IT WAS THE CHRISTMAS Day. An 18½ feet tall noble fir from Oregon rose in the Blue Room of the White House. On it hung 1200 needlepoint ornaments, meticulously created and decorated with pride and care. Over 500 volunteers had worked to decorate the White House. There was the normal hustle and bustle of Christmas, and the mood was festive. In the next few weeks over 100,000 guests would be entertained by the White House. But there was something dramatically different about this Christmas. Never before in the history of the United States had a Christmas Day looked so special. Those who experienced it knew that the joy on this day far exceeded the normal delight and enjoyment that Christmas brings.

Nearly 5000 miles away from Washington, DC, as the sun set on Christmas in Moscow, the mood was anything but pleasant. Against a darkening sky in the background, the flag of the Soviet Union was brought down for the very last time. It would never see daylight again. As the sun rose next morning, the Soviet Union was no longer. Millions of Soviet citizens watched in disbelief as their country was shattered into pieces, melting away the national pride and identity. The unthinkable had happened. A country along with its ideology had come to an end. The world had changed. In the words of President George H.W. Bush, “That confrontation is now over. The nuclear threat—while far from gone—is receding. Eastern Europe is free. The Soviet Union itself is no more. This is a victory for democracy and freedom. It's a victory for the moral force of our values. Every American can take pride in this victory, from the millions of men and women who have served our country in uniform, to millions of Americans who supported their country and a strong defense under nine presidents” (Bush 1991).

Christmas Day 1991 would go down in history as the day when after several decades of intense struggles and battles, America finally came out victorious in the Cold War. The war was over. On that Christmas Day, America had won. And no one thought there would be a day when another Soviet Union–type rivalry would emerge and would set the stage for a new type of competition.

THE NEW AMERICA: FUCK CHRISTMAS

The tree laden with Barbara Bush's needlepoint ornaments was surrounded by a rich collection of eighty houses. Under the shadow of the 1200 ornaments, and across the beautifully crafted houses and the grandeur of the decorations, a joyful toy train ran around the tree. The First Lady took great pride in showing off her Christmas decorations.

Thirty years later another first lady, Melania Trump, also revealed her Christmas decorations in 2020. Unlike the magnificence and splendor of the past, there was nothing except a desolate toy train placed on a depressing dark oval table. The sides of the track were laden with uninteresting shrubs that exhibited a dismal state of desolation. There was no excitement or fervor. There was no pride or showing off. Like a scene from some horror movie depicting a haunted train on an icy cold dark night, Mrs. Trump's gloomy train symbolized the American state of affairs. The mood of the nation had changed.

In a related unprecedented development, media reported that the First Lady was heard degrading and slurring Christmas. New York Magazine narrated it as:

In the recording, Trump says she doesn't care for having to put together the holiday displays: “Who gives a fuck about Christmas stuff?” Discussing her frustration with critics who wanted her to do more about the administration's family separation policy, the First Lady said, “Oh, what about the children that were separated? Give me a fucking break.” (Stieb 2020)

Mrs. Trump's crude comment, if true, can also be interpreted as who cares about Christmas when we have much more to worry about—and that interpretation wouldn't have been a stretch. Because, in an ironic twist of fate, while America was absorbing the gloomy toy train Christmas display and debating over the First Lady's comments, China was preparing to launch one of the world's fastest bullet trains. CNN reported that (Cripps and Deng 2021/Cable News Network):

The CR400AF-G train, which can operate at speeds of up to 350 kilometers per hour (217 mph) in temperatures as low as −40 degrees Celsius (−40 degrees Fahrenheit), is part of the Fuxing series of high-speed electric multiple-unit (EMU) trains developed and operated by the state-owned China State Railway Group.

The train, rolled out in Beijing on January 6, 2021, will run on a new high-speed line connecting the Chinese capital with northeastern destinations including cities of Shenyang and Harbin—the latter of which is famed for its annual snow and ice festival.

Who would have thought that as China would be rolling out that train on January 6, 2021, America would be seeing an unprecedented attack on Capitol Hill? Thirty years later, the world had changed. Reminiscences of the American Christmas of 1991 now seemed like the relics of a departed era—a long forgone distant memory of an elderly person sitting in a nursing home and rekindling good old days of his youthful years without deeply reflecting on them. Christmas Day 2020 was very different from Christmas Day 1991. The effects of losing the AI battle to China were now fully evident and they were showing up in unexpected areas.

THE COGNITIVE WMD

The unimaginative simplicity of the joyless toy train was the least of the problems facing America. The past three decades had not been too forgiving for the country.

The country had gone through some tough times. The loss of manufacturing jobs to automation and foreign countries had devastated the rust belt. Promises of rebuilding the American economy for those areas had fallen flat on their faces. Wall Street scandals had shattered institutional confidence. Two long drawn wars—started on untruthful premises and with unclear goals—had created fatigue and frustration. The Great Recession had hit deep and devastated millions of families—all while enriching a small segment of society. Social conflict had increased, and political discourse had become both shallow and disrespectful. There were no lofty goals, no inspirational speeches, no motivational discourse. It was as if the energy had been sucked out of the country. The grandeur had been replaced with winner's complacency. Everything seemed politically charged and puny. The frustration among the populace was mounting. This was the perfect ground to sow the seeds of national discord, to turn national frustrations into national pains and anger, to conduct a precision strike on the scars that were once considered healed, and—like helping the ghosts escape in the movie Ghostbusters—to reopen the old wounds. This was the time for the adversaries to deploy the armies of bots that would control how America thinks. The social, political, and economic deployment of AI weapons had begun.

