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The Coming Technological Cold War

The conflict between the United States and China over trade and technology is an increasingly high-stakes zero-sum affair. And it is not just about amassing data and talent to achieve economic and geostrategic primacy; like the original Cold War, it is also about the future of liberal democracy.

MADRID – Lurking behind the Trump administration’s trade conflict with China lies an abiding fear that the United States could be losing its advantage in the global technology race. And it’s not just Trump. In US policymaking circles more broadly, China’s “Made in China 2025” policy – intended to ensure Chinese dominance in cyber capabilities, artificial intelligence (AI), aeronautics, and other frontier sectors – is viewed not just as an economic challenge, but as a geopolitical threat. Everything from US telecommunications infrastructure and intellectual property to America’s military position in East Asia are considered to be at risk.

The fact that technology is driving geopolitical tensions runs against the predictions of many scholars and policymakers. As recently as the mid-2000s, some suspected that geography would no longer play a meaningful role in the functioning of global markets. Globalization and technology would lead to a “flat” world with perfect competition, where talent would automatically spread evenly across regions and frontiers; skilled workers would connect to productive processes remotely and only when needed.

In fact, talent in the twenty-first century is more unevenly distributed than ever before. A few key hubs – Cambridge, Massachusetts; Silicon Valley; Shenzhen, China – are now host to a significant share of the world’s high-skilled digital and tech workers. It isn’t entirely clear why this is happening. But some scholars have begun to attribute the concentration of digital talent to the role of “tacit knowledge”: insider know-how such as the industry practices and procedures, or technical expertise that is valuable only under very specific conditions.

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