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Fixing the Global Tech Split

Despite the complex tensions and high stakes in the US-China relationship, a major technology split is likely to be averted in the medium term. But a better long-term outcome for the global economy will require fair and binding multilateral rules of conduct.

SINGAPORE – Heightened US-China tensions have raised the prospect of a deep global technology divide, potentially forcing other countries to choose which camp to join. There are plenty of grim scenarios involving irreconcilable splits between core technologies that power a wide range of products and services, from aircraft and automobiles to precision engineering for robotics and payment systems for e-commerce. Should these scenarios materialize, the world’s two largest economies will pour huge amounts of resources into a zero-sum race to control the cutting edge.

Both the United States and China understand the central role of technology in driving their economies and global development. They also know that mastering it, as well as safeguarding relevant intellectual property, can bolster their national security and geopolitical influence, with important feedback effects for their sustained growth and resilience.

In the medium term, the US faces a stiff challenge to its long-standing dominance in science and engineering, as well as to its capacity to produce critical components. For example, although US firms design cutting-edge semiconductors, America’s share of global output has declined from 37% in 1990 to only 12% today.