As China redesigns its tech strategy, Quad’s high-tech cooperation must succeed
Akey focus of discussion at both the recent Quad Summit, as well as the India-United States (US) bilateral meeting between Prime Minister Narendra Modi and President Joe Biden, was tech collaboration.
While the heads of the two states agreed to revive the US-India High Technology Cooperation Group from early 2022 for accelerating high tech commerce, Quad discussions had better defined outcomes. This included an agreement on tech principles and standards, and an understanding among the participating countries to build on the work of a critical and emerging technology working group, first conceived in March at Quad’s virtual summit.
The group is meant to facilitate technology standards development, and identify collaborations on critical and emerging technologies, including biotechnology, semiconductors and future communication technology. A key objective is the creation of resilient technological supply chains. Both the bilateral and quadrilateral meetings also focused on low-emissions technology solutions to tackle the climate crisis, and cybersecurity solutions.
At first glance, these are definitely positive developments for India. However, disruptive changes happening in China make the realisation of these goals challenging.
The Chinese economy has recently been going through a series of crises. Many of its woes are also self-inflicted, with almost $1.5 trillion wiped off Chinese tech stocks because of crackdowns across the entire platform economy, spanning e-commerce, e-learning, food delivery and ride-sharing apps.
These steps were initially just seen as selfdestructive overreach by the Chinese Communist Party (CCP) to ensure that none of the emerging tech giants would ever reach the size or scale to challenge the party’s ironclad hold on the State. However, there could be some method to China’s recent madness. The clampdown has been restricted only to the consumer tech sector, even as State support to hard and manufacturing sectors, including 5G/6G, semiconductors, batteries, avionics and space tech, has accelerated.
This points to a State-supervised redirection of the tech sector into emerging strategically vital areas to optimise long-term geopolitical and geoeconomic gains. Li Chen, chief economist of China’s Soochow Securities, has commented on this trajectory, and claimed that China’s national policy has abandoned the American road for the German road.
Most market-driven economies have the bulk of their tech entrepreneurs working on consumer-centric ventures. As Jeff Hammerbacher, data scientist and co-founder of a Silicon Valley startup, lamented, “The best minds of my generation are thinking about how to make people click ads.”
Against this backdrop, in China, we can expect a plethora of State-owned enterprises (SOEs) such as ZTE, and State-supported and -controlled tech behemoths such as Huawei, that focus on strategic core technology, to emerge from the reorganised Chinese tech landscape. They would attempt to steer global markets. We have already seen a preview of this when Chinese tech giants pushed their 5G products into global markets. The world split into two blocs, with countries that deemed Chinese technology a national security threat forced between two hard options. They had to either delay their domestic installations as they attempted to catch up, or had to go with a more expensive, yet not-so-proficient, alternative. Even though India deferred its rollout, and had to incur opportunity costs, it has set a good precedent, with several carriers reportedly on track to develop indigenous technology concurring with our rescheduled launch timeline.
Quad’s success in high-tech cooperation depends on the ability of the four nations to draw on each other’s strengths, and identify collaborations that would boost the appetite of their domestic as well as global markets. They would also have to work with utmost urgency if they are to keep up with the singularly focused, State-guided competition from China. Falling behind in these strategic emerging technologies, the drivers of the digitally driven economies of our future, will be debilitating for democracies.