The Pentagon’s concerns over Chinese investment in the US should be considered carefully.
In this morning’s Wall Street Journal, Daniel Michaels and his team write of how what’s “Driving U.S. Factories [is] Foreign Robotics.” All the best machine tools, it would seem, are made by the Germans and the Japanese. If that sounds like the 1980s, he asserts that it’s even more true now: their market share has increased considerably. The Web version of the article has a more alarming bit of click-bait for a title: “Foreign Robots Invade American Factory Floors.” Get past, for the moment, the peak-America obsession of the 1980s with the awesomeness of German industry, and drop your copy of George Freedman’s now absurd-sounding The Coming War With Japan (Saint Martin’s, 1991). More meaningfully, as Christopher Diamond wrote in Defense News last week, the Pentagon is increasingly “concerned with Chinese investments in US high-tech startups.”
Diamond quotes Ken Wilcox of the Silicon Valley Bank, who last year declined offers from three different state-owned Chinese companies to buy “just any and all tech” on orders from Beijing. The issue was first covered two days earlier by the New York Times, in an article about how “China Bets on Sensitive U.S. Start-Ups, Worrying the Pentagon.” Last year, Defense Secretary Ash Carter commissioned Mike Brown, the former head of Symantec, to investigate the question. His otherwise unpublished report is now circulating around the Pentagon and the White House. Word around town suggests that it calls for closer scrutiny of more deals by the federal Committee on Foreign Investment in the United States (CFIUS).
“Sifius,” as it’s pronounced, has a mildly McCarthyist ring, but the scenario represents one of the Pentagon’s recurring nightmares: losing control of the best of American technology. Just think: the cyber guys might log on one day to the message I’m sorry, Dave. I can’t hack that Russian computer for you. I play Go with him on Tuesdays. Control can be lost to foreigners or just to high-minded Americans disinterested in that whole national security thing. I wrote about the matter in July 2014 in parts One and Two of my essay on “Battlestar Google.” Parent company Alphabet, the firm bent on Not Being Evil, was pulling the robotics companies it had bought out of the weapons business—though it then piled those investments into its creepy-sounding division Replicant. One year ago, Bloomberg reported that Google was putting Boston Dynamics up for sale, but that hasn’t happened. Perhaps Executive Chairman Eric Schmidt’s ascension to the ranks of the consulted—his appointment to the Defense Innovation Board, that is—has made a difference.
Maybe other impressive things, with yet military applications, are yet happening. Consider the story around what Frank Tobe of The Robot Report called “technology gap left by Amazon’s acquisition of Kiva.” That company is now Amazon Robotics, and it’s producing huge numbers of mechanical warehouse workers, entirely for use in-house. (The videos are impressive.) Its withdrawal from the broader market has spurred on a pack of competitors now chasing its past business with other customers. Logistics, Winston Churchill once noted, is a particularly American enthusiasm, and so it is in robotics as well. Towards the end of his article in the WSJ, Michaels observes how American companies like Ready Robotics, a startup by graduates of Johns Hopkins University, are “augmenting robots with sensors for vision, motion, and touch—a field where the U.S. is strong.” The company’s oh-so American speciality is touch-screen interfaces that make training workers on the robots easier. That makes for a revealing pun if you think about what the word robot really means.
All this work, Michaels continued, is “enabling automation systems to be reactive, and not just follow rote tasks”—a demonstration of lasting American acumen, and an essential quality on the battlefield. As Stew Magnuson noted for National Defense last week, the Army is still having problems buying a robotic mule (wheeled now, thankfully) that can quietly and reliably keep up with the infantry. That’s also a reminder that technological progress is rarely even and inexorable. On another tack, Michaels notes how some US companies too are shopping abroad for capabilities. Specifically, he extols General Electric’s interest: that firm “last year bought 3-D metal printing companies in Sweden and Germany for roughly $1.5 billion, and is expanding their operations.” Behold the power of global markets, at least those within the alliance: Germans sell robots to Americans, and Americans buy 3-D printing companies from Germans.
After the New York Times published its article, our colleague Jim Perkins (@jim_perkins1) asked us to repeat in unison: “Bureaucratic stifling of innovation is a national security threat.” He directed his tweet to three places: @DEFConference, the community of Defense Entrepreneurs Forum; @DIU_x, which needs no introduction; and @benatworkdc, the personal feed of Ben Fitzgerald, late of the Center for a New American Security, and suddenly on the majority staff of the Senate Armed Services Committee. Clearly, Perkins meant to send a helpful signal to the Congress. In light of these intertwining relationships, it’s important to remember that trade and investment restrictions work two ways. It is most reasonable for the CFIUS to scrutinize deals with Beijing’s backing, but its reach must not stifle the combinatorial innovation that transoceanic trade and investment bring. Defense would be worse off for that.
James Hasik is a senior fellow at the Scowcroft Center for Strategy and Security.