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How the Space Industry Will Save Coal

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The current fusion technology emerging from Commonwealth Fusion Systems will provide a reason why coal will once again become a source of jobs and wealth in the United States.  One of the elements needed to fuel the coming nuclear fusion reactor (called a tokamak), Helium-3 (He-3), will be a constraint on the development of sustainable fusion tokamaks.  It will be necessary to mine the Moon for the estimated 1.1 million metric tons of He-3 that are on the far side of the Moon.  CFS  is estimating that its commercial sales of the ARC will begin in the early 2030s.    

The advent of the space industry, to mine the Moon for He-3, will provide a lifeline to the struggling coal industry and provide thousands of coal mining  jobs in the future.

Why Helium-3 is Important

The Massachusetts Institute of Technology is generally considered to be one of the best universities in the world.  So, it is not surprising that Commonwealth Fusion Systems (CFS) began at MIT at the Plasma Science and Fusion Center (PSFC). Using their AlcatorC-Mod tokamak, the PSFC tried an experiment with a three-ion fuel instead of the traditional two-ion fuel. Using radio frequency heating to ignite two milligrams of helium-three, the helium-3 then ignited deuterium, which in turn ignited the third-ion fuel, tritium. In the new three-ion fuel scheme, all the RF energy is absorbed by just a trace amount of helium-3, and the ion energy is boosted even more — to the range of activated fusion products.

Helium-3 is not indigenous to Earth. It can be harvested from tritium when tritium reaches a half-life of 12.3 years. While tritium is not indigenous to Earth as well, it can be made in a fission reactor. All of the helium-3 in commercial use today is produced by this method. This presents safety and radioactive waste problems.

With helium-3 now a key ingredient in the new fusion process, the demand for helium-3 will become inelastic in terms of economic demand. To satisfy demand another way is needed to produce more helium-3. This can be accomplished by the increased production of tritium, or to mine the Moon where 1.1 million metric tons of helium-3 are estimated to be present in the Moon’s regolith.  The current estimated value of helium-3 on the Moon is $1.543 quadrillion.  This does not take into account the expected increase in demand for helium-3 once the fusion tokamaks from CFS become operational.

Solar Radiation and Its Dangers to Humans

Solar radiation storms occur when the Sun experiences a large-scale magnetic eruption, which causes a coronal mass ejection and accelerates charged particles into space, the solar radiation wave then bombards the planets in the Sun’s Solar System.  A solar eruption takes less than 10 minutes to reach Earth.  Fortunately, for the inhabitants of Earth, the Earth’s electro-magnetic shield protects the human race from the damaging effects of a solar radiation storm.  However as the human race begins to venture into space, to the Moon, to Mars, and eventually to the Asteroid Belt, the human race will need protection from the deadly effects of a solar radiation storm.

The International Space Station (ISS) is currently in low Earth orbit, taking advantage of the Earth’s electro-magnetic shield to help protect the astronauts against solar radiation storms that happen periodically.  The ISS is also heavily shielded, which also protects the inhabitants of the ISS.  However, Inter-Planetary Vehicles, and individuals working on the Moon will not have the protection afforded to the astronauts on the ISS, and must have protection against solar radiation.  When humans venture beyond the Earth, they will need to take hydroponic gardens with them as well, to provide food and a source of oxygen.  They will probably need to take small animals to be used as a potential food source.  Solar radiation will kill any vegetable life it encounters as well as small animal life. 

The best way to fight off solar radiation is lead aprons, and lead-polyethene-boron composites, as well as Boron Nitride Nanotubes.   Boron Nitride Nanotubes are still being evaluated as a possible radiation shield, while the Polyethylene shielding has been tested and found to be able to protect vegetable life, small animal life and human beings.

Raj Kaul, a scientist in the Marshall’s Center’s Engineering Directorate has worked with polyethylene before when constructing armor protection for helicopters of the United States military.  Kaul has said that polyethylene …”Since it is a ballistic shield, it also deflects micrometeorites, since it’s a fabric, it can be draped around molds and shaped into specific spacecraft components.”  Polyethylene is lightweight, half the weight of aluminum, and would only be needed for that part of the spacecraft that carries human, animal and vegetable life.

Polyethylene is Made Out of Coal

Karl Zeigler, from the Max Planck Institute for Coal Research in Germany invented linear HDPE, which is polyethylene.  In 1953, he was awarded the Nobel Prize in chemistry for his work in developing linear HDPE.

Polyethylene is too soft to be used as a frame for rockets and the spacecraft launched into space.  However, it is malleable enough to be made part of the infrastructure of the aircraft, and to be made into a mesh, which would be interwoven into an astronaut’s spacesuit offering protection while not in a structure or a space craft.

Future shelters on the Moon could be built just below the Moon’s surface, with a support roof of Polyethylene instead of burying shelters at a deeper level to protect the inhabitants of these structures from a solar radiation storm.  It has been hypothesized to build the structures deep into the bedrock of the Moon to provide protection from solar radiation, but this carries with it an element of risk.  Moonquakes can be as high as 5.7 on the Richter scale.  A structure buried deep within the Moons strata could be damaged, perhaps causing multiple fatalities, and billions of dollars in damage.

With the human race increasingly venturing out into space, it is imperative that they be protected from solar radiation.

Using coal as a means of protecting the human race in space would give thousands of workers around the world meaningful employment, as well as protecting the inhabitants of this planet.

I am a retired economist, and a retired soldier. I have a degree in Economics and a degree in Liberal Arts. While in the military my specialty was in Intelligence and Administration.

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Expanding Information Technology: A boon or bane?

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The proponent and opponents of tech innovation argue about the blessings and harms of the expanded technological advancement in the global arena. From Hunter-gatherer societies to modern-day’s post-capitalist societies; the art which has indisputable progress for humanity is the art of technology and change. Technological change provides the economic base and societal revolution in the general. Regardless of unprecedented changes in facets of communications its expansion could turn into cyber warfare, data privacy rights, political malice, and a threat to democracy.

