China's emphasis on technology as a source of national power is a marked aspect of its emergence as a peer-competitor to the United States and of that competition itself. Semiconductors, big data, mobile Internet, space, financial and bio technologies figure large in this history, as do autonomous weapons systems and smart surveillance. It has been something of a puzzle as to how China's strategic planning, with its emphasis on indigenization and centralized control, managed to achieve such technological innovation. “Closed” systems are conventionally considered the enemy of the “openness” required for true innovation, with its transnational scientific exchange and data flows and the entrepreneurial opportunities of the global market. This seems a particularly acute tension given the marked shifts in China towards data localization and enhanced information controls during the course of President Xi Jinping's leadership.

Max Parasol's first book, AI Development and the “Fuzzy Logic” of Chinese Cyber Security and Data Laws, addresses this intellectual and practical conundrum in productive fashion. His empirical focus is on the artificial intelligence (AI) innovation ecosystem in China. AI needs data – do Chinese data laws encourage or discourage AI innovation, therefore? The sector is demonstrably thriving, yet should not be, if arguments about “closed” versus “open” socioeconomic systems pertain. Parasol's central argument is that previous work has tended to downplay the real history of Chinese innovation and what he calls the “fuzzy logic” of Chinese technology law and regulation. Through novel documentary research and interviews with Chinese officials and others, Parasol shows how this fuzzy logic expresses a strategic ambiguity that couples the promotion of conflicting AI and data policies with their pragmatic reconciliation through selective implementation, where ideas and practices can be tested before wider roll-out and marketization.

The book is organized in two sections, the first setting out the “Historical and doctrinal background” to relevant policy, legal and regulatory frameworks, the second explaining their “Impact on artificial intelligence” through the central motif of fuzzy logic. These are sub-divided into five and four chapters, respectively. The background section begins with necessary context for understanding innovation in China, not as a failure of Western (read: Schumpeterian) models, but as a combination of post-Mao bottom-up innovation and top-down policymaking, an entrepreneurial ecosystem “with Chinese characteristics.” Within this complex structure, the Party looks to AI to solve social problems (some unpalatable to external eyes); AI companies look to government for direction, data and capital. Chapter two shows how Chinese tech companies have historically negotiated the tension between government regulation and “commercial realities” since 2000, particularly the contortions of variable-interest entities (VIEs) that seek to attract foreign investment whilst not falling foul of government restrictions on those same sources of capital. Fuzzy logic pertains when lower-level regulation is sacrificed for higher-level policy ambitions. Chapter three expands upon this situation under Xi since 2014, in which a pro-innovation “Internet Plus” strategy has conflicted with increased information restriction under the “Network Sovereignty” (wangluo zhuquan) programme. Chapters four and five demonstrate how recent data security policies and the 2017 Cyber Security Law are seen not as antithetical to tech innovation but as “two wings of one body.” For example, internal data control and collection is, in part, modulated so as to provide the raw data that AI firms, in particular, crave in providing solutions to public policy problems.

The chapters in the second section detail exhaustively how AI innovation is affected and enabled by the “fuzzy logic” of data and cybersecurity law and policy, particularly “data localization” in its Chinese form. This asserts that data generated in China by domestic or foreign entities, or by Chinese firms operating anywhere, are sovereign assets and must be protected and exploited in pursuit of Chinese interests (chapter six). Data localization is not easy and reinforces tensions between the domestic demands of legitimate “data protection” and national-level strategic goals, including uncertainty around the role of foreign firms’ involvement in Chinese AI markets and transnational data exchange for research and development (“protectionism”). Deliberate ambiguity exists around what data are deemed protected or “important” under security legislation, meanings that shift according to political ideology and commercial priorities (chapter seven). Chapters eight and nine show how the fuzzy logic of AI policy, law and regulation benefits the Chinese AI sector by permitting data collection for machine learning and big data analytics and the running of “public-private petri dishes,” effectively large-scale AI experiments that feed back into public policy for AI and other social concerns. The author concludes by reaffirming the strategic utility of intentional fuzzy logic to AI innovation, whilst noting that it is not a one-off solution to the dynamic problem of how to balance political security with technological innovation.

Overall, this book is a timely, insightful and well-researched contribution to the literature on China and technology. Its attention to “fuzzy logic” will appeal to scholars of Chinese government and policy, and its empirical focus is of great interest to the wider international studies community, including those concerned with great power competition, cybersecurity and international political economy. Parasol's fascinating book is likely to find its way onto postgraduate reading lists and presents ideas and hypotheses that can be tested and expanded in future scholarship.