numerous private networks throughout the world. Successfully hacking of these networks can open the door to an even larger universe of valuable surveillance opportunities.