Discussing the inverse logic in the first place; there is not an iota of doubt that expanded information technology has revolutionized the healthcare industry across the globe. The people from Nigeria can connect to New York for medical consultancy with little effort. It has changed the paradigm of the health sector with potential phase. Secondly, in the Political arena, the concept of e-governance evolved. Automation and information technology can be used to collect records and data statistics to make new and efficient policies for the public by using evidence-based policies. Regardless of robust socio-economic and socio-political changes in the structure of society information technology posited a major setback to the overall growth of society.

The threat of individual liberty due to mass surveillance is circulated everywhere with the dawn of excessive information technology. People have lost the true independence and liberty to choose and to decide about themselves. Google and media giants have placed the autonomy. The cannibalization of jobs is also a melting point with the advent of information technology. Humans’ cognitive skills are outperformed by artificial intelligence. One of the most lethal problems which are caused by expanded information technology is inequality; the flow of information technology led revenue from the south towards Silicon Valley. All the data of the world is owned by a minutus majority which is problematic. A small data elite can capture the entire globe within clicks. The autocratic hold of data by companies can put a major threat to the independence and rational decision-making of individual as well as collective states. The prior economic inequality was less potent than the subsequent data inequalities between North and South.

Democracy which is based on the trust factor is plagued by cyber-attacks and disinformation. Public opinion is engineered in the firms where the analysis of public behavior through different apps like Candy Crush can be used to mold and shape their opinions of the favorite leader. The democracy which stands over the general will is compromised by manufactured consent. Boot camps and lobbying big data tailor-made the wishes and preferences to make political campaigns for voting and triumphing the preferred members. The manipulated biases are justified through echo chambering by advertising all the biases and prejudices of humans to confirm their biases for political agendas. Democracy replaced by populism due to expanded information technology. The other side of democracy is based on communication. It was the improved communication in the society that established the democratic governances in different parts of the world, but with time, the malfunctioning communication due to a matrix of misinformation can halt the global growth and sustainability of democracy.

Yuval Noah Hariri argued that the biggest threat to the working class is not exploitation but irrelevance in the 21st Century. In the past technology couldn’t replace human intellectual abilities but artificial intelligence can overshadow the cognitive skills of human beings. These cognitive skills were peculiar human traits that empower them to main positions in companies and firms but the modern expanded technology has outnumbered this peculiar trait. Now robots and automated machines can do a good job of hiring and recruiting people than humans. Due to this reason, humans have become irrelevant with the cannibalization of jobs.

Every decision is owned by algorithms which are moral decadence. Google owns preferences and likes and dislikes mechanisms for humans. It is a big moral dilemma that expanded technology posed over human authority and autonomy. The unique decision-making of humans is replaced by tech-based decision powers. The margin of independent thinking has declined in the 21st Century. It is argued by scholars that the ultimate goal of Google is to outsource every decision of humans to Google.

Due to expanded technology, multi-national companies and firms are becoming stronger and more sovereign than entire states. For example, the Apple Market Value in 2021 was $2274.34 billion and Microsoft’s net worth was $1988.67 billion quart triple the entire GDP of any nation in Asia. The digital elites have become super humans which is a global threat to governance in third-world countries. The owner of big firms can sabotage and challenge the governance of any small country for the collective goodwill of their companies. State sovereignty has been diluted and replaced due to the more powerful Leviathan traits of big data firms.

The possible remedies to expanded technology are many. The democratization of data is a way forward in which the concentration and autocratic hold of all the data chains can be diluted into different units by breaking up Big Data like Google and Facebook. For example, Rockefeller Oil Company was diluted into 34 companies when it became a giant holder of all the oil supply in Europe. In the same vein, Big Data can be distributed into different units for democratization purposes. Secondly; strict government regulations and oversight mechanisms can be used to control Artificial Intelligence research. The expansion of IT should be controlled and ethical otherwise it can be a potential threat to humanity.

Modern information technology has changed human lives in general but the flip side of negative outcomes can’t be overlooked. The ethics and innovation should be balanced otherwise the corporates will monopolize all data and algorithms for ulterior motives. Technological advances present significant opportunities for progress and advancement of human beings from nuclear deterrence to communication. But the long-lasting negative consequences are many which proved modern technology a bane rather than a boon. It is high time across the globe to re-consider the ethical side and controlled expansion of information technology before it becomes an uncontrollable fact for human beings to survive and sustain in the 21st Century. The balance between expanded technology and human growth should be discerned in contemporary times.

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China’s Big Tech: From Free Development to Strict Regulation

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After a decade of explosive growth, China’s tech sector lost hundreds of billions of dollars in less than two and a half years of the state’s large-scale regulatory campaign. China’s five largest Big Tech companies lost nearly 50% of their combined market capitalization. While in 2020, Tencent had larger capitalization than Facebook and most other American companies, today America’s Apple with its market value of $2.7 trillion exceeds the capitalizations of Tencent, Alibaba, Baidu, Meituan, JD.COM, and Pinduoduo combined. Following the start of the regulator’s probe into its activities, DiDi alone lost over 90% of its market capitalization. Generally, China’s tech sector lost its former foreign investor appeal. In the first quarter of 2022, investment into it fell by 42.6% in quarterly terms or by 76,7% in annual terms. Over 200,000 employees were fired from internet companies over the last year.

Nonetheless, it would be a mistake to think that Chinese authorities wanted to stifle the development of China’s tech sector. Beijing successfully applied its regulatory measures to address almost all its problematic areas in the sector’s development. Chinese authorities demonstrate their commitment to creating a fully controlled regulatory environment for the so-called platform economy. Regulatory measures are intended to increase the social responsibility of businesses and bring companies and their activities compliant with national security demands.

