U.S.-China Technological Rivalry: from “Arrogance” to Boycott

Abstract

The spread of the coronavirus pandemic and the slowdown in economic activity in the United States have strengthened the position of supporters of “decoupling” from China. The U.S.-China relations are progressing from “patient integration” to “impatient disengagement”. Escalating research spending, accelerated industrial modernization, and the expansion of China’s high-tech exports have been identified as major challenges to American technology dominance. The fragility of global value chains in cooperative relationships between US and Chinese companies has become particularly evident. The United States plan to free themselves from dependence on China’s innovative technologies and critical materials. Washington’s efforts to revive the country’s manufacturing industry received a new impetus. American TNCs have begun to return some of their enterprises to the USA. The “technological boycott” of China is aimed at causing maximum damage to the development of any competitive business that presents a challenge to American multinational corporations, and to slow down the progressive technological development of the PRC. Equally important are considerations of industrial policy aimed at crowding out competitors. Washington’s protectionist actions led to a reduction in trade and mutual investment and have put American companies targeting Asian consumers in a difficult position. Washington is beginning to fear that Beijing may powerfully respond to the United States with countermeasures that are sensitive to the American military-industrial complex and innovative sectors of the economy. Washington’s aggressive actions are mobilizing China’s efforts to move up the value chain and localize products to achieve self-sufficiency in key technologies. However, the threat remains that protectionism could become a “new normal” not only for U.S.-China relations. The only viable alternative to this scenario may be the joining of efforts of market participants interested in returning to international legal norms of trade.