The U.S. China Technological Competition: Cold War or Tension?

CSPS Fellow Caroline Wesson discusses the potential of Technological Cold War between the US and China, what this would in entail, and the reality of the present situation between the two countries.

The technology sector is tantamount for a nation to develop, sustain, and provide its own security. The current U.S.-China strategic rivalry has implications for the global technology industry. Following the escalation tensions between the U.S. and China, in part due to concerns over Huawei’s links to the Chinese Communist Party, many began to claim that the U.S. and China had entered a technological cold war. It is important that before asserting the existence of a technological cold war, that we analyze what a technological cold war is, what one would look like, and what forces within the technology sector will affect it.

What is a technological cold war?

To understand if we should be concerned about the U.S.-China strategic technological rivalry we need to explore what a technological cold war is, and what it is not. A technological cold war begins with the decoupling, which in this case is defined as the disentanglement of technology sectors, and ends with fully separate spheres of technological progress and influence. Even with this definition, there are still questions surrounding what a technological cold war is, and what decoupling would entail. For instance, how much disentanglement of technological sectors is needed to declare a technological cold war? Are trade barriers enough, or do we need to see a reality in which technological progress is completely insular?

What would be the impact of a technological cold war? It is hard to say for certain, but to begin with, there would be impacts on the ability to wholly produce technological products in either country due to the fragmentation of supply chains. This would result in shortages of key products, like semiconductors, which are an input piece to nearly every piece of technology. Additionally, there could be a loss of interoperability between technologies originating from each locus. The most intangible impact would be a loss of innovative capabilities. Innovation, described as “creative destruction” by Schumpeter, has many inputs, is a non-linear process, and benefits from open collaboration between scientific communities from diverse backgrounds. A technological cold war, and the barriers erected to cause decoupling, would strain the innovative process and limit technological progress. These inefficiencies would have real life implications for the economic and societal development across the globe.

What is the current reality?

As tension mounts between the U.S. and China, media outlets have grasped for a way to describe their relations. Some have labeled the current technological relationship of trade, regulation, and research collaboration between the U.S. and China as a technological cold war. We should caution the use of this terminology due to the lack of a clear definition for what constitutes a technological cold war and because of the nature of the technology industry.

The technology industry is as much a field of hard science as it is a creative industry. The field is collaborative, often with international teams. There are profound educational links between nations with top technological industries, with research collaborations and students studying abroad. This is especially true for the U.S. and China. In fact, educational and talent exchange is a big part of why the U.S. has maintained a lead in technology despite China’s manufacturing capabilities.

A technological cold war would come at great expense to national income, economic growth, and private firms. A true technological cold war would limit firms from accessing markets in the rival nation, prevent certain products from export entirely, and decrease the attractiveness of rival nation products due to different standards and interoperability concerns. Additionally, there are several companies with corporate links across national borders and long-standing joint ventures. The ability to profit from the creation, manufacturing, and export of technological goods would be greatly impacted by a technological cold war.

In sum, buying into claims that a technological cold war is here or imminent is premature. There are powerful forces at play that may prevent a decoupling process from proceeding. If this tension between the U.S. and China persists it is possible that one, or both, nations could turn to erecting necessary policies to decouple the technology sectors for reasons of national security. We must wait for decisive policy action to be taken by either nation before we can say we are approaching a technological cold war between the U.S. and China.

Caroline Wesson is a second year PhD student studying Political Science at George Mason University where she is a President’s Scholar and a graduate research assistant. She also holds a bachelor’s and master’s in International Affairs from the Georgia Institute of Technology. Caroline is currently working on research related to the intersection of culture, technology, and economic development. In the security realm Caroline produces research on military innovation, national innovation systems and strategic trade, and emerging technology. Caroline was a research intern with Center of Strategic and International Studies in 2019 and worked on their ChinaPower Project where she contributed to pieces on Chinese innovation, web connectedness, and the WTO. Caroline also serves as the Managing Editor for the Arts and International Affairs journal. During the summer of 2020 Caroline will be a Summer Associate at the RAND Corporation working on issues related to science and innovation.

Photo can be found here.