Recently, due to a national economic slowdown brought by the COVID-19 pandemic, as well as uncertain external conditions, Chinese authorities are eager to show both businesses and investors that there will be no political pressure put on Big Tech. Vice Premier of the State Council Liu He supported the platform economy and expressed his hope that tech companies will play a constructive role in reviving national economy. Liu He, who is considered one of China’s top officials in charge of the economic bloc (along with Premier Li Keqiang), also welcomed businesses to attract financing at both domestic and foreign capital markets. By doing so, Beijing likely wants to revive investor optimism and demonstrate that China is far from anathematizing tech giants.

Nonetheless, the already adopted regulatory measures should not be expected to weaken. Given that for the last decade China’s tech sector has been developing practically regulation-free, it is now clear that the past development dynamics will no longer be. Using regulations, Chinese authorities drew red lines for China’s Big Tech. Chaotic capital expansion, monopolist practices, and uncontrolled use of data are categorically prohibited to businesses by rules that can no longer be broken. Those companies that want to attract financing and actively work on international markets without leaving the domestic market will likely have to look for additional compromises. One possible scenario is transferring a certain share of a company to the state and appointing party officials to the company’s board of directors, thereby granting more control leverages and making their activities more transparent.

The last decade is often called the golden era in the development of China’s technological sector. Over a short period of time, many companies have grown from small startups into international tech giants. Back in 2020, six out of the world’s ten largest unicorn companies (i.e. companies with a capitalization over $1 billio) were Chinese. ByteDance Ltd. still remains the world’s most expensive startup, with a capitalization of $140 billion. However, 2021 marked a turning point in the development of China’s Big Tech: within a year, China’s technological sector lost more than $ 2 trillion in capitalization amid toughening regulations. Although Beijing has shown some leniency to tech companies, the long-term trend for tough sectoral regulations is likely to remain. To better understand the logic behind these changes, we need to follow the transformation of the state’s development priorities that determined the regulations for tech companies.

National Innovations and National Champions

Even though China had established its “global factory” status by the late 1990s-early 2000s, the share of added value created directly in China was small: 14.5% for electronics and computers, 28.1% for telecommunication equipment, and 27.5% for home appliances. China maintained its status as a “global factory”, entrusted with overseeing “knock down” assembly, simple, labor-intensive, or environmentally harmful manufacturing. China’s authorities realized that given the growth of China’s economy and of its population’s income, this development model would inevitably drive China into a middle income trap. On average, China’s GDP per capita in 1995–2005 grew by over 10% annually, while in some years, for instance in 1994 and 1995, it reached up to 25% and 29%. Obviously, the existing economic development model (i.e. exporting finished products manufactured through an abundance of cheap labor force) ran its course. The best way out of the predicament was seen in increasing the share of added value, diversifying specific advantages, using innovations as an important economic development resource, and also gradually transforming the growth model by using the potential of China’s colossal domestic market.

In 2006, China published its 2020 Medium to Long-Term Plan for the Development of Science and Technology. This plan noted the importance of national innovations as the main goal of developing science and technology in the next 15 years. Plans involved stimulating national innovations through investment, tax benefits, and targeted funding. A major part was assigned to public procurement. Thus, China developed its first paradigmatic document defining the state’s subsequent policies and priorities focused on developing technologies and innovations. This document launched the growth of “national champions”, or private tech companies that were looked on favorably by the state and enjoyed every consequent priority in the state’s policies. This was a form of mutually advantageous cooperation: a business was given certain preferences, while local authorities, first off, demonstrated consistent compliance with the policies proclaimed by central authorities, and secondly, met their own region’s needs for economic development. Provinces competed in attracting the largest numbers of tech companies. Often, provincial authorities concluded exclusive partnership agreements with a locally headquartered company. Such a company gained direct access to the regional market and was also prioritized when it came to participating in governmental contracts. Virtually every large Chinese tech company (Alibaba, Tencent, Huawei, Inspur, etc.) had the exclusive partner status in one or even several Chinese provinces, and essentially became a monopolist provider of the goods and services it specialized in. Additionally, these companies received major subsidies from local authorities, which sometimes covered over 30% of their expenditures. Later, “national champions” became a means of self-expression not only for local authorities, but for some national regulators as well. This, in particular, explains the apparent lack of coordination between the People’s Bank of China and the China Securities Regulatory Commission. The latter approved the IPO of Ant Group, Alibaba’s financial technology subsidiary, in record time, while China’s Central Bank saw this IPO as a source of systemic risks for the stability of China’s financial system.

It would, however, be a mistake to suppose that preferences and subsidies granted by the state were the main factors for China’s growth of internet giants. The companies that subsequently grew into tech giants built their business on meeting the current market needs; they managed to predict the trends in market development. For instance, Alibaba and Tencent were founded when no more than 2% of Chinese were internet users. In 2005, the figure climbed to 10%, then to over 30% in 2010, and today, China has nearly 1 billion internet users, which is more than the combined population of the US and the EU. Alibaba correctly focused on the tremendous potential of e-commerce and on the unmet consumer demand, particularly in China’s rural areas. Tencent, in turn, adapted internet services to Chinese customer preferences, thus significantly improving customer experience. Ant Financial, Alibaba’s financial technology subsidiary, started developing mobile payments; this subsidiary was established because a trust problem between customers and suppliers necessitated creating an online version of banks’ letters of credit to be used on Alibaba’s e-commerce platform.

It is also important that China’s tech companies operated in a relatively closed domestic internet space with severely limited competition from foreign players. Nonetheless, foreign investors rated very highly the objective market prospects of China’s tech companies. For instance, Alibaba’s IPO brought in $21.8 billion, and the entire company was valued at $167.8 billion at the time it went public.

China’s authorities tried not to limit the development of tech companies in any way, sometimes even disregarding their own legislation. For instance, Chinese law prohibits involving foreign capital in China’s internet sector, yet China’s internet companies circumvented this prohibition by establishing so-called Variable Interest Entities (VIE); companies were registered mostly in offshore account, bearing the same name, along with a claim to the assets and profits of the parent corporation. China’s authorities primarily cared about tech companies handling the urgent tasks of facilitating economic growth and social development. For instance, internet companies fill in all the gaps that emerged in the online space following the ban on popular foreign internet services; they create a favorable environment for internet users and improve user experience. “China’s internet” has replicas of all popular international services such as Facebook, Google, Twitter, WhatsApp, Wikipedia, Quora, and YouTube; consequently, “China’s internet” developed as a “thing in itself”, discouraging users from using circumvention tool to access banned resources.

