Schmidt, in his book "The New Digital Age", said that the disparity between American and Chinese firms and their tactics will put both the government and the companies of the US at a distinct disadvantage, because the US will not take the same path of digital corporate espionage, as its laws are much stricter - and better enforced - and because illicit competition violate the American sense of fair play.
The book, co-written with Jared Cohen, a former US government adviser, will be published in April by Random House.
The book also acknowledges that the US is also flawed, highlighting the country's role in the Stuxnet virus, which accidentally spread across the internet in 2010. The virus was originally created by the US and Israeli governments to attack Iran's nuclear facilities.
Schmidt and Cohen also say that the spread of Chinese technology around the world increases the influence of the Chinese government.
However, the authors also argued that the spread of technology could destabilise the authoritarian central government.
They said that the mix of active citizens armed with technological devices and tight government control is exceptionally volatile, which could lead to "some kind of revolution in the coming decades".