The China-US Geo-Technological Competition: State of Play 2023

Since the Bureau of Industry and Security (BIS) of the US Department of Commerce in 1997 included the China Academy of Engineering Physics on its Entity List of foreign businesses, research institutions, government and private organizations, individuals and other types of legal persons subject to specific license requirements for the export, reexport and/or transfer (in-country) of specified items, this list has been steadily growing longer. By July this year, I found 416 Chinese addresses on the register. There may be more Chinese entities on the list if those with overseas addresses are included.

When I first started writing about the China-US geopolitical and technological (geo-technological) competition five years ago (my first piece on the topic appeared in AsiaGlobal Online in December 2019, with a follow-up published in September 2020), I could not understand this idea that Americans had to weaken global supply chains. But with time and more exchange of ideas with US interlocutors, I gradually came to understand the feelings and fears of Americans.

In a discussion on Sino-US relations convened by the Brookings Institution on June 6, 2023, Professor Jennifer Lind from Dartmouth College described how the US in the 1960s opposed Japan's efforts to establish the Asia Development Bank (ADB). As the most powerful country in the world, the US had a hard time accepting the idea of the ADB if it would not lead it (A Japanese national has headed the ADB since its founding). Fast forward to 2013, when China proposed the creation of the Asian Infrastructure Investment Bank (AIIB), which was launched two years later. The US refused to join an international financial institution that was shaped by China and is now led by a Chinese national.

It is meaningless to talk about a Cold War or differing ideology. The United States and China cooperate with countries with different ideologies all the time. But as Professor Lind argued, even though China and the US have different opinions, they must maintain cooperation and engagement. The United States cannot act on its own to address global challenges, and China’s rise is a fact – unstoppable and irreversible. China also needs the US in the important tasks of developing the Global South, tackling climate change, and indeed facilitating and managing the rapid development of technology.

Hawks or nationalists on both sides are dedicated to stirring up tensions for their own career gain and desire for influence and power. But this approach lacks foresight. What is needed is humility on both sides to see the mutual benefits for them, for the two countries and for the world that cooperation would bring.

Consider two areas of possible cooperation – artificial intelligence and the development of the Global South – and what the advantages of collaboration would be.

Artificial intelligence (AI), combined with operating systems (such as Windows), search engines (such as Google), social tools (such as Facebook, Twitter, and WeChat), online shopping (such as Amazon, Taobao), and home Internet of Things, or IoT (various smart appliances), will penetrate and permeate the work and daily lives of citizens. How to protect personal privacy and avoid discrimination and algorithm bias have become a global ethical issue. Compounding the challenge is that in the foreseeable five years, AI will inevitably be deeply integrated with systems such as transportation, energy, communications, defense and the military. Humans will need to ensure that it is harnessed for good.

But there are different standards for what "good" is, particularly in the context of national interests and security. The differences in ethical and security standards will mean that some AI applications could be more aggressive towards individuals – their livelihoods, identities and rights. It is still difficult to comprehend the extent of these risks. The United States has taken steps to secure commitments, albeit voluntary, from technology players to manage AI risks, but they can only mitigate, not remove, them. Considering that the US and China are leading in AI and related fields such as smart-city design and construction and will extend their knowledge and technology to the world, if both sides do not cooperate to regulate and guide this momentous expansion, there will inevitably be conflicts or governance disruptions in the other countries and between them that due to the China-US clash and race to decouple.

A second realm of possible China-US collaboration is in the development of the Global South. Whether it is the Indo-Pacific Economic Framework for Prosperity (IPEF) of the US or China's Belt and Road Initiative (BRI), both are facing their own challenges. The former lacks financial support and faces opposition from domestic political forces in certain countries. Even Washington’s allies and partners understand that the program, absent market access opportunities, will have limited benefits. For China, with the BRI, it is necessary to improve the benefits, profitability and transparency of projects.

China and the United States are two sides of the same development coin – they each possess advantages in their approach that are worth learning from the other. The capital, technology and operating models that are required for building the infrastructure that economies in the Global South desperately need to be able to develop faster, trade more and deal with global warming require the joint participation of talents from both China and the US. Working together on development projects would be an ideal opportunity for each side to better understand their way of thinking and motivations – and indeed to correct misperceptions and move forward in leading global efforts against poverty and climate change.

In today’s tense geopolitical climate, the technological competition has gone toxic – with some advocating zero-sum thinking. Recently, Robert Lighthizer, the former US trade representative under the previous president, Donald Trump, recently stated that Sino-US trade and technology must be decoupled to reduce the harm of global free trade to workers, farmers and other domestic groups in the US. He is clearly a smart person who knows which groups of people have influence in American domestic politics and how to appeal to them. Another example is that the US Congress has expressed serious concerns about American venture capital supporting Chinese AI companies.

But Lighthizer’s and the Congress’s solutions and prescriptions – the decline in financial, technological and cultural/education exchanges – are likely only to harm US business interests. Rather than “de-risk” the commercial environment for US companies and investors, it will only heighten risks by reducing already low trust levels between the two countries and increasing global political instability. The US political class can impose rules and restrictions on domestic companies and what they can and cannot do in China or with Chinese and they can add more and more organizations, firms and people to their entity list and roles of the sanctioned. But the reality is that such action does not make the global geopolitical situation more stable and does little to help people deal the obstacles they face to have a better life.

Both China and the US face significant domestic economic and social challenges, especially coming out of the pandemic and with the ripples from the Ukraine conflict. China has a more stable political situation, while US politics is more volatile, given divisions in its society and the upcoming elections in November 2024. Although the entire diplomatic, military and security systems of both nations are in a state of intense competition, the two sides know each other and can work together, as they had in the past.

Ideally, expected encounters between US President Joe Biden and Chinese leader Xi Jinping in September at the G20 summit in Delhi and in November at the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting in San Francisco will prove to be catalysts for calming relations. If they and their respective officials are able to promote collaboration in areas of common interest such as AI and other technology issues including data governance and security, this will ultimately make the world more peaceful and stable.

Further reading:

Chen, Xi. (December 15, 2022) “Give Pragmatism a Chance: Don’t Get Distracted by Values Wars”, AsiaGlobal Online, Asia Global Institute, The University of Hong Kong.

Chen, Xi. (February 17, 2022) “The China-US Geo-Tech Competition: State of Play 2022”, AsiaGlobal Online, Asia Global Institute, The University of Hong Kong.

Chen, Xi. (December 12, 2019) “The China-US Technological Competition and its Opportunity Costs”, AsiaGlobal Online, The University of Hong Kong.

English version is published in Asia Global Institute of the University of Hong Kong on 27^th July, 2023:

https://www.asiaglobalonline.hku.hk/china-us-geo-technological-competition-state-play-2023