Trump may have started the trade wars, but Biden is transforming them into the tech wars. Contrary to pre-election posturing, the Biden administration has made competition with China a new front in the struggle between democracy and autocracy. Thus, pushing the US and China towards an all-out “tech war”.
The US is blocking semiconductor exports to China, while China is limiting the US’s access to rare earth minerals, which are essential in the manufacture of many electronic components. In addition to the US, many other countries too have banned Huawei from operating in their markets. Tik Tok is another point of contention, with India outright banning the app and many other countries mulling the same course of action.
A Decoupling in the Offing?
The tensions between the US and China have resulted in many speculating about a possible decoupling of the two largest economies in the world, and what that may hold for free trade. The US and Chinese economies have become deeply intertwined over the last two decades, with China becoming the US’s factory for all things and the US the largest market for Chinese products.
In the wake of Trump’s “America First” policy and the resulting trade war, there were calls to decouple the two economies, to reduce US reliance on China-centric supply chains. However, this was initially ignored and dismissed on the grounds that the two economies were inextricably linked. However, both the major political forces in the US have found common ground in terms of a limited decoupling, which already exists to an extent in terms of cyberspace; with Facebook and Google banned in China, while the US attempted to ban or restrict access to apps like TikTok.
A Delicate Balance
Whether a decoupling will occur or not is left to be seen. However, it is very unlikely that a major decoupling will take place in the near future. While the two economies rely on each other, they are also keen to safeguard their own interests and conflict is in neither of their best interests. Still, it is likely that we will continue to see posturing and measures from both sides as the tech wars continue.Whether a decoupling will occur or not is left to be seen. However, it is very unlikely that a major decoupling will take place in the near future. While the two economies rely on each other, they are also keen to safeguard their own interests and conflict is in neither of their best interests. Still, it is likely that we will continue to see posturing and measures from both sides as the tech wars continue.
