U.S. – China Technology War

Dr Paulraj, Professor Emeritus, Stanford University, Winner of the Marconi Prize & IEEE Alexander Bell Medal, speaking during the Synergia Conclave 2019 provided a larger perspective on the current US-China technology war. He also gave his insights on what kind of implications it holds for the world.

Background

The US-China trade imbroglio is at heart a battle for technological supremacy and the immense commercial and security arbitrages that accompany it. China’s strategic plan to dominate these areas provoked the Trump administration after US enterprises operating in China accused the latter about forced technology transfers and intellectual property theft. With tensions spiralling after the US blacklisted Huawei Technologies, the theatre of a tech cold war is unfolding.

US-China trade and technology tussle is fueling fears of a renewed Cold War. Mindful of the challenges to its technological suzerainty, US is severing the umbilical cord to 40 years of scientific and economic engagement that brought strategic and fiscal benefits to both sides. China, on the other hand, talks of a ‘new type of Great Power relations’, meaning it already sees itself as an equal to the US. 

Analysis

In the modern context, the standing of countries across the world is best measured by the strength of their economy and technology plays a crucial role in forming the health of any nation’s economy. A strong economy also means resources to build a powerful military. 

Technologies come in different tiers, but high technology is the dominant source of national power. Therefore, the combination of mass market and high technology (two important qualifiers) underpin a nation’s power and influence today. For nations to be truly committed to the development of high technology, they need to make massive R & D investments and develop talent and the skills required to create a supportive ecosystem. To break into the high technology market, there should be capital, entrepreneurial drive and a healthy market share. That’s why only a few countries around the world control high tech. 

For years, the US has remained the dominant player in high technology, but now, China has become the growing challenger. Dr Paulraj further provided the historical perspective on how technology informed the growth of both US and China. He spoke about how collaboration between academia and governments results in the growth of high technology and how both the United States and China has benefitted from just that. 

He stated that even though the United States had long been supportive of China’s rise in the field, it was around 2014-2015 when the United States began to consider China as a challenger in the technology race seriously. It was a combination of China’s significant growth as well as President Xi Jinping’s policies which began to cause fear and concern in Washington. He noted that this concern in Washington has bipartisan support and the United States, as a result, has begun making serious demands from China. 

Some of the recent demands include US asking China to rein in commercial espionage, stopping technology theft and forced technology agreements, among others. Dr Paulraj stated that China’s response had been somewhat muted. He elaborated that any technology war between US and China would have far-reaching implications for the world. He concluded his session by stating that he hoped “good sense” and better judgement would prevail among key decision-makers that would prevent the tech war.

Assessment

  • The US has created the most valuable companies technology companies in the world, with the leading players in software, smartphones. E-commerce, search and social networking. China’s technology sector has surged in the past five years, with Tencent and Alibaba edging their way into the top echelons of global companies. 
  •  Innovation has become a buzzword in Beijing as China tried to invigorate a tepid economy and outdo the United States in cutting edge technology. China has bankrolled an estimated 110 billion high tech budget in upping its entire manufacturing industry value chain including advanced manufacturing and integrated circuits 
  • The technology base that maximally impacts the economy is mass-market technologies – that is the technology used by millions or billions of people inside and outside the country and therefore are huge revenue engines. India has a huge advantage which must be leveraged to its ultimate provided it can produce mass-marketed products for its citizens and the world.
  •  Currently, only a few countries control high technologies. It is a fraternity very hard to embrace and once accepted; it takes sustained efforts to remain there, primarily due to intense competition for the very few seats at the high table. China is facing this as its efforts are being strongly contested. India must learn from the experiences of China and at the same time, put in place its strategy once the ongoing tussle leads to a bifurcation of the technological world.
  • The bifurcation of the internet between US/Europe and China/Russia may be the first arena where this conflict is likely to manifest itself in the near future.

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