The Sino-US Technological Decoupling and Ways to Address It

Abstract

Since 2018, the Sino-US trade war has gradually turned into a tech race that mainly stems from China's technological ambitions reflected in the “Made in China 2025” strategy promoting China as a high-tech country in the world markets and reducing its dependence on foreign technology. More recently, there has been an increasing “tit-for-tat” game for global economic and technological dominance, while at the same time both countries are still strongly linked through the “dollar trap” of the international monetary (dollar) system. The main arguments behind the increasing technological competition are to reduce the US reliance on Chinese technology in areas that raise national security risks and to protect critical technologies from being transferred from the US to China, with technological competition mainly encompassing sectors such as 5G, artificial intelligence, and advanced semiconductors. China uses its economic power over global technology supply chains to achieve its political goals and many companies are leaders in advanced technologies relative to the US and the rest of the world in fields such as smartphones, drones, and electric vehicles. In response, the US government has placed unprecedented restrictions on technology exports to cut off Chinese companies from advanced semiconductors made anywhere in the world using US equipment or know-how. The goal is to contain China's rise by thwarting technological development that could enhance its capabilities, especially in the military and cyber fields. In the search for a suitable US technological decoupling strategy regarding China, four approaches are distinguished to address it including the full technological decoupling by the separationists, the restrictive approach that assumes that the technology relationship between the US and China is a zero-sum game, a cooperative approach that views US–China technical ties as non-zero and largely beneficial to the US and the centrist approach conducted by the Biden administration that tends to focus on the advanced technology decoupling while enabling fair economic engagement with China in other fields.