Lurking in the background were the ideology bots—engineered to attack the cognitive structures by diminishing the cognitive immunity of the mind. This process works as follows. First, the scouting bots are sent out to create personas and profiles of people. Then, like in the movie Inception, the second round of artillery bots are sent to breach the cognitive immunity. Once the defensive firewalls are brought down, the attack is followed by the delivery bots—the cavalry and the infantry—which delicately implant new ideas in people's minds. In the fourth layer of assault, the post-implant action bots are deployed to invite action from the targets. The actions undertaken by the targets become the feedback mechanism to gauge the success of the campaign. Finally, the neo-dominion bots are deployed to ensure that the cognitive firewalls remain breached and the controlled targets continue to think and act in predictable ways.

Once the adversaries engaged in a successful campaign in America, the rest was easy. America was being prepared to be at war with itself. A new civil war was brewing. The AI cognitive bomb, the ultimate cognitive weapon of mass destruction, was dropped on America, and no one felt a thing. Like colonialism, the craziest thing about cognitive bombs is that the victims welcome and happily embrace the suffering they bring.

WAR UNLEASHED ON AMERICA

The AI era had just unleashed its first warfare. The bots that started the cognitive warfare had created the shockwaves that would reverberate through America in the years to come. A new reality was taking shape. The country would never be the same again.

Less than a month after Christmas 2020, the world watched in disbelief as thousands of protestors crashed into the Congress building as US congressmembers ran for their lives and had to escape through backdoors and alleys. The media and many politicians termed the act an “insurrection.” What was also revealed was that the political, social, and economic instability were evident.

Everything that followed—all domestic issues and foreign policy positions—would be viewed through the lens of the new reality. The cultural war had commenced. America stood divided. Battles erupted in streets, in stadiums, in flights, in schools, in shops—and people were killed or critically wounded over their skin color, over their preference for wearing a Covid-related mask, their ethnicity, their political orientation, their dining preferences, and their school board orientations. Militias trained to prepare for some imaginary upcoming war—forcing President Biden to declare in his United Nations address his concerns about domestic terrorism in America.

The chaos had set in. The 2016 election campaigns became the Pearl Harbor of cognitive attacks. But unlike in World War II, five years later, in this new war America stood far from being victorious. The adversaries had conducted a skillful and precise operation. America was now in a reactionary mode.

Please note that it is not our view that the 2016 (or 2020) election outcome was not legitimate. The point we are trying to make is that the level of intolerance, anger, division, and hatred that manifested in that time frame was unprecedented in our recent history, and that anger has become an ongoing part of our national psychology. While it is true that foreign interference does happen in all elections, AI has given adversaries the tools that can create deeper and more extreme conflicts. AI is a potent social weapon, and it is much easier to arm people with that than guns.

THE FIRST ATTACK

Like the early morning before the Pearl Harbor attack, a serene calm had spread across America. When the first wave of the AI attack came, America found itself unprepared. The calm was about to change in a dramatic manner. The stage was set for a new battle to begin.

Dates such as 12/07/1941 and 9/11/2001 signify the events when America suffered unprovoked attacks on the homeland. Both are remembered for the lives lost and the courage with which the nation fought back. Both events were not only attacks on American lives, but they also represented attacks on our institutions. Whether military and Congress, or commerce and trade, the enemies intended to shake America at its core. Along the same lines a massive strike targeted American institutions in the middle of the second decade of the twenty-first century. This raid did not kill people at the time when it was unleashed—but as years passed, it led to the loss of American lives on an ongoing basis. It left behind a divided nation, it created conditions for a potential civil war, and it destroyed the national spirit. But that attack went largely unnoticed. The frog was being boiled slowly, and it didn't feel a need to jump out of the pan. American was lost in its audacity.

Long before China came out of the shadows, America had to come to terms with the AI attack that left the country sizzling and scorching with political and social unrest. In fact, in some ways it can be argued that the American masses received their first introduction to intelligent bots in the form of a raid on their highest esteemed institution: democracy. The foreign meddling in the US election of 2016 was carved in the memory of many Americans—a testament to the power of bots. The foreign intelligent bots spewed hate and positioned themselves to create ideological conflict in the US.

Bots can do that! Many Americans wondered—and remained unconvinced— that bots can have such a control over them. They struggled to understand how bots can make them angry, resentful, bitter. After all, humans have their own minds and operate with their own values. How dare someone propose that a foreign bot could alter my frame of mind or thinking power—many questioned. Many Americans were convinced it could not have been bots—even though FBI agent Clint Watts testified before the Senate Intelligence Committee alleging that Russia used armies of Twitter bots to spread fake news. Intelligence was no longer confined to humans. A competing intelligent entity had been created. Humans were no longer in control of their minds—they were being socially engineered. This was a rude awakening. A grim recognition set in for some analysts: AI would be a force to reckon with.

That realization should have changed the business and agency calculus. But business consultant playbooks were not designed for this new wave. Their supply chain models were drawn for a world with a deterministic pedigree of overly simplistic causes and effects. Finance gurus imagined a world where humans made investment decisions. Still trapped in the counterterrorism mode, defense analysts piled up redundant reports on reanalyzing what had been already analyzed a million times. Political and inside-the-beltway intellect was developed and deployed to only respond to sensationalism. Intellectuals, journalists, and think tanks debated trivial and nonconsequential matters. Politicians created and re-created diversions, divisions, and distractions. Defense contractors submitted old technology RFPs and celebrated contract wins. Totally oblivious to the industrial-scale nation-destroying metacognition at work in the background, America went about its business as if nothing had changed. But unbeknownst to many, the underlying reality of America had been materially altered. Signs of discomfort began appearing. A deep sense of anxious recognition manifested at the higher levels in the echelons. The American AI was no longer just about technological superiority, it was about the survival of the nation.

