Economic Statecraft
Technological Conflict Between the US and China: A Politics Devours the Economy
Valdai Club Conference Hall, Tsvetnoy boulevard 16/1, Moscow, Russia
List of speakers

On November 30, 2023, the Valdai Club hosted an expert discussion titled “The Technological War between the USA and China: Implications for the World and Russia”, which was timed to coincide with the release of the new Valdai Club report “US Technology Policy Amid Rivalry With China”. Discussion moderator Ivan Timofeev described the global trend towards the sovereignisation of technology platforms as being “consumed” by the politics of economic rationality, and suggested that we will continue to observe a gap between key partners in the technology sector, primarily between the United States and China.

Anastasia Tolstukhina, the author of the report, briefly outlined its conclusions. She noted that technology policy is now being intensified and rethought in the United States. Now the state is purposefully intervening in the technology sector and is allocating huge investments to the development of key areas, particularly microelectronics. Tolstukhina named the main objectives of American tech policy as the production of chips in the United States, “friendshoring”, curbing China’s technological development through sanctions, and the creation of technological alliances. However, this policy has its own vulnerabilities, including the high cost of production in the United States, labour shortages, continued dependence on the supply of the most expensive chips, sanctions backfiring against America’s private sector, and problems with industrial development in friendly countries which are being substituted in as production centres. The analyst believes that the main problem is Washington’s lack of a clear strategy for separation from China, which could lead to the situation getting out of control.

Ruslan Yunusov, co-founder of the Russian Quantum Centre, suggested that the United States had realised it too late: for a long time, it was profitable for the Americans to use Chinese production power, and when Washington decided to pursue a policy change, it turned out that it would no longer be possible to easily transfer production. He pointed out that many scientists in China were educated in the West, but now the United States is blocking cooperation in the scientific and educational field, and is trying to extend its new stance to all Western countries. This trend opens up great opportunities for Russia. Even countries like China cannot afford completely autonomous development, which gives Russia the chance to become a key scientific partner of China.

Jacques Sapir,  professor of economics at the Paris Higher School of Social Sciences (EHESS) and Lomonosov Moscow State University, sees the return of politics to the economy in the conflict between the United States and China. This is not the first time the world has experienced a technological conflict between major powers. In particular, one can recall the US-Soviet technological race during the Cold War. The other side of what is happening, according to Sapir, is the economic war; he considers this to be a struggle for the restoration of economic sovereignty. During this war, a wide range of tools are being used: from purely economic measures and legislative prohibitions to industrial espionage and manipulation of information. As a result, a wall of antagonism arises between rival countries, which also leads to the destruction of global scientific cooperation. Meanwhile, the crisis affects all countries, including those not directly involved in the conflict.