E-commerce services benefited small business development while also handling the important social task of creating jobs and overcoming poverty. In 2014–2017 alone, online retail in rural China grew from $27 billion to $189 billion. The so-called Taobao villages (named after Alibaba’s domestic online trading platform) helped farmers establish their own channels for selling their goods, thereby creating about 840,000 jobs. In turn, Ant Financial, Alibaba’s financial technology subsidiary, issued 100 billion yuan worth of loans to 2 million people from the poorest rural areas in a single year.

Overall, financial technology companies were helping to resolve the problem of giving several hundred million people with no credit history access to financial products. Traditional banks preferred to work with large state enterprises to whose aid the state would come should things go south, while loans to small business and individuals were issued on a leftover principle. Consequently, China’s authorities viewed financial technology companies as a quick way of handling the growth problem of small and medium-sized business that, however, accounted for nearly half of the national GDP growth and over 60% of urban jobs.

The state prioritized the role of the internet sector in furthering socioeconomic development in its Internet Plus action plan, which was first announced by Li Keqiang, the Premier of China’s State Council, in 2015. Presenting the annual report on the government’s activities, Li Keqiang said that the Internet Plus plan would entail broadly integrating internet services with traditional economic and industrial sectors. According to the Premier, this plan would guarantee the internet’s decisive role in optimizing the locations of manufacturing factors and to give economic development a new impetus. The plan envisaged lowering barriers for tech companies’ IPOs, accelerated construction of digital infrastructure and related high-tech manufacturing facilities, and introducing cloud computing technologies and big data into the work of governmental bodies.

The leaders of tech companies increasingly influenced the opinions of China’s top state officials. Tencent’s founder Ma Huateng, for instance, became a member of the National People’s Congress. Incidentally the very phrase “Internet Plus” was used by Ma Huateng even before Li Keqiang announced the program. Therefore, some speculate that the head of Tencent influenced the formation of the new concept of digitalizing the economy. His competitor, Jack Ma, the head of Alibaba, repeatedly spoke about the importance of big data as a new source of economic growth. His recommendations were allegedly reflected in the 13th five-year development plan (2016–2020). Whether or not this is true is impossible to verify, but a separate article is devoted to introducing a national big data strategy.

In any case , China’s tech companies set new world records as they developed at lightning speed during the 12th and 13th five-year plans. The P2P lending sector, for instance, grew by over 200% annually. Alibaba and Tencent virtually became monopolists on China’s mobile payment market, with each company having over 700 million users. Before the pandemic, the revenues of DiDi, China’s vehicle-for-hire company, grew by more than 10% annually. Alibaba’s Yu’e Bao, an asset management product which offered an extremely low entry threshold of just 1 yuan, became the world’s largest money market fund by the late 2010s,, managing about $9 billion. With time, it became clear that tech companies could no longer develop unsupervised as their activities began to generate systemic stability risks. The sanctions against Alibaba, which ended with the cancellation of its IPO and a record $2.8 billion fine, are often taken as the starting point of the “regulatory winter”. Indeed, Alibaba’s case became the largest in China as regards the amount of financial penalty assessed. However, the first regulatory steps had been taken long before this case. All the potential risks posed by tech companies and, accordingly, all regulatory steps taken in their regard can be divided into three parts: combating chaotic capital expansion; anti-monopoly regulations; and threats to data security.

Chaotic Capital Expansion

Back in 2017, China’s President Xi Jinping in his address to the 19th Congress of the CPC proclaimed that China had to win “three difficult battles”: a battle against poverty, a battle against environmental pollution, and a battle against financial risks. These risks began to emerge after 2008 when Beijing decided to offer $585 billion. worth in economic stimulus money. The funds were supposed to go to the economy’s real sector and to infrastructural construction. However, central authorities contributed only one third of that amount; the rest had to be contributed by local governments. Since local authorities could not legally take out loans directly from banks, they relied on affiliated companies, local government financing vehicles (LGFV) that essentially acted as creditors.

This created a colossal demand for loanable funds, and the banking sector could not fully meet it, partly because of regulatory restrictions. . Hence, so-called shadow banking began to develop. CEIC Data reports that from 2008 to2017, shadow banking in China tripled from 20% to 60% of the GDP. Shadow banking is generally understood as off-balance sheet assets of traditional banks meaning loans issued by trusts, pawnshops, and micro lenders. The general problem with these schemes is, as the name suggests, that they are conducted out of sight of banking supervision, and therefore, may pose risks to the stability of the financial system.

This is, for instance, exactly what happened with P2P lending platforms. Their numbers in China peaked at 5,000, while they only numbered in dozens in other states. After one of the largest platforms, Ezubao, defaulted and 900,000 investors lost $7.3 billion, regulators began to look closely into the specifics of China’s P2P platforms. It turned out that instead of being merely informational go-betweens connecting creditors and borrowers, as is the case everywhere else, Chinese P2P platforms acted as quasi-banking structures: they accumulated investors’ funds guaranteeing them high returns and issued their own loans. In 2018, the Executive Group’s Office for Special Risk Management in Internet Finance issued “Notifications on Greater-Intensity Normalization of Online Asset Management and Establishing Supervision.” In particular, this document notes that currently active P2P platforms must: obtain a license to work; stop creating reserves out of investor funds,;act solely as intermediaries between creditors and borrowers; cap loan total costs at 36% interest rate (China’s supreme court capped total loan cost in 2015);operate solely via a depository bank; and cap loans per single borrower at 200,000 yuan for natural persons and 1 million yuan for legal entities. Companies were given a year to ensure they were compliant with the new norms. However, not a single company could become compliant, and by 2021, China had no P2P platforms at all.