BATTLE II: COVID

And then the most unexpected thing happened. A dark cloud of pandemic engulfed the world. Of all the places it could have come from, the cloud rose from China and rapidly spread to the world. The Chinese understood the severity and acted quickly. With strong moves China put in place an aggressive program to combat Covid. The country mobilized significant resources and overcame the pandemic with impressive execution. America watched in horror as the virus spread through its states and cities. Overcrowded hospitals, morgues, and cemeteries became the talk of the day. Helplessness soared. That was when America suddenly realized its second vulnerability. Not only had the country underestimated the power of AI, but what became obvious was that the nation lacked the manufacturing and supply chain resilience to grapple with all the changes. With crippling shortages in toilet paper, hand sanitizers, masks, ventilators, medicines, and many other items of critical importance, America seemed like a country gasping for air. Hundreds of thousands perished as doctors and nurses struggled to reuse supplies. Apparently, those who had advocated sending manufacturing abroad did not consider such an event. Consultants who did both—enterprise risk planning and “move your business to China” consulting—stood on the sidelines as their models collapsed at the first test of a real risk. Suffering intensified across the nation.

As the picture became bleak by the day, some positive signs emerged. The services sector rapidly adapted to the digital economy. People worked from home, generating massive amounts of new data. With nearly everyone going digital for many types of work and personal tasks, AI got its unexpected second, and even more powerful, boost. All types of new digital data were now available for mining and training. Under the lockdown, as isolation intensified the need for social interaction, social media applications such as TikTok became the favorite release points. This meant more data for even more AI.

RISE OF DOMESTIC TENSIONS

Unfortunately, while the nation fought the pandemic, the broader rationality of the country became hostage to the daily battles of rhetoric among politicians. America was now fighting on multiple fronts—including an internal battle—and almost all her battles required AI in one way or another. As the government scrambled to build much-needed capabilities, recognition set in that the nation needed to mobilize to face the ultimate challenge. New RFPs were issued to build AI capabilities. America was trying to get its mojo back.

At the most critical juncture of when America needed absolutely clear leadership, when AI was emerging as the critical force to change the future of humankind, America was engulfed in the flames of domestic battles and violence. Every day consumed by the infighting was a day lost to build the AI potential of the nation.

The agony of Covid and the power dynamics of AI should have made two things clear for America: first, the country needed a revival and reorientation of its manufacturing and supply chains; and second, America needed sincere and clear leadership in AI. It had become obvious that China had both. What was also written on the wall was that these two factors—supply chains and AI—had now become one. Going forward they cannot be approached separately. Failure to approach them in an integrated, strategic manner meant a loss of competitive position in the world. America was not only in chaos, but now it was also in denial.

AI INDUSTRIALIZATION

The American supply chains began showing signs of cracking in early to mid-2021. This was not all due to Covid. Neither was it solely due to the aftereffect of Covid-related surge in demand. Right before Christmas 2021, President Biden made the following comments on a Zoom call:

Earlier this fall, we heard a lot of dire warnings about supply chain problems leading to a crisis around the holidays, so we acted. A lot of recommendations of the people that you see on the screen here. I wish we were all able to do this in person.

We brought together business and labor leaders to solve problems.

And much—you know, the much-predicted crisis didn't occur. Packages are moving. Gifts are being delivered. Shelves are not empty. (Biden 2021)

Just few weeks after these comments, many parts of America started experiencing extreme supply chain shortages. With empty shelves at retailers, Americans complained, and on Twitter, #BareShelvesBiden started trending. The American solution to the supply chain problems was to throw in more money and hope the problem would be solved. President Biden touted his Bipartisan Infrastructure Law to push $17 billion to speed up and modernize American ports and for the Department of Transportation to give $200 million in grants to ports nationwide. No reference was made to AI—which should have been fundamental to determine both the modernization of the ports and the national supply chain planning and execution. The president and his staff were operating in the legacy world of the 1990s.

As if the inflationary pressures and Covid were not enough, America was in the grip of a national level supply chain meltdown. The delays at ports increased, and American supply chains began experiencing significant delays. The supply chains were built for efficiency and cost effectiveness and not resilience. From semiconductor shortages, which affected many other industries such as auto manufacturing, to the crisis at the LA port and trucker shortages, America was in the grips of a new supply chain dynamic. Years of neglect and an associated sense of invincibility had left the nation unprepared for major changes.

CHANGE IN DEMAND PATTERNS

One of the reasons supply chain disruptions are expected to continue—even beyond the Covid times—is because the demand patterns are changing due to automation. This means that the way humans buy, what they buy, and how they buy is now changing, and that implies a new total demand pattern is emerging. The recommendation algorithms working in the background are shaping demand in unpredictable ways—and the more such demand patterns solidify, the larger the change will be. In other words, the change itself will drive more change as data from transactions will add to new learning and recommendations.

What remained unclear to many is that there is a deep, intrinsic relationship between AI and modern manufacturing/supply chain. In other words, AI and supply chain modernization and manufacturing are not two different pursuits. They are one and the same. They constitute the industrialization strategy at a national level. The new supply chains and manufacturing, if not built on the foundational platform of AI, will lead to disastrous results. The country would sink into chaos, and investment waste would leave America uncompetitive.

Rebuilding supply chain and manufacturing and the pursuit of AI should be undertaken as an integrated strategy. This means rebuilding the national capacity in a manner where American dependence on adversaries is minimized with AI-led innovation in supply chain and manufacturing. This is what we call the superspeed of relevance. The superspeed of relevance—the main message of this book—is based on rebuilding American leadership in manufacturing and supply chain with AI. The result is a resilient, self-reliant, powerful, and reliable supply chain. It also achieves national security goals—all while improving the standard of living and economic performance of our nation.

