Monday, May 29

China and the US dispute over technology the first battle of deglobalization

“America is not prepared to defend itself or compete in the age of Artificial Intelligence.” This reading was the great conclusion launched by Eric Schmidt, former CEO of Google, in the report of the so-called National Security Commission on Artificial Intelligence (NSCAI), with the purpose of providing the American Congress and the White House with recommendations aimed at preserving the American technological hegemony.

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Schmidt’s team’s inquiries emerged from a lustrous cast of experts. In the slightly more than three years of life of this commission, former Defense Secretaries such as Ash Carter or William Perry coexisted with CEOs of companies such as Andy Jassy (Amazon Web Services), Safra Catz (Oracle) or Chris Darby (In -Q-Tel) and an extensive cast of academics. All endorsed that “China had emerged as a technological power at an unusual rate.”

Schmidt continues to pull the thread and prescribe indigestible pills so that his country can restore its “lost splendor”, as he claims. “America has been technologically dominant for so long that the occupants of the Oval Office believe the country is safe.” However, “this interpretation is a mistake”, because he -warns- “the Chinese irruption has astonished the world and has generated implications that are still very difficult to understand”.

In the opinion of the NSCAI, Beijing acts as a “second digital superpower”, as a kind of innovative “alternative” to the US capable of leading and promoting a “decoupling partial” as the one that has already been engendered with two differentiated technological ecosystems: the American and the Chinese. This “verifiable phenomenon” -he assures- “must be understood as a hostile declaration”, to which Washington has responded “without a clear strategy”, which will force it in the future to “take greater risks if it wishes to continue defending its independence” digitally. .

Schmidt’s premonitory vision dates from 2021, but it remains valid because it affects the persistence of this threat in the prologue of the essay US-China Technological Decoupling, by Carnegie Endowment for International Peace analyst Jon Bateman in Foreign Policy. In this report, he urges the White House to build containment dams on technology transfers between the two superpowers.

Shortly after, the Biden Administration gave the green light to the ban on trading in chips, semiconductors and technology made in US with the asian giant. Meanwhile, after these executive orders, the thesis that the US not only did not want to prevent the disintegration of the global order that has governed in the last four decades, but also encouraged its imminent separation, gained strength.

However, some voices more accurately illustrate this geostrategic game. One of them is that of Gregory Allen, from the Center of Strategic and International Studies (CSIS), who places the start of this technological battle in not so recent times. China, far from having sponsored the silent response, already saw the hostilities coming in 2018 and protected itself from the attacks of the United States, warns this analyst.

The Chinese Counterattack to American Technological Hostility

On October 7, 2022, the date on which Joe Biden signed the technological veto of China, with new export rules aimed at isolating the evolution of Artificial Intelligence (AI) and the semiconductor industry from its rival, it was not the epicenter of the dispute. It didn’t even happen on February 24, when Russia invades Ukraine, the great geopolitical conflict of the year. For Allen, the American reprisals against China from the Democratic Administration have the importance of marking a new era in bilateral relations between Washington and Beijing, but the “friction point” occurred in 2018. Specifically, in April when the US, In the middle of the tariff war of then-President Donald Trump, he imposed “strict supervision” of the operations of the Chinese telecommunications company ZTE on American soil.

China then understood that technology and the productive segment of chips were being considered strategic sectors and elements of national security. From that moment on, the Asian country had to make an effort to circumvent the sophisticated American controls and concentrate on developing its own digital prototypes. On October 7, 2022, on a scale of 1 to 10, the asian giant “I had achieved an 11 in progress in both areas,” Allen wryly admits.

For this reason -adds the CSIS analyst- Beijing’s reaction seems “invisible”, as if the filing of charges before the WTO arbitration panel or the announcement of subsidies for one trillion yuan were reduced to a mere diplomatic complaint (143,000 million dollars). But China is waiting to see how the White House manages the 465,000 million dollars in guarantees and aid from Biden’s Inflation Reduction Act (IRA) and Europe’s response to this measure of “clear industrial protectionism”, as well It was defined by the Chinese chief executive Xi Jinping.

Bateman corroborates this digital divide between both superpowers. “Washington has weakened its dominance” because “it has built over many years investor, business, university, and knowledge, innovation and R&D or human capital ties” with China, “despite its dubious legal business practices international”.

China’s geostrategic race

Biden’s restrictive measures – he predicts in several parts of his book – “can help the US to contain the bleeding, but not to control the decoupling underway, nor to reverse the acquired technological deficit”. Prediction shared by reports such as that of the Australian Strategic Policy Institute (ASPI), which anticipates that China preceded the US in 37 of the 44 key fields of research and technological production for the development of AI between 2018 and 2022, in addition to alerting “ all Western democracies” that they are “losing global competitiveness” in the digitization process.

In 2018, financial injections began to solve the weak points of some Chinese productive scales, “extremely difficult to supply” under a climate of “protectionism and unilateralism”, as Xi Jinping stressed in 2018, alluding to the US. The roadmap was to “lead China to technological dominance by 2025”. Since then, Beijing has watered its technological strategy with resources, specifically aimed at encouraging the manufacture of semiconductors.

Allen also warns that Beijing “is not going to spare any effort to break the alliance between the US and its European and Asian allies, nor to promote the connection between the commercial and military spheres” in the technology market. For now, the EU has reinforced the transatlantic gateway, raising the census of Chinese component firms that circumvent Russia’s veto, although, at the same time, showing division in the diplomatic strategy to follow with China, with France promoting the most conciliatory tone. .

In a rarefied economic and investment atmosphere, the Secretary of the Treasury, Janet Yellen, and the National Security Adviser, Jake Sullivan, have just ruled out any globalizing breakdown: “A separation of our economies would be disastrous for the US and China and would destabilize the rest of the world Yellen emphasized. While Sullivan endorsed a few words from Ursula von der Leyen, president of the European Commission, with which he specified that “we are diversifying and diluting risks, not disassembling global markets.”

George Friedman, founder of Geopolitical Futures, concludes that geopolitical and technological cycles overlap: “It is not by chance or the result of magical realism that this technological affront occurs in the midst of the reinvention of big-techs, with massive layoffs and rethinking of their strategies. of business, because there are historical concordances that link episodes of innovation, with industrial revolutions and changes in the world order”.

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