In September 2020, China’s Central Bank announced comprehensive regulatory measures to regulate the activities of all tech companies offering financial services. Under these rules, any company that is not officially a financial enterprise, but has two or more financial divisions, should be registered as a financial holding. To be licensed, a company should have registered capital of at least 5 billion yuan. The new regulations extend to non-financial companies managing commercial banking bodies with assets totaling over 500 billion yuan, and to non-financial companies managing non-banking financial bodies with assets totaling over 100 billion yuan. Such companies should request a license from China’s Central Bank and, if this license is issued, add “financial holding” to their name. If a conglomerate is denied a license, it must sell or transfer its shares and control of its financial divisions. These rules cap loans issued to natural persons at 300,000 yuan and loans issued to legal entities at 1 million yuan. Simultaneously, a loan cannot exceed one third of a person’s average income for the last three years. Finally, new rules mandate that micro lenders may not attract bank funds or stockholder funds in amounts exceeding the amount of the company’s net assets. Also, the amount of funds attracted by issuing bonds and by securitization may not be more than four times the company’s net assets. Additionally, if a micro lender or an internet finance platform issues a loan together with a bank or other financial institutions, the micro lender’s or the internet finance platform’s share in the loan should be no less than 30%.

These rules appeared before Alibaba’s founder Jack Ma delivered his seditious speech at the Bund Summit financial forum in Shanghai. So, while the cancellation of Ant Group’s $37 billion IPO is often labeled as regulators’ “revenge” for Jack Ma’s arrogance, a much more likely reason seems to be that Ant Group did not comply with the new regulatory rules. Ant Group’s placement memorandum for investors said that consumer loans and loans to small businesses brought in 39.4% of the company’s revenues. For example, as of June 2020, outstanding loans issued via Ant Group’s platforms totaled 1.73 trillion yuan (261 billion dollars.). About 98% of these funds were either underwritten by banks or securitized. In other words, Ant’s balance sheet carried only 2% of loans. Traditional banks and investors carried risks for all the other loans that had in fact been issued by Ant Group.

In December 2020, the Politburo of the Central Committee of the CPC announced at its meeting that China would combat “chaotic capital expansion.” Rénmín Rìbào, the party’s main newspaper, explained that chaotic capital expansion refers to the logic of gaining profits at any cost, when development is detrimental to public interests. Therefore, a purely economic component was augmented by a social factor motivating Beijing to regulate the tech sector. In the thinking of Chinese authorities, financial stability goes hand in hand with the needs of building a harmonious society. Therefore, regulation means not only minimizing risks for the financial system, but also eliminating factors that provoke social instability.

Steps taken to combat the online education market fit into this framework as well. China’s State Council first mentioned the need to regulate online education and reduce school studentworkload back in 2018. Already in 2021, Chinese authorities first prohibited foreign investment in education and then mandated converting all online education tech platforms into non-commercial organizations. The two largest players on the market, Yuanfudao and Zuoyebang, were fined $389,000 for misleading marketing practices. Needless to say, these restrictions came as a shock to a sector that had accumulated at least $100 billion in investment. Nevertheless, as declining birthrates create serious demographic problems, regulating the sector that averagely consumes,30% of families’ annual income, and exacerbates social stratification between urban and rural populations became a political priority.

The food delivery sector also began to pose certain social instability risks. On the one hand, it was rapidly gaining popularity: from 2016 to 2020, the number of people ordering food online doubled to 400 million people. Two companies, Meituan and Ele.me, were virtually monopolists in this area. However, in an effort to take over the largest possible market share, each company tried to use its competitive edge aggressively through algorithms that optimize logistics This manifested primarily in delivery times and the range of foods offered. However, media and social networks eventually began to report horrendous labor conditions of delivery personnel who had to break traffic rules and work overtime if they wanted to meet rigid delivery deadlines; most importantly, the companies fined delivery personnel for smallest delays regardless of objective circumstances such as traffic, weather, time of day, etc. In 2021, an official from the Beijing Municipal Human Resources and Social Security Bureau went to work undercover for one of the companies and personally ascertained the harsh working conditions. Two months later, China’s State Administration for Market Regulation (SAMR) and six other state agencies developed regulations mandating that food delivery services extend basic social guarantees to their employees, including minimal wage-compliant earnings, and the ability to form trade unions. Additionally, companies were prohibited from using the harshest algorithms and were mandated to give employees more time to complete every delivery. Also, companies were mandated to set up special rest and food areas for employees and issue them special gadgets (like smart helmets) that would enable them to use their smartphones hands-free. Later, eateries complained about food delivery aggregators charging excessive fees. In February 2022, Chinese authorities mandated that companies reduce fees charged to food businesses.

Combating chaotic capital expansion applied to the online games market, too. Back in 2018, China’s authorities suspended issuance of approval for new games by relevant regulators, and in 2019, the authorities prohibited people under 18 from playing games after 10 p.m. They also mandated that companies ensure compliance with these requirements via, among other things, compulsory user identification. In August, China’s largest state media labeled games as “spiritual opium,” and soon the authorities prohibited children under 18 from playing online games for over a combined total of three hours a week. Tencent, the largest manufacturer of online games, was forced to increase its expenditures on complying with new regulations (including user verification). In 2022, the company’s revenues demonstrated negative dynamics for the first time since its 2004 IPO. Additionally, as a goodwill gesture, the company promised to earmark $7.7 billion for social “universal welfare” goals, another slogan China’s leadership frequently reiterates.