This book is about introducing this paradigm and showing how American government and American firms can adopt the most powerful and revolutionary transformation in the history of humankind—and come out of it successful and more powerful. But there is a critical dilemma. America had already started its journey for developing AI, and the current plans, strategies, and their execution have run into major problems. Numerous reports have pointed out this alarming trend—but no one has shown where the gaps are and how to fix the problems. None of the solutions proposed consider the existing conditions. The current plans function oblivious to what is transpiring in the nation, ignoring the chaos that now exists at all levels—and a lot of that is the aftereffect of AI. The existing paths to build the AI nation ignore ground realities and fail to confront the most critical issues. No one wants to say the truth or to challenge the existing power structures. No one wants to tell the emperor that he stands naked. In the absence of confronting those issues, it will be impossible for America to gain the competitive edge the country needs. We are committed to have that difficult conversation in this book.

GREAT-POWER COMPETITION: HYPED OR REAL OR WHO CARES?

Like the exuberantly decorated Christmas trees, the White House loves to create grand narratives that not only fascinate people but also help facilitate driving the acceptance of policies and strategies. One of those is the term “great-power competition” (GPC). The term has been used to describe various periods of power struggles between powerful adversaries.

Scholars have offered at least two criticisms of GPC as being an undesirable term (Cooper 2020). First, some scholars and researchers are uncomfortable with the usage of the term for unworthy or undeserving opponents. This, they argue, gives too much credibility to an opponent who is not really a competitor. It elevates their status in the eyes of the world, they claim, and such an undesirable boost has consequences. It becomes its own truth and gives an unnecessary edge to the unworthy competitor. Within that line of reasoning, it is argued that using the term for Russia and China obscures the fact that these two are very different types of competitors and that the Russian power is nothing as compared to that of China. Furthermore, the liberal use of the term can create an impression that this competition is only about power and not values. The 2017 National Security Strategy (NSS) report claimed that “great power competition” is back “after being dismissed as a phenomenon of an earlier century.” However, the terminology was changed in the 2018 National Defense Strategy (NDS) report that stated it as “the reemergence of long-term, strategic competition by… revisionist powers” (Trump 2017).

Within the above criticism category, some feel that even China does not deserve that status and it is possible that China is not as powerful as we have been led to believe. They argue that the data provided to us about China's rise is selective or architected. In a rather strange case of such selective offering of data, International Monetary Fund's (IMF) head Kristalina Georgieva was accused of boosting China's ranking by influencing a report when she worked at the World Bank. Based on the allegations, during her tenure as the chief executive officer, she applied “undue pressure” on World Back staff to make the ratings favorable for China in the “Doing Business” report (Martin and Donnan 2021). She maintained her innocence and denied any wrongdoing—but that did not stop many US congressmembers to criticize both China and the World Bank.

An investigation pursued and a report on the allegations was issued. While the authors of the report, lawyers at WilmerHale, exonerated China from having done anything wrong, Senator Marco Rubio lost no opportunity to lambast China and said, “No one should be surprised that the Chinese Communist Party uses its influence to corrupt individuals and institutions. It is in the CCP's organizational DNA to do so. Those complicit should be held accountable, and free nations need to seriously reevaluate the role we allow Beijing to play in global institutions”(Martin 2021).

Senator Rubio also chaired the Project for Strong Labor Markets and National Development, a project of the US Senate Committee on Small Business and Entrepreneurship. A comprehensive report was issued by the initiative. The title of the report was “Made in China 2025 and the Future of American Industry.” Even though the report was supposed to be about American leadership in business and national development, the report focused on China right from the beginning. Senator Rubio described the state of the American challenge in the following words:

High-end goods made by advanced manufacturing were the very products that America was supposed to make more of due to our competitive advantages in talent and capital. Instead, these products are increasingly being captured by China. The “Made in China 2025” industrial plan announced in 2015 by the Chinese government makes their goal clear. China aims to become the global leader in innovation and manufacturing. This would be an unacceptable outcome for American workers. To drive our own development in a competitive, global economy, we must prioritize the high-wage industries of the 21st century, to the benefit of American businesses, workers, and their families. (Rubio 2019)

Senator Rubio's initiative seemed to indicate a bit of reactionary panic, either intentionally hyped or real, and made China look as if it were in the driver's seat of the American planning. In fact, in the 80-page report the word “China” appeared 602 times and “Chinese” appeared 145 times—while the word “USA” appeared merely 4 times, “America” 28 times, “American” 101 times, and “Americans” only 11 times. Such was the paranoia. The Chinese dread had consumed America, and it was showing.

The second criticism comes from a pool of scholars who are less concerned about the factual positions of GPC and more about the dangers of hyping up terms such as great-power competition. Emma Ashford warned against using the terms that are not clearly defined. In an article in Foreign Policy, she argued that America has already suffered the consequences of loosely defined terms—such as War on Terror (Ashford 2021). She points out that no one is bothering to define what we are competing for and why we are competing. Such terms tend to create narratives based on loosely defined goals and lead to chaos and quagmires—such as the two wars in Afghanistan and Iraq. For Washington's strategic community, they represent a “poorly theorized model of the world and of America's place in it,” Ashford claimed. Is it liberal democracy that is being defended in this competition? Is regime change the goal? Is it only means to some ends (with ends not being defined)? Ashford points to the dangers of an ill-defined strategy. Ashford suggested that there is never a time when great-power competition does not exist as states are always maneuvering for power—hence we can easily reject the notion that the competition is somehow returning. If anything, she argues, all this means is that the US is in a state of relative decline after three decades of a US-dominated world. This means the power gap has shrunk, and these competitors—including China and Russia—can make some moves that they wouldn't have been able to make before.

