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LATEST NEWS

  • Philip Osadebay - Tech Journalist

Technology continues to be the struggle to the "hot peace" between China and the US

In the world of global geopolitics, the tensions between the United States and China have captured the world's attention leading to a rapid decoupling of the world's two largest economies.



There have been reports of Beijing prohibiting the use of Apple phones by state officials which caused US investors to mark off $200 billion from Apple's stock market value. Oher US tech giants such as chipmaker Micron Technology have faced repercussions from Chinese authorities resulting in their products being excluded from major shops.


Unlike the US and the Soviet Union during the Cold War which largely operated in separate economic spheres, the US and Chinese economies remain deeply interconnected, particularly in the business of technology.


The "hot peace" between the US and China is characterized more by mutual collaboration than the looming threat of mutual destruction. The economic interdependence continues to be of benefit to consumers in both countries.


The process of the US distancing itself from China began in 2018 when then-President Donald Trump imposed restrictions on exports and tariffs on Chinese imports. Surprisingly, despite the discord between the two administrations, President Joe Biden has only reinforced this approach.


Data from the Bureau of Economic Analysis shows that the total accumulated stock of US direct investment in China based on historical cost has risen from $108 billion in 2018 to $126 billion last year.


Despite the tensions from both sides, Chinese officials have been cautious about driving away strategic foreign investors.


There are compelling reasons for US investors to exercise extreme caution when dealing with China. The Chinese economy is currently grappling with one of its most challenging periods in decades. The costs of local manufacturing have increased, and the threat of intellectual property theft is ever-present.


Meanwhile, the policymaking environment in both Beijing and Washington remains volatile. If geopolitical tensions escalate further, no US business would want to be left with stranded assets in China, similar to what occurred in Russia following the Ukraine invasion.


China now leads the world in 37 out of 44 critical technologies, including advanced materials, synthetic biology, and quantum communications. The era of competitive collaboration remains a challenging path to navigate but is expected to persist unless a genuine geopolitical crisis erupts.

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