Shoppers are silhouetted outside a Huawei retail store in Beijing on December 30, 2022. Huawei says it has pulled itself out of “crisis mode” following years of US restrictions that have stifled its sales in overseas markets. Photo: AP
Opinion
The View
by Stephen Roach
The View
by Stephen Roach
US-China tech war: how Washington’s approach of all tactics, no strategy could be its undoing
China continues to play a long game, whereas the US tactical assault on Chinese technology is all about short-term gains
As long as the US is trapped in a political system that places little value on strategy, there is no guarantee it will prevail in an existential tech conflict
Technology is ground zero in the conflict between the United States and China. For the US, it is about the leading edge of geostrategic power and the means for sustained prosperity. For China, it holds the key to the indigenous innovation required of a rising power.
The tech war now under way between the two superpowers could be the defining struggle of the 21st century.
Huawei quickly became the lightning rod in the tech conflict between the two. Feared as a threat to US telecommunications infrastructure, it has been cast as a modern-day Trojan horse, complete with a potential back-door threat in its world-class 5G platform that would make the mythological Helen smile.
Supported by circumstantial evidence – a few espionage charges that have nothing to do with the suspected back door and the presumption of nefarious motives from the military service of its founder, Ren Zhengfei – the US case against Huawei is laced with false narratives.
The real issue in dispute is the murky concept of tech fusion, specifically advanced technologies’ dual use for military and civilian commercial purposes. The US authorities are convinced there is no such distinction in China.
In their view, China’s state and, by inference, its military ultimately owns everything that falls under the purview of its tech sector, from hardware and software to big data and the surveillance of those at home and abroad. That is also the essence of the growing outcry over the social media platform TikTok.
US lawmakers on both sides of the aisle are pushing to ban TikTok – a subsidiary of Chinese company ByteDance – in the US. Photo: AP
Never mind that the US has long had its own strain of tech fusion. Over the years, the Defence Advanced Research Projects Agency has spawned many important technological advances that have broad commercial applicability.
These include the internet, the Global Positioning System, semiconductor breakthroughs, nuclear power, imaging technology and numerous pharmaceutical innovations, notably Covid-19 vaccine development. Apparently, what is fine for a democracy is unacceptable for a system governed by the Communist Party.
The Huawei threat is the tip of the iceberg in the US tech conflict with China. The Entity List the US Commerce Department uses to blacklist foreign companies for national security purposes has expanded to include Huawei’s supply chain, as well as a number of Chinese tech companies engaged in domestic surveillance of ethnic minority groups in Xinjiang province.
At the same time, with the recent passage of the Chips and Science Act, the US has stolen a page from China’s industrial policy playbook and embraced state intervention to support technological innovation. Last October, a far bigger shoe dropped: the Biden administration imposed export restrictions on advanced semiconductor chips, aiming at strangling nascent Chinese efforts in artificial intelligence and quantum computing.
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AI chip maker ordered by US government to halt exports to China
AI chip maker ordered by US government to halt exports to China
But these tough policies could be self-defeating for the US because its tech war with China is long on tactics and short on strategy. The US has been quick to grasp the power of the “weaponised network” – the hold it can place on critical nodes of cross-border connectivity.
That approach, in conjunction with the “friend-shoring” of alliances, has been key to the financial sanctions imposed on Russia in response to its invasion of Ukraine. It is debatable, however, that this approach will be as effective in controlling the complex multinational research consortiums and physical supply chains of modern technologies.
More important, squeezing adversaries does not compensate for the lack of heavy lifting at home. That is especially the case for the US, given its fragile tech leadership.
While the US responded forcefully to technology threats from the former Soviet Union during the Cold War – especially the nuclear arms competition and the Sputnik-induced space race – it has dropped the ball since. Federally funded research and development fell to 0.7 per cent of GDP in 2020, far below the peak of 1.9 per cent in 1964.
Furthermore, in recent years, the US has underinvested in basic research, the pure science that is the seed corn of innovation. In 2020, basic research slipped to 15.6 per cent of total R&D spending, well below its 18.8 per cent peak in 2010. Recent efforts are not doing much to change that; for example, only 21 per cent of the funding in the Chips Act is earmarked for R&D.
In part, the US shortfall in the critical foundations of technology leadership – R&D and human capital – is an outgrowth of the same deficiency of domestic saving that has given rise to chronic US trade deficits. Its penchant for blaming China for problems of its own making is an excuse, not a strategy.
China’s approach is not without its own vulnerabilities, especially concerning AI. While China’s reservoir of data implies a huge advantage for machine-learning applications, its advances in this domain ultimately will be stymied without ever-increasing processing power.
The US assault on the advanced chips that fuel China’s AI processing power targets that weak link in the Chinese innovation chain. China gets that and can be counted on to respond.
Today’s China continues to play a long game, whereas the US tactical assault on Chinese technology is all about the short game. Trapped in a political system that places little value on strategy, there is no guarantee the US will prevail in an existential tech conflict with China.
Stephen S. Roach, a former chairman of Morgan Stanley Asia, is a faculty member at Yale University and the author, most recently, of Accidental Conflict: America, China, and the Clash of False Narratives. Copyright:Project Syndicate