Both of the above criticisms, however, have not stopped US Congress, the executive office, and the numerous agencies under the executive office to make a strong case for China and Russia as strategic competitors. The Washington strategy analyst community also does not seem to be majorly concerned about either defining the term or exploring the factual basis of the competition. For them, this offers a new product to sell. Like any other product life cycles, the product of war on terror reached its maturity and was facing a perceptual decline. Its long-awaited replacement—counter-proliferation—was not as sexy and too complicated to turn into a narrative that would be consumed by the masses on a daily basis. But GPC is different. It is a much simpler play that can be consumed by the masses and the government alike. It can have major spinoff paradigms of its own. And it can be hammered into many different shapes—based on audience targeting. A new product was born in the DC circles, and it acquired its own reality. Welcome to the era of the great-power competition.

THE MAKING OF THE DRAGON

Acknowledging the rise of China while embracing it with open arms, President Obama stated that “the United States welcomes the rise of China” (Li 2016). Cheng Li, director at John L. Thornton China Center and senior fellow at Foreign Policy, believes that President Obama's background, his lack of experience with China, and his gullible idealism made him less distrustful or wary of China. Despite the overtures by President Obama, President Xi responded with a certain level of confidence in 2015 and referred to the relationship between China and the US as a “new type of great power relations.”

Looking back now, it appears that when America embraced China with open arms, the strategic intent was a bit different than what really transpired. Most importantly, it was not any president's gullibility or naivety—but perhaps the emergence of a new phenomenon that strategy analysts did not consider. China was supposed to be the production backyard for everything uninteresting, everything unworthy of being produced in a developed economy, everything too blue-collarish. China was supposed to become one supersized factory of sweaty workers, oily machines, forklift trucks, workshops, warehouses, and conveyor belts. In contrast, more advanced nations—specifically the US—were seen as the ones that will lead the services industry, conduct the white-collar work, own the capital and financial markets, drive innovation, run the information technology industry, and be the gorilla economy that will consume the items produced in the developing nation factories. That model would have worked for decades to come. But China played its cards very differently than what policymakers and planners had anticipated.

China not only became the manufacturing center but also acquired and developed the innovation potential. Whether the innovation capacity was acquired through intellectual property theft or via internal capability building, China advanced its economy differently than what US strategists had assumed. That is why the shock expressed by Senator Rubio (see the previous section for his quote) was so high. As if in a state of disbelief, Senator Rubio complained that America was supposed to produce the high-end products, but instead, China is doing that and that China is doing both “manufacturing and innovation.” A deep feeling of regret and despair was evident in his words.

Apparently, the planners who pushed for the pre-GPC China strategy did not take into account the inherent potential of people to reinvent themselves. The perception bias—as depicted in the words used in the movie Ocean's Eleven, “the little Chinese guy”—can paint an image of a compliant, submissive, and subservient China, a China that was eternally grateful and mesmerized to embrace the grand opportunity for bringing its massive population out of poverty and into a burgeoning middle class. A country known for its longstanding policy of strategic patience was not expected to draw a different course for itself than what was being given to it. But China was about to surprise everyone.

The US had not only lost its manufacturing edge, but also its technology and science leadership had been compromised. At a global stage, it appeared that the US was sliding, and its decline was accelerating. And that is where President Xi saw a once in a lifetime chance to make the ultimate move for China—which could be considered as the greatest move ever in China's entire history. Jude Blanchette—who describes himself as an American Sinologist—holds the Freeman Chair in China Studies at the Center for Strategic and International Studies (CSIS). Previously, he was engagement director at The Conference Board's China Center for Economics and Business in Beijing and has firsthand knowledge of the inner workings of the Communist party. While discussing China's shift from strategic patience to an assertive nation, he points out that “Xi has consolidated so much power and upset the status quo with such force because he sees a narrow window of 10 to 15 years during which Beijing can take advantage of a set of important technological and geopolitical transformation, which will also help it overcome significant internal challenges” and that President Xi sees a “perceived shift in the global balance of power away from the United States” and what President Xi called “profound changes unseen in a century” (Blanchette 2021). Blanchette has beautifully described the strategic calculus of President Xi. Notice the two drivers: technological and geopolitical. While geopolitical can be categorized as a “perceived shift,” clearly President Xi noticed that the technological shift is as real as it gets.

Consequently, the new China was not aiming to be a regional power—it was aiming for the biggest prize: the ultimate global leader. This China was no longer the subservient state that would play by other people's rules. It was ready to challenge and change the rules of the game. It was mastering the ultimate technology: AI.

US power may have declined. But the decline was not that steep that it would have given President Xi a reason to conclude that China's decades long strategic patience should come to an end. The claim about the geopolitical decline appears contrary to the obvious power projection capability the US possesses and a credible military and powerful economy to back it up. It is rather clumsy to view the US as weakened or critically wounded due to either the Iraq or the Afghanistan quagmires. Neither lend themselves to draw parallels with the Vietnam or the Korean wars—and even those wars did not critically wound the US. In the Afghan and Iraq wars, the American frustration and fatigue happened more due to its inability to define what victory means rather than actual on the ground losses. Reinforced by scandals of corruption and exploitations by defense contractors, the war-related exhaustion had set in and had become an unnecessary distraction. However, at any level, that was not sufficient to conclude that an opening had risen to dislodge the leader. Despite its shortcomings, the state of the union was strong—both domestically and internationally.

It is highly unlikely that the Chinese decision to project its power was based on some analysis that showed a weakened America in terms of its military, political, economic, or soft powers. The American influence was strong in all continents and in all major allied countries. From military to economic power, and from soft power to political power, there was no near rival. American relationships with allies, whether by choice or compulsion, were strong. Whether it was Trump or Obama, the global fascination with America never declined. And neither did the obvious American power. The US military power was strong. From naval fleets to air superiority and from military mobility to intelligence, the US faced no global parallel. Add to that the economic power, and the picture becomes even clearer. Foreign direct investment was high. Capital was coming into the US, and American markets were performing well under both Obama and Trump administrations. And despite all the idiosyncrasies and unique communication style of President Trump, the power dynamics of the US continued to be strong. The economy performed, and the military strengthened.