Anti-monopoly Regulation

Officially, China adopted anti-monopoly legislation back in 2008, and China’s Supreme Court heard the first anti-monopoly case of two Chinese IT-companies (Qihoo 360 Technology Co. Ltd. and Tencent Holdings Ltd.) in 2014. The two companies marketed rival products (antiviruses 360 Safeguard by Qihoo and QQ Doctor by Tencent) and used dubious competitive practices. Ultimately, Qihoo upgraded its 360 Safeguard product and it started blocking QQ’s pop-up ads. Tencent, in turn, also upgraded its QQ messenger, and it stopped working on computers that had the 360 Safeguard antivirus installed. In other words, consumers had to choose “one out of two”, a phrase that will be incorporated into Chinese antitrust law for several years… Although China’s Supreme Court recognized that these actions caused some harm to businesses, the specific economic damage, expressed in the loss of the customer base, was considered insignificant back then. The existing antimonopoly legislation of the time was too general and did not account for the specifics of internet business.

In November 2020, two weeks before an antimonopoly probe was launched against Alibaba, draft antimonopoly rules for internet companies were published. They were adopted in less than six months with minimal changes. Under these rules, a monopoly means practices, including digital platforms, that deliberately limit the compatibility of their own products with competitors’ products. Forcibly routing internet traffic and blocking a competitors’ hyperlinks for the purpose of restricting client access is prohibited. Additionally, the practice of “choosing one out of two” when online marketplaces prohibited sellers from simultaneously cooperating with other online trading platforms is held to be inadmissible. Fake advertising, paid-for client reviews, and other misleading information was prohibited as well.

Additionally, harsher measures were adopted for antimonopoly regulation of companies working with online payments, internet finance, and financial technology. Under these rules, any non-banking company holding over half the market, or two companies holding over two thirds of the market, or three companies holding over ¾ of the market will be subjected to an antimonopoly probe. Should China’s Central Bank notice any signs of monopolism undermining the principles of business security, efficiency, fairness, and reliability, it may file a grievance with relevant antimonopoly bodies and spearhead an antimonopoly probe even if the company’s business does not comply with the above criteria.

The verdict in the Alibaba case was the most high-profile outcome of an antimonopoly campaign. The company was fined a record amount of $ 2.8 billion, which totaled 4% of its 2019 annual turnover in China. China’s State Administration for Market Regulation found that Alibaba had systematically violated antimonopoly regulations: it forced sellers selling goods on its e-commerce platform to work solely with Alibaba’s platform. Trading on other e-platforms was forbidden; otherwise, the company threatened to hide the seller’s goods in its search results and to cut them from any promotion campaigns.

After the demonstrative punishment of Alibaba, top managers of all the largest Chinese internet companies were summoned for a talk with the regulator. They were reminded that monopolistic policies were inadmissible. Later, almost every one of them was fined for various violations of antimonopoly legislation: for exclusive agreements on distributing musical context (Tencent), for failure to disclose information about mergers and acquisitions (Baidu, Shenzhen Hive Box), and for promoting inaccurate information that misleads customers (JD.COM). Another major case involved food delivery service aggregator Meituan, who was fined $530 million for exclusive agreements and for using its monopoly to force customers to choose “one out of two.”

Antimonopoly regulation of China’s tech companies stemmed from the objective need to whip into shape the market environment and create conditions for healthy competition. This process was closely tied to combating “chaotic capital expansion”, analyzed above. China’s tech giants aggressively used non-competitive methods to push out smaller players. For instance, when China introduced regulations for financial technology platforms, Alibaba’s subsidiary Ant Group and Tencent’s WeChatPay service were virtually monopolists in the mobile payments market. These companies divvied up a market of 1 billion users, although officially another 233 Chinese companies were licensed to engage in the same activities. Beijing knew that without requisite regulations, tech giants would become a backbone force hard to control even at the level of state. For instance, even though China’s Central Bank mandated that all mobile payments operators process transactions using a specialized clearing platform controlled by the regulator, companies repeatedly violated requirements for relevant supervision of capital movement. Finally, looking at the global practice that involved EU and US authorities conducting antimonopoly probes against global giants such as Amazon, Beijing realized it was time to act. Some may even go so far to say that China managed to catch up with and overtake its international partners. Today, China has instituted a very strict regulatory regime for tech companies; this is particularly true for protecting, processing, and transmitting data.

Data as a National Asset

In 2013, ex-NSA employee Edward Snowden publicized information about American secret services using vulnerabilities of IT systems throughout the world to garnish intelligence information. This made China ponder the influence data may have on national security. In 2017, Cybersecurity Law went into force mandating, among other things, storing all data on Chinese users in China. Subsequently , technological confrontation with the US had an even greater influence on Beijing’s data policy.

The US has a competitive edge (fundamental research, qualified personnel, hardware/firmware) in practically all key technologies such as artificial intelligence, while China outstrips the US only in quantity and quality of data. This led to Chinese authorities placing a particular emphasis on regulating turnover of data as a crucial national asset. In 2021, China passed the “Data Security Law” and “Personal Information Protection Law” (PIPL). Under these laws, data is viewed as a national asset, another production factor on par with labor, land, capital, and technology. Data is also categorized by importance: regular data, key data, personal data. Cross-border transmission of key and personal data is rigidly regulated. This procedure may be conducted only after this data has been comprehensively checked by appropriate authorities.

Under PIPL, the confidentiality of user personal information was further stringently protected. The law mandates that the multitude of mobile apps and services have no right to deny their services to a user who refused to submit their personal information, except for the cases when this information is absolutely necessary for the proper functioning of an app. Users now have the right to receive specific information on how, where, by whom, and for what purpose their personal information is used. Companies must obtain user informed consent to use, store, and process their personal information. Users may revoke their consent at any time. The laws rigidly regulates cross-border data exchanges. If a company accumulates a large array of data about Chinese citizens, then, before conducting any data exchange with foreign partners, this company must undergo a strict cybersecurity check and obtain approval from the appropriate Chinese authorities.

China’s vehicle-for-hire company DiDi was the main “victim” of the new data protection legislation. DiDi launched its IPO on the New York Stock Exchange just when the relevant data security legislation was in the works. Merely a few days after DiDi’s $4.4 billion IPO, China launched a probe against DiDi regarding its compliance with data protection standards. The company was mandated to remove its apps from app stores and stop attracting new users. The probe against DiDi – concluded only when the company announced it was delisting itself from the American exchange.

