The rising tensions between the US and China have accelerated globalization to such a level, where it cannot be reversed. Technology decoupling is halting the trades of high-tech goods because of concerns raised like data privacy and national security. This will have serious implications not only on the businesses and the economies of these two countries, but on a global scale. Reports suggest that the impact of tech decoupling showed potential gross domestic product losses of up to 5% for global economies.
The US has been threatened by China’s growth such that they created a sector known as Chinese Strategy Group (CSG) in July 2020, with their main focus being to make sure China doesn’t dominate and surpass the US in the tech sector. They have supposedly blamed it on China’s “asymmetric” nature where they end up crossing several lines like corporate espionage.
The US Department of Commerce had recently economically black listed seven Chinese supercomputing firms barring US companies from exporting goods without proper approval. They have also filed sanctions against China’s supercomputing centers claiming they have been busy building tech related to global destruction. One of the biggest industries that has been affected due to decoupling is the semiconductor industry. This industry is responsible for manufacturing chips which exist everywhere from a smartphone to an entire house, even affecting the R&D department.
One of the victims of this ongoing conflict was Didi Global. Didi is the most dominant ride service in China commencing about 90% of China’s market. Its growth has been exponential and was expected to be one of the top IPOs of the year. Barely after the opening, reaching the market cap value up to $100 billion, Chinese government filed charges claiming that Didi has breached several data privacy policies collecting information of its customer and potentially misusing this data. This scrutiny was brought to daylight just after Didi elected to list shares in the US. This raised the red alert in the Chinese government and the regulators couldn’t take the risk of losing company data to the US.
“Slowbalization” is the new era after the end of globalization with the rise in China’s tech sector with expanding tariffs, cybersecurity concerns and US interventions. As we head towards the decoupling, soon there will only be two left standing in the global trade, one being the US allied trading bloc and supply chain and the other China allied. This system will have severe implications on the tech sector with restricting them to do business across these 2 different based allies.
The Trump administration ran the crusade against the Chinese relentlessly but it is yet to be seen how will the Biden administration take action against this. In the long run, the US is keen on maintaining their leadership role in the tech world whereas China is fighting their way to reach that level. With the growing momentum towards decoupling, it has left the entire world to reevaluate their global strategies.