A great proof of the above argument is that regardless of the power transition dynamics, change of the administration, and apparent policy clashes that may show a great divide among Republicans and Democrats, the Biden policy mirrored the Trump policy. So much so that in September of 2021, Fareed Zakaria seemed perplexed when he noticed that President Biden seems to be more Trump than Trump himself (Zakaria 2021). The reality was that America had not weakened, and neither had its power declined in the above areas.

Then the natural question is: What really happened that made President Xi realize that a window of opportunity has opened up to dislodge and unseat the uncontested leader of the world? The answer lies in understanding the technology dynamics and not just any technology—the game changer was the artificial intelligence (AI) technology. All other types of powers—military, economic, political, soft, and others—now rested on AI. A loss in AI competitiveness would trigger an across-the-board loss in power.

THE IT THAT WASN'T IT

At the turn of the century, the American leadership in the information technology sector was so evident that there seemed no need to even question that part of the US economy. After all, America was the uncontested leader in the Internet technology. So much so that Internet and US companies became synonymous, and terminology developed around them—for example google something, tweet something. A sense of invincibility was apparent. With Big Tech acquiring more power than many state institutions, America felt secure about its leadership in the technology. This confidence in the invincibility of the tech sector allowed President Trump to make political overtures to other sectors—such as the coal industry, trucking industry, and the broader energy sector. The tech sector can be placed on cruise control, and America will be just fine was the mantra that belied many presidencies and that also gave President Trump the flexibility to schmooze the rust belt. No one was worried about underperformance from the American tech sector. But AI was not the normal run-of-the-mill IT. It was different. For one, the regular IT is developed for data—as it stores, manipulates, analyzes, and processes data. But AI (specifically machine learning) is developed from data. This distinction between for and from often confuses people and makes non-technology people believe that IT trained professionals can develop AI solutions. But AI is its own specialization and requires very different skills than programming.

As the IT sector in the US developed rapidly, it began to create some noticeable problems. On one end, Big Tech became too big to manage and control—as President Trump discovered when his own Twitter and Facebook accounts were blocked. On the other end, due to this black-hole effect that sucks everything around it—Big Tech became the competitor of and the buyer of new start-ups. American start-ups and the national innovation potential began declining. Companies were being launched—but mostly designer firms to sell to the established Big Tech. Innovation translated into building a designer firm developed with the sole purpose of filling a small functionality or a feature gap in the Big Tech software offering. Venture capitalists specialized in funding those firms. Media outlets, recycled management teams, VCs, and a whole gamut of characters became proficient in flipping the designer firms. While the American innovation declined, the M&A deal flow increased. The financial innovation and designer-tech firm launch replaced pure-technology or science-based innovation. Fareed Zakaria noticed the trend as early as in 2015 and repeatedly warned about the declining entrepreneurship and innovation capacity of America (Zakaria 2015). In 2016 Zakaria pointed to a risk-aversive new American generation tarnished by the Great Recession and which lacked the adventurous spirit of their baby boomer ancestors (Zakaria 2016). This generation wanted complacency and certainty. The explorer mindset was replaced by the idler mindset. As the power of Big Tech magnified while the innovative potential of the nation declined, both Trump and Obama administrations felt helpless to do anything to reshape the deeply ingrained competitive dynamics of the tech sector. The new American superpowers (Big Tech) became untouchable. Congressional investigations and inquiries became media circuses as tech entrepreneurs and CEOs dropped tech buzzwords on congressional leaders who seemed ill-prepared to handle the new terminology and concepts.

The litmus test of the above problem was evident when Biden picked his head of FTC. Her biggest qualification was her strong opposition to the unrestrained Big Tech monopolization. Clearly, in the upper echelons of the government, the anticompetitive risk of Big Tech must have been raised to the red alert level for Biden to pull a young and determined academic out of Princeton and given her the reins of the FTC. Chair Lina M. Khan's mandate—it seemed—was to rein in Big Tech's ambitions.

Unlike the highly motivated Chinese new generation, the American new generation did not care about the AI revolution. It meant nothing for them. The Clinton/Gore-era marketing of tech revolutions was nowhere to be found. Big Tech and then other software companies pushed terms such as cognitive, intelligent, augmented, and automation, but neither rose to become a clear national mandate. No one was able to mobilize resources and rally Americans to respond to this revolution. If anything, more naysayers, critics, and futurists emerged than pragmatic evangelists.

Despite being at such a critical juncture of human history, the federal funding in R&D as a percentage of GDP remained lethargic and continued to decline.

For the younger generations, America had been turned into the tech user nation as opposed to a tech developer country. Gen X and gen Z Americans quickly figured out how to make big money from becoming social media influencers and Internet sensations. But few were inspired to become AI experts or launch AI firms.

THE OPPORTUNITY OPENS UP

Collectively, all of these signs were way too obvious to ignore. It is likely that this is what led President Xi to realize that the opportunity to strike had emerged. America was now trapped in its own mess. The technology that was developed to bring people together, social media, had created an addiction and a mass hysteria. A different type of an opium war had started—but this time America was the target. A country that had lost its innovation potential, whose people had become fatigued and risk averse, whose leaders had lost people's trust could now be challenged. The calculus was simple—while America's military and economic power were intact, a decline was on the horizon. A self-absorbed nation mired in its own hysteria will take a long time to adjust its course. By that time China will be well past the leader, President Xi may have concluded.

