Pakistan Today (Lahore)

What really matters in the Sino-american competitio­n?

- JOSEPH S NYE, JR Joseph S. Nye, Jr. is a professor at Harvard University and author of Do Morals Matter? Presidents and Foreign Policy from FDR to Trump (Oxford University Press, 2020).

THE United States and China are competing for dominance in technology. America has long been at the forefront in developing the technologi­es (bio, nano, informatio­n) that are central to economic growth in the twenty-first century. Moreover, US research universiti­es dominate higher education globally. In Shanghai Jiao Tong University’s annual Academic Ranking of World Universiti­es, 16 of the top 20 institutio­ns are in the US; none is in China.

The COVID-19 pandemic has restructur­ed entire industries and changed the way workers think about their jobs, especially in low-paid occupation­s and sectors. But a full recovery in employment is still possible: policymake­rs and employers need only offer workers the support they are demanding.

But China is investing heavily in research and developmen­t, and it is already competing with the US in key fields, not least artificial intelligen­ce (AI), where it aims to be the global leader by 2030. Some experts believe that China is well placed to achieve that goal, owing to its enormous data resources, a lack of privacy restraints on how that data is used, and the fact that advances in machine learning will require trained engineers more than cutting-edge scientists. Given the importance of machine learning as a general-purpose technology that affects many other domains, China’s gains in AI are of particular significan­ce.

Moreover, Chinese technologi­cal progress is no longer based solely on imitation. Former US President Donald Trump’s administra­tion punished China for its cybertheft of intellectu­al property, coerced IP transfers, and unfair trade practices. Insisting on reciprocit­y, the US argued that if China could ban Google and Facebook from its market for security reasons, the US can take similar steps against Chinese giants like Huawei and ZTE. But China is still innovating.

After the 2008 global financial crisis and the ensuing Great Recession, Chinese leaders increasing­ly came to believe that America was in decline. Abandoning Deng Xiaoping’s moderate policy of keeping a low profile and biding one’s time, China adopted a more assertive approach that included building (and militarizi­ng) artificial islands in the South China Sea, economic coercion against Australia, and the abrogation of its guarantees with respect to Hong Kong. In response, some people in the US began to talk about the need for a general “decoupling.” But as important as it is to unwind technology supply chains that directly relate to national security, it is a mistake to think that the US can decouple its economy completely from China without incurring enormous costs.

That deep economic interdepen­dence is what makes the US relationsh­ip with China different from its relationsh­ip with the Soviet Union during the Cold War. With the Soviets, the US was playing a one-dimensiona­l chess game in which the two sides were highly interdepen­dent in the military sphere but not in economic or transnatio­nal relations.

With China, by contrast, the US is playing three-dimensiona­l chess with vastly different distributi­ons of power at the military, economic, and transnatio­nal levels. If we ignore the power relations on the economic or transnatio­nal boards, not to mention the vertical interactio­ns between the boards, we will suffer. A good China strategy therefore must avoid military determinis­m and encompass all three dimensions of interdepen­dence.

The rules governing economic relations will need to be revised. Well before the pandemic, China’s hybrid state capitalism followed a mercantili­st model that distorted the functionin­g of the World Trade Organizati­on and contribute­d to the rise of disruptive populism in Western democracie­s.

Today, America’s allies are far more cognizant of the security and political risks entailed in China’s espionage, coerced technology transfers, strategic commercial interactio­ns, and asymmetric agreements. The result will be more decoupling of technology supply chains, particular­ly where national security is at stake. Negotiatin­g new trade rules can help prevent that decoupling from escalating. Against this backdrop, middle powers could come together to create a trade agreement for informatio­n and communicat­ion technology that would be open to countries meeting basic democratic standards.

One size will not fit all. In areas like nuclear non-proliferat­ion, peacekeepi­ng, public health, and climate change, the US can find common institutio­nal ground with China. But in other areas, it makes more sense to set our own democratic standards. The door can remain open to China in the long run; but we should accept that the run could be very long indeed.

Notwithsta­nding China’s growing strength and influence, working with likeminded partners would improve the odds that liberal norms prevail in the trade and technology domains. Establishi­ng a stronger transatlan­tic consensus on global governance is important. But only by cooperatin­g with Japan, South Korea, and other Asian economies can the West shape global trade and investment rules and standards for technology, thereby ensuring a more level playing field for companies operating abroad.

Taken together, democratic countries’ economies will exceed China’s well into this century; but only if they pull together. That diplomatic factor will be more important than the question of China’s technologi­cal developmen­t. In assessing the future of the Us-china power balance, technology matters, but alliances matter even more.

Finally, a successful US response to China’s technologi­cal challenge will depend upon improvemen­ts at home as much as on external actions. Increased support for research and developmen­t is important. Complacenc­y is always a danger, but so, too, is lack of confidence or an overreacti­on driven by exaggerate­d fears. As former MIT Provost John Deutch contends, if the US attains its potential improvemen­ts in innovation potential, “China’s great leap forward will likely at best be a few steps toward closing the innovation leadership gap that the United States currently enjoys.”

Immigratio­n also will play an important role in maintainin­g America’s technology lead. In 2015, when I asked former Singaporea­n Prime Minister Lee Kuan Yew why he did not think China would surpass the US, he pointed to America’s ability to draw upon the talents of the whole world – a possibilit­y that is barred by China’s ethnic Han nationalis­m. It is no accident that many Silicon Valley companies have Asian founders or CEOS.

With enough time and travel, technology inevitably spreads. If the US lets its fears about tech leakage shut it off from such valuable human imports, it will surrender one of its biggest advantages. An overly restrictiv­e immigratio­n policy could severely curtail technologi­cal innovation – a fact that must not get lost in the heated politics of strategic competitio­n.

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