Former US president George H.W. Bush once said that “No nation on Earth has discovered a way to import the world’s goods and services while stopping foreign ideas at the border.” In an age when democracies dominated the technological frontier, the ideas Bush had in mind were those associated with the US’ own model of political economy.
Now that China has become a leading innovator in artificial intelligence (AI), might the same economic integration move countries in the opposite direction? This question is particularly relevant to developing countries, since many are not only institutionally fragile, but also increasingly connected to China via trade, foreign aid, loans and investments.
While AI has been hailed as the basis for a “fourth industrial revolution,” it is also bringing many new challenges to the fore. AI technologies have the potential to drive economic growth in the coming years, but also to undermine democracies, aid autocrats’ pursuit of social control and empower “surveillance capitalists” who manipulate our behavior and profit from the data trails we leave online.
Since China has aggressively deployed AI-powered facial recognition to support its own surveillance state, we recently set out to explore the patterns and political consequences of trade in these technologies. After constructing a database for global trade in facial recognition AI from 2008 to 2021, we found 1,636 deals from 36 exporting countries to 136 importing countries.
From this dataset, we document three developments:
First, China has a comparative advantage in facial recognition AI. It exports to roughly twice as many countries as the US does (83 versus 57 links), and it has about 10 percent more trade deals (238 versus 211). Moreover, its comparative advantage in facial recognition AI is larger than in other frontier technology exports, such as radioactive materials, steam turbines, and laser and other beam processes.
While different factors might have contributed to China’s comparative advantage, we know that the Chinese government has made global dominance in AI an explicit developmental and strategic goal, and that the facial recognition AI industry has benefited from its demand for surveillance technology, often receiving access to large government datasets.
Second, we find that autocracies and weak democracies are more likely to import facial recognition AI from China. While the US predominantly exports the technology to mature democracies (these account for roughly two-thirds of its links, or three-quarters of its deals), China exports roughly equal amounts to mature democracies and autocracies or weak democracies.
Does China have an autocratic bias, or is it simply exporting more to autocracies and weak democracies across all products? When we compared China’s exports of facial-recognition AI to its exports of other frontier technologies, we found that facial recognition AI is the only technology for which China displays an autocratic bias. Equally notable, we found no such bias when investigating the US.
One potential explanation for this difference is that autocracies and weak democracies might be turning specifically to China for surveillance technologies.
That brings us to our third finding: Autocracies and weak democracies are more likely to import facial recognition AI from China in years when they experience domestic unrest.
The data make clear that weak democracies and autocracies tend to import surveillance AI from China — but not from the US — during years of unrest, rather than pre-emptively or after the fact. Imports of military technology follow a similar pattern. By contrast, we do not find that mature democracies import more facial recognition AI in response to unrest.
A final question concerns broader institutional changes in these countries. Our analysis shows that imports of Chinese surveillance AI during episodes of domestic unrest are indeed associated with a country’s elections becoming less fair, less peaceful and less credible overall. A similar pattern appears to hold with imports of US surveillance AI, although this finding is less precisely estimated.
At the same time, we do not find any association between surveillance AI imports and institutional quality among mature democracies. So, rather than interpreting our findings as the causal impact of AI on institutions, we view imports of surveillance AI and the erosion of domestic institutions in autocracies and weak democracies as the joint outcome of a regime’s pursuit of greater political control.
Interestingly, we also find suggestive evidence that autocracies and weak democracies importing large amounts of Chinese surveillance AI during unrest are less likely to develop into mature democracies than peer countries with low imports of surveillance AI. This suggests that the tactics employed by autocracies during times of unrest — importing surveillance AI, eroding electoral institutions and importing military technology — might be effective in entrenching nondemocratic regimes.
Our research adds to the evidence that trade does not always foster democracy or liberalize regimes. Instead, China’s greater integration with the developing world might do precisely the opposite.
This suggests a need for tighter AI trade regulation, which could be modeled on the regulation of other goods that produce negative externalities. Insofar as autocratically-biased AI is trained on data collected for the purpose of political repression, it is similar to goods produced from unethically-sourced inputs, such as child labor. Since surveillance AI might have negative downstream externalities, such as lost civil liberties and political rights, it is not unlike pollution.
Similar to all dual-use technologies, facial recognition AI has the potential to benefit consumers and firms. However, regulations must be carefully designed to ensure that this frontier technology is diffused around the world without facilitating autocratization.
Martin Beraja is an assistant professor of economics at MIT. David Y. Yang is professor of economics and director of the Center for History and Economics at Harvard University. Noam Yuchtman is a professor of political economy and a fellow of All Souls College at the University of Oxford. Andrew Kao contributed to this commentary.
Copyright: Project Syndicate
US President Donald Trump has gotten off to a head-spinning start in his foreign policy. He has pressured Denmark to cede Greenland to the United States, threatened to take over the Panama Canal, urged Canada to become the 51st US state, unilaterally renamed the Gulf of Mexico to “the Gulf of America” and announced plans for the United States to annex and administer Gaza. He has imposed and then suspended 25 percent tariffs on Canada and Mexico for their roles in the flow of fentanyl into the United States, while at the same time increasing tariffs on China by 10
As an American living in Taiwan, I have to confess how impressed I have been over the years by the Chinese Communist Party’s wholehearted embrace of high-speed rail and electric vehicles, and this at a time when my own democratic country has chosen a leader openly committed to doing everything in his power to put obstacles in the way of sustainable energy across the board — and democracy to boot. It really does make me wonder: “Are those of us right who hold that democracy is the right way to go?” Has Taiwan made the wrong choice? Many in China obviously
US President Donald Trump last week announced plans to impose reciprocal tariffs on eight countries. As Taiwan, a key hub for semiconductor manufacturing, is among them, the policy would significantly affect the country. In response, Minister of Economic Affairs J.W. Kuo (郭智輝) dispatched two officials to the US for negotiations, and Taiwan Semiconductor Manufacturing Co’s (TSMC) board of directors convened its first-ever meeting in the US. Those developments highlight how the US’ unstable trade policies are posing a growing threat to Taiwan. Can the US truly gain an advantage in chip manufacturing by reversing trade liberalization? Is it realistic to
About 6.1 million couples tied the knot last year, down from 7.28 million in 2023 — a drop of more than 20 percent, data from the Chinese Ministry of Civil Affairs showed. That is more serious than the precipitous drop of 12.2 percent in 2020, the first year of the COVID-19 pandemic. As the saying goes, a single leaf reveals an entire autumn. The decline in marriages reveals problems in China’s economic development, painting a dismal picture of the nation’s future. A giant question mark hangs over economic data that Beijing releases due to a lack of clarity, freedom of the press
RSS