With meticulous planning, which is characteristic of Chinese strategy, it would not have been hard for China to recognize that the AI transformation simultaneously enhanced productivity in three areas:

• Discover: AI can speed up discovery and drive innovation. It can create new solutions.
• Predict: AI can predict better. Consider all the gaps and losses that happen in both civilian and military activities because of our inability to resolve uncertainty.
• Automate: AI can automate not only physical work but also cognitive work. The ability to automate total work implies no need for human workers. Think about autonomous cars and driverless trucks—these vehicles offer physical automation (mobility) and cognitive automation (driving).

When viewed collectively, the three enhancers form a cycle known as the DPA cycle (discover, predict, and automate). This cycle, when perfected, can unleash tremendous productivity. Faster discovery means greater innovation, better prediction means less errors and more optimal solutions, and automation means all aspects of human work getting automated. This is the formula for productivity on steroids. When implemented, it has the potential to shift the productivity curve to a new height. And this made President Xi's gamble all the more worthy for China.

VICTORY LIES IN LOSING THE GAME

Just as Clinton/Gore inspired an entire generation of Americans to launch the Internet era, President Xi led a similar vision-setting transformation for the Chinese in AI. Unlike American youth, Chinese young people began acquiring AI skills in hordes.

Kai-Fu Lee explains this revolution in his book AI Super-Powers and calls it the Chinese Sputnik moment (Lee 2018). The trigger event that inspired the AI revolution was a game of go. This game was played in 2017 between the world champion Ke Jie and Google's deep learning software known as AlphaGo. Go was considered one of the most profound strategy games in ancient China. AlphaGo, a deep learning algorithm-based software developed by DeepMind of Google, systematically defeated Ke and won the match. Like the Sputnik moment for Americans where the Russian launch of Sputnik initiated a national response in America, AlphaGo, a Western technology, beating the go master represented a national wake-up call and challenge. A year before Ke lost the game, AlphaGo had defeated a Korean master and over 280 million Chinese viewers had watched that game. The response was overwhelming. One game of go had mobilized a nation—and the Chinese technology community, investors, government, scientists, and entrepreneurs united to start a new era in China's scientific development. The forces of social constructivism and sensemaking were at work here. As Americans would have switched the channel to watch a baseball or basketball game—with sheer luck a game of go gave China a new national identity and launched a technology revolution.

One way to understand the impact it made would be to imagine if somehow the worst-performing NFL team recruited a new player—except the player was a cyborg—and this player won every game and took the team to win the Superbowl. Every pass he got turned into a touchdown. Every kick he made ended up in the goalposts. Imagine how this would have created a huge social awareness and sensation in America about cyborgs. People would talk about it at dinner table and in offices. Children would carry its pictures. Young people and students would want to create one. Grown-ups would want to own one. All other NFL teams would want to buy one. Professional teams from other sports—such as basketball, hockey, and baseball—would explore if they can recruit those as well. And companies across the US would become excited about recruiting and making cyborgs. You get the point. This is what happened in China.

The combined potential of the three capabilities of AI meant a new economy, a new technological revolution, a new type of machines, a new type of productivity, a new paradigm, and a new country. The path for the Chinese progress was clear.

The calculus for President Xi was obvious. Employing a strategy composed of AI-centric transformation, the state power of China can increase exponentially—and if played right, American power can decline. In fact, China would have concluded that the damage done by the Russian bots was sufficient to get the snowball rolling. China recognized that the American academic system has become commercialized and technological innovation is dominated by a handful of large companies. Start-ups are funded to become designer firms to be sold to large firms. The monopolization of the tech sector will be unbreakable—or at the very least take decades to end. An open political system that functions based on lobbyists and special interests will not lend itself to be easily swayed to start performing again. Rampant legalized corruption will not end overnight. The political rhetoric will become vile. Political campaigns will become too divisive. Social discontent will amplify. Racism, ethnocentrism, religious extremism, and dozens of such ideologies that coexist with their opposing forces in a liberal democracy can be extracted and deployed on the front lines. The inertia in America will keep the country trapped and paralyzed in its domestic struggles. China, on the other hand, can be positioned to run faster and without such burdens can sprint ahead of the competitor. The wolf warrior-ism was the only way out. This was not the time to take a back seat. The strategic patience was over. China will come out of the shadows. The American AI now had to find its way under the shadow of a towering great-power competitor.

AMERICA FIGHTS BACK, BARELY

Unfortunately, the timing for the AI surge could not have been worse for America. American politics had taken an unexpectedly bitter turn. The political rhetoric heated up, and the national attention focused on daily bickering, insults, and domestic conflict. The two terms of President Obama and then the era of President Trump became the battlegrounds for ideological struggles. A state of hopelessness and indifference consumed American youth. In the absence of great visions or aspirations, mediocrity descended in collective consciousness. Indifference and depression worsened with Covid. TikTok and social media commanded the attention of American youth. Entertainment consumption peaked. Shows such as Game of Thrones and Marvel's movie series captivated America. The nation was losing its ability to think critically. Andrew Yang, 2020 Democratic Party presidential candidate (withdrew during the primaries), proposed giving a monthly universal basic income (UBI) of $1000 to offset job losses due to automation. He termed it “Freedom Dividend.” Who needs to innovate when one man can create a weapon like the Ironman suit! Who needs to work when leaders were proposing $1000 monthly checks that can be considered as some type of an AI relief fund! At a collective social subconscious level America felt protected by Ironman, SHIELD, the Avengers—and pacified with a promise of guaranteed income and stimulus packages. Kennedy's “ask not” and Clinton/Gore era's “information highway” became a distant history. On one hand, America was in battle with itself; on the other hand, it was immersed in a delusional state—America needed visionary leadership. But none came.

All the avenues necessary to mobilize a strong and viable response to regain the competitive leadership position seemed to be broken. Mired in its domestic troubles, Covid, inflation, ideological battles, and nepotism, America faced a long-term competitive existential threat.

