Ongoing developments have exposed a new strain of political ball game: technology. In a sign of building tensions between the two major powerhouses in this regard, the US ambassador to China, Terry Branstad, announced today he is stepping down from his position. Although there are many potential causes for this, the US pressure in the realm of technology and national security is likely a strong contributor, with sanctions on the supply of microchips paralysing their western expansion and, in the eyes of China, granting unfair competition to US 5G companies.
There are points to both sides: the capitalist system thrives on competitive businesses coming out on top and therefore providing superior quality and pricing, but also allows more totalitarian states the ability to utilise this economic freedom to expand spheres of intelligence. The White House has now clearly decided that the latter point is deserving of more importance, and we, therefore, begin a new age of technological conflict in the political sphere. The problem of economic openness was laid bare in a rejected editorial to a Chinese state newspaper by Mr. Branstad, claiming the US was being “exploited”.
As an “old friend of China”, who boasts a 35-year history with Xi Jinping, it is unusual that such a figure like Branstad would crash out of the role with a scent of animosity. But the growth of Chinese influence was inevitable, as you can only expect the world’s second-largest economy to want a share of global influence when the current hegemon is the home of technology leaders such as Google, Microsoft, and Apple. It is not just technology that the US has an undisputed dominance over, but also military prowess, banking, intelligence, and diplomacy. China is therefore looking for its deserved world influence. However, unlike the Cold War, which saw two polar systems of economic ideology, one of external as well as internal totalitarianism, we now have a China that is looking to participate in global markets and utilise the globalised system that has emerged dominant following the collapse of communism in the USSR but while also controlling its businesses a little too closely for some.
Just as the period of relative hegemonic peace during ‘Pax Britannica’ ended with the onset of WWI, we stare at an uneasy geopolitical climate with the withering of Pax America. Although these games are no doubt taking place across many spheres, such as diplomacy and finance, the inclusion of technology allows for a very public display of these confrontations and is like a strong indication of the severity of them in other areas.
The conflict in technology has spilled out into multiple western countries, with the UK and Australia banning Huawei from its future 5G infrastructure under US pressure, and now UK technology company Arm is caught up in the crossfire of this geopolitical turmoil. Arm China, the businesses Chinese operation and 51% owned by Beijing backed investors, asked for Chinese government protection when the parent company, who owns the remaining 49%, tried to remove the head of the Chinese unit, Allen Wu. The major complications come in two parts, Arm China’s main client is Huawei, and Arm, which was owned by Softbank in Japan, has been sold to the American technology company Nvidia. To add insult to this move, the Founder and CEO of Nvidia is Taiwanese-American, born on the island that China claims, and the US supports militarily.
The fallout from this will likely be the catapulting of Nvidia and Arm into the political battle, and further US pressure on the UK due to Nvidia’s promise to maintain Arm’s headquarters in the UK, making it subject to UK export control laws, and the restriction of technology to Arm China in an attempt to stymie Huawei’s 5G prowess. RISC-V, an opensource chip design platform backed by Chinese businesses Huawei and Alibaba, will likely be a beneficiary of intra-China business divestment from Arm China as a result.
Whereas Huawei was opposed due to its potential influence on 5G infrastructure, TikTok, which experienced more quarterly downloads than any other app in history according to analytics company Sensor Tower, is a social media platform. The parent company, ByteDance, has been forced to sell its US operations or be shut down by the government on national security grounds. Therefore, another US company now finds itself in a similar position to Nvidia, Oracle, who has won the bid for control over TikTok USA following a failed bid by Microsoft. It is becoming clear that the US response to Chinese ‘exploitation’ of its free market system is the utilisation of its multinational corporations to purchase or take controlling stakes in companies of national interest.
Given the hegemonic power of the US in these areas, and the funding capabilities of its financial institutions, it makes for a strong defense if ever there was a need for one. Just as the US government has ordered the takeover of the Chinese operations of TikTok and Huawei, China may retaliate with a similar annexation of Arm China. This is yet to be seen.
Two things are certain in this new realm of politics, it is certainly not limited to technology, especially as China may be looking for more ways to test the US’ global position, and it is not over yet. Although China possesses an economy nearing that of the US, it is just beginning to dance among the periphery of the US across the board.
There are going to be many more conflicts as China grows even stronger in the field of technology, diplomacy, finance, and, we all fear, military development. We need to then seriously contend with how to deal with China going forward, by remembering that it is not in China’s own interests to lead to escalation and military incursions, but also respect that they will inevitably need a place in the future dual-hegemony of the world order.