Initiative for U.S.-China Dialogue on Global Issues

I have learned a tremendous amount from the other participants about important technical and geopolitical aspects of technology innovation and competition in fields that are outside of my direct research, such as autonomous driving, cyber-security and global supply chains. Interdependence, multinational firms, networks and non-state actors are far from new themes in international relations research, but the ways in which technology has reconfigured patterns of communications and production, alongside major shifts in geopolitical power, mean that there is a lot of scope for new and creative scholarship in this area.

Predictions of decoupling are too simplistic. The broader geopolitical context is fluid and so much depends on what kind of agreement or compromise the U.S. and Chinese leaderships can come to. Broadly speaking, there are four different scenarios that the world could be moving towards, in different issue areas. One question is whether we will continue to see the deployment of tariffs, export controls and investment restrictions, or whether alternative mechanisms aimed at risk mitigation and verification might be adopted to bring more stability into the technology relationship.

In the shorter term, I think that Chinese firms will engage in a two-pronged strategy to respond to the turn in U.S. policy towards one of strategic competition and the turn in Chinese policy towards hyper-charged indigenization in innovation and supply chains and stockpiling of critical components. To the former, we might see more Chinese firms start to de-nationalize parts of their production, by shifting to other countries and entering hybrid partnerships with non-Chinese firms in other parts of the world, so as to skirt U.S. barriers. This might involve developing “dual nationalities” – one global entity that abides by rules set by developed economies, and another Chinese entity that abides by domestic rules on data-sharing and national security. ByteDance’s moves to separate TikTok from the technology operations of its Chinese app, is one such example. At the same time, we can expect the same firms to also look for ways to take advantage of the injection of state funds within China to support their development in high-tech sectors. Some of these strategies will be more successful than others, and these strategies will also prove more effective in some high-tech activities than others. In other words, the landscape will be varied.