US-China decoupling: Beijing has options beyond Russia in navigating geopolitics of technology

China’s most important technological partners are not in Russia but in US-allied countries such as Germany and Japan
Until the US brings down the hammer on its friends and partners, the door will remain partly open to China as long as it doesn’t fully side with Russia

John Z. Lee

Published: 1:00am, 9 Dec 2022

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The Group of 20 summit last month gave the world contrasting images of its two leading autocratic powers. Russian President Vladimir Putin was not even present, and his foreign minister left early after sitting through a speech by Ukrainian President Volodymyr Zelensky, who was specially invited.

But at the same event, leaders from around the world met bilaterally with President Xi Jinping, even walking across the stage to him as if he were hosting the event in China. China’s weight in the global economy was also on display two weeks before when German Chancellor Olaf Scholz flew to Beijing with a business delegation, not long after Xi’s anointment for a new leadership term at the 20th party congress.

The difference in the world’s treatment of Russia and China shows the “axis of authoritarianism” between these states is a mirage. Other countries’ divergent interests regarding Moscow and Beijing reflect the two countries’ own differing priorities towards the rest of the world.

But they have a common rival in the United States, so they also have an interest in partnership, to the extent that this helps balance US advantages in global contests for power.

Nowhere are these US advantages greater than in technology. US firms still occupy the commanding heights of key technology supply chains, a structural feature of the world economy that Washington can wield against its rivals. It did so against Russia in response to Moscow’s invasion of Ukraine.

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The US is now targeting China with its leverage over the supply chain for semiconductors, with sweeping export controls that represent the first move in an apparent strategy of technological containment. But the US is already discovering the frictions of weaponising interdependence in a world where key technology is controlled by other states.

Many of the other key national actors in the semiconductor supply chain are US allies, yet not all seem ready to follow Washington’s lead in seeking to freeze China’s technological progress. The Netherlands has been most public with its unwillingness to let the US “simply impose” new export controls on a partner country.

Japan and South Korea appear uncomfortable about recent turns in US policy and their impact on their economies. Even in Taiwan, which has the most to fear from China’s power, there is concern over the implications of US efforts to reorient the semiconductor supply chain.

Taiwan’s semiconductor ties to mainland China are a bellwether for the rest of East and Southeast Asia. Likewise, the Netherlands’ disquiet about US priorities and methods is reflected in concerns elsewhere in the European Union.

The turn towards a “make in America” industrial policy in response to the Chinese challenge is seen as a disproportionate response that undermines Europe’s economic future; trying to steer global commerce towards a decoupling with China is counter to European interests.

While there is angst in Europe about Beijing’s refusal to distance itself from Moscow over its invasion of Ukraine, there is little sense that policymakers fear Chinese-Russian partnership in a world riven by the geopolitics of technology.

This reflects the fact that China’s most important technological partners are not in Russia but in US-allied countries. For applications of the fourth industrial revolution, Japan and Germany are world leaders and thus China’s partners of choice.

German firms have been key players in China’s development of an industrial internet and smart manufacturing, while German carmakers and chemical giants are doubling down on China as an R&D and production base. The same interests are driving Japanese industry leaders to build separate supply chains for China to avoid the constraints of US export controls.

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Having brought about its own ostracism, Russia can now only turn to China for microelectronics, 5G telecommunications and other key technologies. When it comes to the global rules of the road for governing cyberspace, Moscow and Beijing have coordinated positions to mutual advantage.

But the domain where Russia has real value to offer China is in defence and outer space technologies. Here, Russian expertise and legacy knowledge from the Soviet era benefits China’s state projects in aviation, rocketry and missile defence.

Russian capacity could help China compete with the US lead in satellite launches, and the two states’ interoperable satellite-based navigation systems provide mutual redundancy in the event of hostilities with third parties. In the most cutting-edge fields such as hypersonic platforms and drone swarming, the substance of Sino-Russian cooperation remains opaque.

All this collaboration will never substitute for what China gains from working with the US-allied advanced economies, but it helps China compete at the margins in critical technologies for national security, future war-fighting and exploitation of outer space.

China seeks every advantage against the US and can still look to US-allied countries for technological cooperation since there remains no broad front against China. There might have been a tacit united front among these states in semiconductor controls, but that was before the US unilaterally expanded controls in the name of freezing Chinese technological progress.

Until Washington decides to bring down the hammer on its friends and partners, the door will remain partly open to China, which will not risk slamming it shut by fully moving to Moscow’s corner.

For this reason, there can be no unlimited Sino-Russian partnership. But there is a strategic partnership since China can turn nowhere else for cooperation on military technologies or for a partner to directly counter US influence.

For its part, the US will need to lean on allies much more heavily if it is to cut the Gordian knot of global interdependence on China.

John Z. Lee is director of the consultancy East-West Futures