The demands of US regulators to disclose information raises security concerns to Chinese authorities. The US demands that all companies listed on American exchanges grant the Public Company Accounting Oversight Board (PCAOB) unobstructed access to audit and accounting reports. Previously, Chinese companies ignored this demand citing Chinse legislation that prevented them from disclosing such information to international partners and regulators. In 2020, however, the US passed the Holding Foreign Companies Accountable Act (HFCAA). Under this act, should any company listed on American exchanges fail to provide data and accounting reports for three years, it will be forcibly delisted. China’s vehicle-for-hire company DiDi works on the domestic market and accumulates sensitive data concerning movements of millions of Chinese citizens. Naturally, such a company launching an IPO with the potential condition of transmitting these data to the US is a very risky step. Although the authorities did not publicly say so, from a regulator’s point of view, the main condition for companies like DiDi to continue operating is to prevent uncontrollable cross-border transmission of data.

As for domestic information security, Chinese authorities started regulating the use of algorithms by companies. The State Internet Management Office together with the Ministry of Industry and Information Technology and the Ministry of Public Security announced measures that have been in place since 2022. Under these rules, companies must not use recommendation algorithms for illegal purposes, for instance, for undermining national security. News sites whose work is based on algorithms must undergo a special licensing procedure; recommending fake news is prohibited. Additionally, companies are mandated to inform users about the recommendation service’s basic principles, purpose, and operating procedures; users should also have the option to opt out of receiving recommendations created through the use of algorithms. Companies also must provide users with the option of choosing or removing tags the algorithm uses to form recommendations. Finally, users may not be subjected to price-based discrimination based on an algorithmic analysis of their online behavior.

***

After a decade of explosive growth, China’s tech sector lost hundreds of billions of dollars in less than two and a half years of the state’s large-scale regulatory campaign. China’s five largest Big Tech companies lost nearly 50% of their combined market capitalization. While in 2020, Tencent had larger capitalization than Facebook and most other American companies, today America’s Apple with its market value of $2.7 trillion exceeds the capitalizations of Tencent, Alibaba, Baidu, Meituan, JD.COM, and Pinduoduo combined. Following the start of the regulator’s probe into its activities, DiDi alone lost over 90% of its market capitalization. Generally, China’s tech sector lost its former foreign investor appeal. In the first quarter of 2022, investment into it fell by 42.6% in quarterly terms or by 76,7% in annual terms. Over 200,000 employees were fired from internet companies over the last year.

Nonetheless, it would be a mistake to think that Chinese authorities wanted to stifle the development of China’s tech sector. Beijing successfully applied its regulatory measures to address almost all of its problematic areas in the sector’s development. Chinese authorities demonstrate their commitment to creating a fully controlled regulatory environment for the so-called platform economy. Regulatory measures are intended to increase the social responsibility of businesses and bring companies and their activities compliant with national security demands.

Recently, due to a national economic slowdown brought by the COVID-19 pandemic, as well as uncertain external conditions, Chinese authorities are eager to show both businesses and investors that there will be no political pressure put on Big Tech. Vice Premier of the State Council Liu He supported the platform economy and expressed his hope that tech companies will play a constructive role in reviving national economy. Liu He, who is considered one of China’s top officials in charge of the economic bloc (along with Premier Li Keqiang),also welcomed businesses to attract financing at both domestic and foreign capital markets. By doing so, Beijing likely wants to revive investor optimism and demonstrate that China is far from anathematizing tech giants.

Nonetheless, the already adopted regulatory measures should not be expected to weaken. Given that for the last decade China’s tech sector has been developing practically regulation-free , it is now clear that the past development dynamics will be no more. Using regulations, Chinese authorities drew red lines for China’s Big Tech. Chaotic capital expansion, monopolist practices, and uncontrolled use of data are categorically prohibited to businesses by rules that can no longer be broken. Those companies that want to attract financing and actively work on international markets without leaving the domestic market will likely have to look for additional compromises. One possible scenario is transferring a certain share of a company to the state and appointing party officials to the company’s board of directors, thereby granting more control leverages and making their activities more transparent.

From our partner RIAC

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Artificial intelligence and moral issues. Towards transhumanism?

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As artificial intelligence travels through the solar system and gets to explore the heliosphere (enclosing the planets), it will adapt by making decisions that enable it to do its job. Many people in the field of astrobiology are in favour of the so-called post-biological cosmos vision. Is it because of the desire to conquer space that we humans are sowing the seeds of our own destruction in favour of artificial intelligence? Or are we unconsciously following some sort of master plan in which flesh and blood beings are destined to become extinct and be hybridised by silicon and synthetic materials? As for the mind, memory, consciousness, could there also be a place for humans in a robot’s brain? Should our mortal shells be replaced by something more robust and durable, could we still consider ourselves human?

The proof of this is a series of fairly recent experiments that seem to suggest that robots will not only be able to acquire human consciousness but also reproduce it. Ottawa, Canada, June 2017: Carlton University’s Department of Mechanical and Aerospace Engineering announced the development of a technology that would revolutionise the future of space travel. Engineers hope to create a 3D printer that will one day be able to build structures on the moon using only minerals from there, but probably even more shocking is the fact that it will have the ability to self-replicate.

As man goes ever further in his attempts to colonise space, technology is being developed – as mentioned – through which a 3D printer can self-replicate using materials collected on the surface of a specific celestial body. In this way, printers will be able to double in number from time to time. This would mean that by using artificial intelligence and 3D printing, installations and bases can be created on celestial bodies, including satellites, planets and asteroids.

Although there are strong doubts that mankind will be able to develop a technology that makes machines capable of self-replicating in the near future, there is a project known as RepRap that has been going on since 2005 to design a 3D printer that can make everyday objects and even create some spare parts. 3D printing is a huge step forward for the development of scientific progress. What is even more incredible, however, is that this type of printer is capable of reproducing itself and we are therefore dealing with a technology that is capable of surpassing its own purpose and will also be able to build better machines that are faster and more powerful.