POPULAR NARRATIVE

At the government level, the entire focus shifted to China, but at a masses level the understanding of the China competition—especially as it relates to AI at its core—was totally absent. Average Joe or Jane did not know that their economic and social well-being and the national security of their country was now dependent on winning the AI battle against China. They had no clue that America was now engaged in a full-fledged plan B strategy against China. Perhaps intentionally, the population was kept in the dark. No communications took place to inform the public about the presence of a major threat to the US competitive position. No appeals were made to rise above the ideological battles. No requests were made to unite in the face of an adversary. No challenge was issued to the nation to come out of its complacency. No efforts were made to use either fear or excitement to motivate the populace.

Creating a narrative requires showing people something more or different from what they have seen. For example, Americans knew of Saddam Hussain as a brutal dictator, but his invasion of Kuwait gave the story a new spin. When combined with Saddam Hussain pursuing nuclear weapons—which obviously turned out to be false—the narrative became far more personal for Americans. Note that we are not justifying lying to the American people or recommending that Americans should be misled. We are simply giving an example of how fear is often used to create a national narrative to mobilize the population.

The invasion of Ukraine by Russia offers a more recent example of how the anti-Putin narrative took shape rapidly in America. Over 80% of Americans support increased economic sanctions against Russia and 42% support direct military action (Agiesta and Edwards-Levy 2022). This suggests that short of a direct attack on Taiwan by China, it is hard to imagine the American populace turning against China.

The Golden State Warriors minority owner and former Facebook executive Chamath Palihapitiya claimed on his All-In podcast that “nobody cares about the Uyghurs” (Jones 2022). Perhaps he was implying that the Uyghur narrative does not work in America. For one, in many political circles in America, the anti-Muslim messaging was used to create an impression of Islam as a force opposing the West. This went on for two decades. This dehumanizing narrative of Muslims shaped the perception of a large part of the population, and hence the Uyghur narrative may not lead to getting sympathy from America. Second, many Muslim-majority countries such as Pakistan, Iran, and Turkey who are usually vocal about Muslim issues in other countries are not talking about the Uyghur issue. In fact, many US allies are also mute about that. Third, President Trump's national security advisor John Bolton said that during a private meeting with Chinese President Xi Jinping, President Trump expressed approval of a concentration camp for Uighur Muslims (Bolton 2020). Fourth, there are many allies of the United States that subject their own populations or populations in their dominion to atrocities and harassment. This shows that it will be hard to drive support in America about the Uyghur-related narrative.

The same goes for Hong Kong and Taiwan. The fatigue the nation experienced after being at war for two decades has created an America that may not care about what happens on the other side of the world. The rise in anti-Asian crimes in America also points to the dehumanization of the Asian population. This implies that it will be hard to find significant empathy or sympathy across the nation to mobilize a national level response to the China challenge.

Shaping the narrative comes with a challenge. The American population genuinely believes that America is still at the forefront of the world, that American values and principles are intact and will safeguard America's leadership position, and that the American institutions are immune from subversion undertaken by foreign or opportunistic domestic forces. If the population is told that America is no longer in the leadership position, that our values and principles and the integrity of our institutions has been compromised or weakened by the adversaries, it will create an even greater psychological shock at a social level. However, considering the threat, would it make sense to communicate to Americans that America is not invincible and every generation must play a role to keep the country as a leader?

The narrative of the China threat has still stayed at the government level and not trickled down to the populace level. While policy publications such as Foreign Policy and Foreign Affairs fill their pages with China, the intensity of that is still low in the popular media or culture. This is perhaps a sign that the China-US rivalry is not being viewed as a cold war—but only as a technological rivalry. This was not how things happened in the Cold War. From cities to rural America, the nuclear fallout drills and bunkers shaped a social psychology that was fully aware of the Soviet threat. Movies such as Red Dawn helped shape the mental image. But when it came to China, the American perception is still somewhat favorable. “Made in China” has not become unpopular in America. America has not become anti-China to a point where people will cringe at the mention of the name or where a masses-level boycott happens for Chinese products.

INFLATION AND FAILING SUPPLY CHAINS

In November of 2021, Janet Yellen said that “the pandemic has been calling the shots for the economy and for inflation” (Williams 2021). She then talked about the relationship between inflation and getting the pandemic under control. This sentiment was rejected by many who felt that inflation was not related to the pandemic but to overly aggressive monetary and fiscal policies. The Financial Times reported that the US Treasury secretary Yellen acknowledged that reversing the Trump-era tariffs on China could release some inflation pressure for the Americans (Williams 2021). Despite such an acknowledgment, no efforts were made to reverse the tariffs, and the Biden administration continued the Trump-era China policy. This was a clear indication that the tariffs were not just political or economic—they were about creating a more level playing field with an adversary who had surpassed America. Unfortunately, Americans were expected to endure higher prices for their government's failure to compete effectively with China.

The inflationary pressure was not about pandemic-related supply issues—although they exacerbated the situation. It was about the demand: the lethal combination of a fiscal policy that was driving the economy by constantly increasing the government's share of purchases with a monetary policy that was on steroids. The expansionary monetary policy created a surge in demand. This placed tremendous burden on supply chains and production capacity. A simultaneous reduction in supply when combined with an uncontrollable demand unleashed a sudden rise in prices. As America entered 2021, the country began noticing that inflation was rising. By the end of the year, it had become worse.

THE AMERICAN AI PLAN

To build an American AI plan, government should have first taken an inventory of the above factors. These factors were not independent of AI. In fact, AI was at the core of all those developments. Just as any strategy development process starts with looking at the broader picture and understanding the environment, the American AI Initiative should have also developed in accordance with the environmental factors.

Technological change cannot transpire effectively and positively without the associated changes in economic and institutional variables, complementary technologies, social sensemaking and socially constructed meanings, economic structures, property rights, and private incentives. The American AI plan was greatly deficient.

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