On AI, Trump orders all hands on deck

Trump's executive order comes amid tense brinkmanship between the U.S. and China, driven by a trade war declared by the U.S.

• The order brings new focus to the core of U.S. unhappiness: Beijing's strategic plan "Made in China 2025" and its goal of capturing the commanding heights in AI, quantum computing, biotechnology and more.
• The bottom line: This may be an attempt by Trump to signal deeper resolve ahead of coming new talks with Chinese leader Xi Jinping, possibly in March.

Simply signaling an all-hands push by the White House on AI is valuable, says Michael Allen, of Beacon Global Strategies and a former member of President George W. Bush’s National Security Council.

• "This has a galvanizing effect and elevates AI as a critical national priority," Allen tells Axios.
• "I read [the order] as a demand for the federal agencies to give the White House specifics for what steps they are going to do to make AI a priority and what resources they need to make those steps a reality," says Gregory C. Allen, an adjunct senior fellow at the Center for a New American Security. "Overall, this [order] is great news."

The billion-dollar question is how the government's new priorities will be funded.

• Trump set aside no new money in his executive order. When Axios asked how the initiative will be funded, a senior administration official said that money is the purview of Congress.
• While true that Congress is in charge of appropriating funds, the White House can move existing money around, says William Carter, a technology policy expert at the Center for Strategic and International Studies.
• "If they can find $5 billion for a border wall, they should be able to find a few billion for the foundation of our future economic growth," says Carter.

What the plan does do, however, is tee up civilian agencies to make AI investments, and encourages them to do so.

So far, U.S. funding for AI has been anemic.

• An analysis from Bloomberg Government found that the Pentagon's R&D spending on AI has increased from $1.4 billion to about $1.9 billion between 2017 and 2019. DARPA, the Pentagon's research arm, has separately pledged $2 billion in AI funding over the next five years.
• It's hard to put a number on the entire federal government's AI spend, says Chris Cornillie, a Bloomberg Government analyst, because "most civilian agencies don't mention AI in their 2019 budget requests." (The new executive order would keep better track of civilian agencies' AI funding.)

These numbers pale in comparison to estimates of Chinese spending on AI. Exact numbers are hard to come by, but just two Chinese cities — Shanghai and Tiajin — have committed to spending about $15 billion each.

One element of funding is building and maintaining talent superiority, and education is a pillar of Trump's executive order.

• A key issue is whether threats to slow down immigration and make it more difficult for foreign students to attend U.S. schools will detract from U.S. competitiveness, says Elsa Kania, an adjunct senior fellow at CNAS.

Why it matters: As the Trump administration ramps up its multifront trade war with China, a number of foreign companies are reconsidering their place in the U.S. While some are concerned about doing business in an "America First" environment, others appear to be delaying big-ticket projects — with scores of jobs hanging in the balance.

• Chinese investment in the U.S. dropped almost 90% from 2016 ($46 billion) to 2018 ($5 billion), per the Rhodium Group. "Trade and other economic frictions between the two countries have substantially reduced the attractiveness of the U.S. as a destination for Chinese foreign direct investment," says Eswar Prasad, a trade policy expert at Cornell.

The backdrop: Chinese companies went from employing 500 U.S. workers in the manufacturing sector in 2007 to over 26,000 as of 2016, according to the Bureau of Economic Analysis. "It seemed like it was on this dramatic uptick," says Joe Parilla, a scholar at Brookings.

• In some cases, Chinese companies have stepped in to bail out failing American factories. As documented in Netflix's "American Factory," China's Fuyao Glass bought a shuttered General Motors plant in Ohio in 2014 and turned it into a glass supplier for the American automaker.

"FDI [foreign direct investment], including from China, has been a significant source of manufacturing employment growth," says Brookings' Mark Muro. "But now that is ebbing."

In Arkansas, 2 factories bought by Chinese companies stand vacant as the trade fight rages on.

• In 2017, a Chinese firm bought a factory in Forrest City, Arkansas, that had been empty for 10 years and pledged to create 800 jobs, an investment that would have made that company the biggest employer in the county, reports the American Communities Project. Two years later, the facility is still a ghost town.
• “There are various factors that have gone into the delay, but the main factor is the tariffs,” Forrest City Mayor Cedric Williams told the American Communities Project. “We’re at a standstill until they get that resolved.”

Another Chinese company's plan to build a paper mill is on hold in Arkadelphia, Arkansas. In an interview with Christian Science Monitor, Stephen Bell, who heads the city's chamber of commerce, called the trade conflict "a dark cloud hanging over the future of the project."

What to watch: In another potential blow to Chinese-owned companies in the U.S., the Trump administration is considering restricting American firms from investing in them, reports Bloomberg.

"If you saturate a neighborhood with dozens of dollar stores, there’s just no room left in the market for anyone else."

The big picture: There are about 30,000 dollar stores in the U.S. today — more than the total number of Walmarts and McDonald's combined. And Dollar Tree and Dollar General have plans to open 20,000 more.

The problem is more acute in some cities than others, per a report from the Institute for Local Self-Reliance, a nonprofit research and advocacy group that opposes concentrated economic power.

Consider Birmingham, where close to 70% of city residents live in food deserts and the 2 dollar giants have opened more than 40 locations in the last decade. Since 2005, 5 Birmingham supermarkets — undercut by the cheap chains — have closed, and the city has struggled to get new grocers to come to town, the report notes.

• Now Birmingham has passed a pair of laws: The city is banning new dollar stores from setting up shop within a mile of an existing location and it's financing the opening of new supermarkets.

Northeast Oklahoma City was confronted with the problem of dollar stores after its last grocery store closed in July.

• The city has now prohibited new dollar stores from opening within a mile of old ones unless the store commits to saving 500 square feet of floor space for fresh produce.

The other side:

• A Dollar General spokesperson told Axios: "We are disappointed a small number of policymakers have chosen to limit our ability to serve their constituents and communities."
• "Our stores provide an affordable and convenient fill-in shopping option for our customers in between their weekly or bi-weekly grocery store trips, all while creating more jobs and investing in the communities we serve," a Dollar Tree spokesperson said.

The bottom line: The backlash against dollar stores is here — and spreading. More cities, from small ones like Hutchinson, Kansas, to big metros like Cleveland and Fort Worth, are considering laws to limit the chains.

• The findings are a roadmap for politicians, the entertainment industry and technology executives seeking to tap into less romanticized measures of success.

"When you aren't saying publicly what you privately believe, you end up with really bad policies and with things that stay in place that nobody really wants. But nobody changes it,” said Todd Rose, president and cofounder of Populace.

• "Being famous" was the top answer for what respondents thought mattered according to society's view of success.
• But that was the last answer for what individuals felt was important to achieve to be successful in their own lives.
• Parenthood was the most common achievement for individuals' standards of success, but ranked at 33 out of 76 when people were asked about things society considers important for success.
• "Very conservative” Americans tend to consider being a parent twice as important as those who self-identified as "very liberal."
• Having an advanced degree was something respondents valued both in terms of how society judged them and how they judged themselves.
• Having a purpose in life, a couple of close friends and regularly seeing family were all important components to how people judged their own success — but so was not having to worry about money.
• Women were more likely than men to view fame and having a large social media following as important to society's view of success — something that may correlate to other trends like women being overrepresented on Instagram, Rose said.

Between the lines: Milestones and traits related to status, education and finances were at the top of the list for what most people believe others consider markers of success. But people said success in their own lives has more to do with educational achievement, relationships and personal character.

• "We can do something with that if we can just realize that this silent majority exists, and that it crosses political and ideological and other demographic bounds," Rose said.