In the 1940s – over 20 years before man set foot on the moon – the Hungarian scientist John von Neumann (1903-57) – one of the greatest mathematicians in modern history and one of the prominent scientific personalities of the 20th century, as well as creator of the game theory – believed that self-replicating machines would enable man to venture beyond our solar system to explore the entire galaxy.

According to Japanese-born astrophysicist Michio Kaku – a summa cum laude graduate of Harvard University: “Man is led to believe that, in order to explore the stars, you need a huge spaceship, but this is not the case. The most effective way to explore the galaxy with so many planets is to send a small probe like John von Neumann’s”.

Von Neumann’s probe is a self-replicating machine that explores space and uses materials collected in the universe to create identical copies of itself. For example, if a probe is sent to Jupiter, once it gets to its destination it will collect material from that planet to give birth to the next generation of itself. At that juncture, the new probe will continue its journey to other worlds, and once it reaches its destination, it will in turn collect material to self-replicate again and again. In this way, the chances of reaching the edge of the heliosphere will increase exponentially. Many believe that one of the obstacles of interplanetary space travel is the time it would take a spacecraft to travel from one place to another. However – apart from the help of warp drive and wormholes (faster-than light travels according to the Einstein-Rosen bridge theory) – at that juncture, instead of spaceships full of humans, could not the universe be explored and populated with probes like von Neumann’s? We now know that flesh and blood people are not suitable for space travel. Exploration scientists have been working for decades on the project of turning mankind into mechanical or transhuman beings in order to create an entire cloned race of robots.

Transhumanism is a philosophical and intellectual movement that advocates improving the human condition by developing and making widely available sophisticated technologies that can greatly enhance longevity and cognition. It also predicts the inevitability of such technologies in the future.

In essence, it will be possible to upload our consciousness (in the form of digital information) onto a computer and transmit data to a specific location in space, as we shall see later.

In the 17th century, the French philosopher Descartes developed the concept of mind-body dualism, according to which human consciousness is not produced by the body, but is distinct from it: the body and mind of a human being, therefore, do not interact with each other because they are two separate things.

While observing – with perplexity – the progress and horrors of the industrial revolution, on June 13, 1863 the English author Samuel Butler (1835-1902) wrote in the Christchurch (New Zealand) newspaper, The Press, a prophetic letter to the editor entitled Darwin Among the Machines, in which – inter alia – he stated with great foresight and vision:

The views of machinery which we are thus feebly indicating will suggest the solution of one of the greatest and most mysterious questions of the day. We refer to the question: What sort of creature man’s next successor in the supremacy of the earth is likely to be. We have often heard this debated; but it appears to us that we are ourselves creating our own successors; we are daily adding to the beauty and delicacy of their physical organisation; we are daily giving them greater power and supplying by all sorts of ingenious contrivances that self-regulating, self-acting power which will be to them what intellect has been to the human race. In the course of ages we shall find ourselves the inferior race. Inferior in power, inferior in that moral quality of self-control, we shall look up to them as the acme of all that the best and wisest man can ever dare to aim at. No evil passions, no jealousy, no avarice, no impure desires will disturb the serene might of those glorious creatures. […]. We take it that when the state of things shall have arrived which we have been above attempting to describe, man will have become to the machine what the horse and the dog are to man. He will continue to exist, nay even to improve, and will be probably better off in his state of domestication under the beneficent rule of the machines than he is in his present wild state. […] Day by day, however, the machines are gaining ground upon us; day by day we are becoming more subservient to them; more men are daily bound down as slaves to tend them, more men are daily devoting the energies of their whole lives to the development of mechanical life. The upshot is simply a question of time, but that the time will come when the machines will hold the real supremacy over the world and its inhabitants is what no person of a truly philosophic mind can for a moment question. Our opinion is that war to the death should be instantly proclaimed against them. Every machine of every sort should be destroyed by the well-wisher of his species. Let there be no exceptions made, no quarter shown; let us at once go back to the primeval condition of the race. If it be urged that this is impossible under the present condition of human affairs, this at once proves that the mischief is already done, that our servitude has commenced in good earnest, that we have raised a race of beings whom it is beyond our power to destroy, and that we are not only enslaved but are absolutely acquiescent in our bondage.” (Samuel Butler, A First Year in Canterbury Settlement With Other Early Essays, A.C. Fifield, London 1941, pp. 182-185).

John Von Neumann argued he started from Descartes’ theory and Butler’s assertions to arrive at the assertion that self-replicating machines need to be used to explore other planets. However, Rabbi Ariel Bar Tzadok stated: “If we were to create an artificial life form and if it developed, evolved and grew, it could become superior to modern man. This would create a moral problem, since human beings tend to worship what they believe is greater than themselves.”

Are we probably close to a new phase in human evolution during which we will become transhuman? Prof. Kaku replied: “I think that by the end of the century we will be able to digitise consciousness. Everything known about man such as personality, memories, emotions, and even the nerve pathways will be digitised. What will it be used for? To place our consciousness on a laser beam and direct it into the sky: in a second, human consciousness will arrive on a specific celestial body where it will be downloaded into a central system and then inserted into a mechanical avatar. I call it laser transfer”.

If the technology of transhumanism is successful, the content of our brain will soon be stored in the cloud. Hence, as the human civilisation prepares for the next phase of its evolution, will those we consider human beings become extinct or transhuman? That is, with intelligence developed in AI-driven cybernetic bodies. Numerous scholars deny this possibility, arguing that a human being is more than a mix of flesh and bones. Man means thought, ideas and especially feelings that make him a being different from any of his fellows and all other living creatures in the universe. This awareness should reassure and motivate us as we prepare to fulfil mankind’s ultimate destiny, i.e. to turn ourselves into a future generation that will explore worlds for now far away from us.

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