Digital Battlefield: Reassessing China's Cyber and AI Advances

In a revealing dialogue between two leading experts, the evolving nature of China's digital influence was comprehensively examined. The conversation, originally hosted on the "China Considered" podcast, features insights on groundbreaking AI developments, emerging cyber threats, and the strategic policy adjustments needed by the United States.

A New Era in Artificial Intelligence

Dr. Adam Segal delved into China's recent breakthrough with the open-source AI model DeepSeek. According to Segal, the significance of DeepSeek lies in three main areas:

• Resource Efficiency: Unlike models from other tech giants, DeepSeek was trained using a considerably lower number of chips, challenging the prevailing emphasis on high chip and energy dependency as underlined by initiatives like President Trump's Stargate.
• Open Source Diffusion: Being non-proprietary, DeepSeek could rapidly disseminate across the tech community, complicating the U.S. efforts to control AI advancements by controlling chip supplies through corporations such as Nvidia.
• Policy Implications: The breakthrough calls into question the effectiveness of current export controls, especially in light of China’s longstanding prioritization of AI through initiatives like Made in China 2025.

Segal stressed that while technical achievements should be lauded, they are hardly unexpected given China’s determined focus on harnessing AI for both economic and political security. Even as critics challenge the existing export controls, hardware limitations remain a critical barrier for Chinese developers.

Unpacking Chinese Cyber Operations

The discussion then shifted to cyber threats, with reference to operations codenamed Volt Typhoon, Salt Typhoon, and Flax Typhoon. Segal explained that these designations, though sometimes arbitrary, reflect two principal objectives:

• Espionage: Operations like Salt Typhoon and Flax Typhoon focus on infiltrating political, military, and industrial sectors. They aim to extract valuable information by targeting telecommunications, state organizations, and media outlets.
• Infrastructure Disruption: Volt Typhoon, in contrast, targets critical sectors such as ports and cranes, potentially laying the groundwork for significant disruptions in conflict scenarios.

Authorities contend that these cyber operations are highly targeted, with each operation honing in on specific vulnerabilities rather than causing indiscriminate damage to essential services like water or power networks.

Shaping U.S. Cyber and Digital Policy

Reflecting on his tenure at the State Department, Dr. Segal discussed a strategy centered on "digital solidarity." This approach emphasized that the U.S. must rely on robust alliances to effectively manage challenges in AI governance and digital infrastructure. Key facets of this strategy involved:

• Multilateral Engagement: Early drafts were shared with partners in Europe and Southeast Asia to ensure a cohesive international response.
• Unified Government Efforts: By aligning defense, intelligence, and diplomatic endeavors, the strategy sought to foster unified initiatives—ranging from counter-ransomware measures to the reinforcement of trusted networks.

Despite the symbolic impact of sanctions imposed on state-directed cyber operations, Segal pointed out that punitive measures at the corporate level often have limited efficacy when companies are minimally engaged with U.S. markets. Instead, he suggested that targeting higher levels of the cyber command chain might yield better deterrence, though not without significant complexities.

Reflections and Forward-Looking Insights

The conversation also featured personal reflections on the nature of public service and policy-making. Segal reminisced about the passionate and knowledgeable colleagues he worked with in Washington, contrasting this with the bureaucratic gridlock that often stifles innovation. He lamented the delay in initiating direct engagement on cyber issues—suggesting that early robust strategies could have paved the way for clearer norms and stronger international cooperation.

When asked about the likelihood of a breakthrough in U.S.–China relations benefiting American interests, Segal remained cautious, estimating the chances as rather low. His recommendation for further reading, the article "From Vegas to Chengdu," provides an in-depth look at how hacker culture is being co-opted into state-supported cyber capabilities, underscoring the multifaceted challenges in the digital realm.

Concluding Perspectives

This conversation underscores an urgent need for a recalibrated approach to digital security and international cyber policy. With AI and cyber operations rapidly evolving, the U.S. must adapt its strategies to not only defend but also proactively disrupt hostile activities. The insights from these experts offer a foundational perspective for policymakers navigating the intricate landscape of global digital warfare.

About the Experts

Adam Segal
Adam Segal holds the Ira A. Lipman Chair in Emerging Technologies and National Security and directs the Digital and Cyberspace Policy program at the Council on Foreign Relations. His extensive career includes senior advisory roles within the U.S. State Department and academic appointments at prestigious institutions.

Elizabeth Economy
Elizabeth Economy serves as the Hargrove Senior Fellow and co-director of the Program on the U.S., China, and the World at the Hoover Institution. With a robust background advising on China-related commerce and policy, Economy is an acclaimed author and strategist on global Chinese influence.