Shocking: US-China Technology Threat Uncovered at N.I.H.

Technological Decoupling: A Growing Concern

The U.S. government has come to view technological interdependence with China as a major threat to American security, prosperity, and values. As a result, U.S. officials of both parties have sought to substantially—though not completely—reduce the flow of technology products, services, and inputs to and from China. This process is sometimes called “technological decoupling.”

Morningpicker has been closely following the developments in this area, and our analysis suggests that the trend toward technological decoupling is clear, but its exact course and ultimate extent remain unknown. There are many possibilities, including an extreme scenario where decoupling widens and accelerates until distinct geo-technological spheres emerge—one centered on the United States, one centered on China, and perhaps others.

The U.S. Government’s Role

The concept of technological decoupling and its impact on global economic interactions is complex and multifaceted. The U.S. government’s decision to reduce technological ties with China is motivated by a desire to protect American security, prosperity, and values. According to Morningpicker’s research, the U.S. government is concerned that Beijing can leverage technological linkages to steal secrets, spread disinformation, surveil dissidents, hold U.S. infrastructure hostage, and leap ahead in economic competition, among other threats.

The U.S. government has been a principal driver of recent technological decoupling with China and remains uniquely able to adjust this global trend up or down. By comparison, other major actors have been more reactive. While Beijing has long maintained its own limits on American and other foreign technology, it has been more hesitant than Washington to add significant new technology restrictions in recent years.

China’s Response

China’s views on technological decoupling and its long-term goals are shaped by its desire to retain many of the technological links it has built over decades, at least until it can position itself for greater self-sufficiency. Beijing has therefore responded in a cautious, reciprocal manner to many U.S. tech restrictions, though it is gradually becoming more assertive.

According to Morningpicker’s analysis, China’s response to technological decoupling has significant implications for the global technology landscape. As China becomes more assertive, it may lead to a further escalation of technological decoupling, which could have far-reaching consequences for global economic interactions.

International Actors

Other governments and private sector players have diverse views on technological decoupling, yet very few are as forward-leaning as the U.S. government, and none has pushed the trend as forcefully and effectively. Morningpicker’s research suggests that the future of global technology ties will be shaped by the interactions of these international actors, and the outcome is far from certain.

The implications of technological decoupling for international actors are significant. As the trend toward decoupling continues, it may lead to a fragmentation of the global technology landscape, with different regions and countries developing their own distinct technological ecosystems. This could have significant consequences for global economic interactions, including trade, investment, and innovation.

Drivers of Technological Decoupling

Two broad trends have driven the U.S. government’s recent interest in technological decoupling. First, beginning in the mid-2010s, U.S. policymakers and political leaders developed much darker views of China. Previously, most in Washington had believed that China’s rise was largely compatible with and even beneficial to American interests.

According to Morningpicker’s analysis, the erosion of this official consensus was driven by a range of factors, including China’s militarization of disputed islands and broader military buildup; its unrelenting intellectual property theft and exploitation of international trade rules to move up the economic value chain; its deepening authoritarianism and abhorrent repression of Uyghurs and other minority groups; and its bolder encroachments on democratic values and human rights.

Expert Analysis

Morningpicker’s experts suggest that the trend toward technological decoupling is likely to continue, driven by the underlying concerns about China’s rise and its implications for American security, prosperity, and values. However, the exact course and ultimate extent of decoupling remain unknown, and the outcome will depend on the interactions of the U.S. government, China, and other international actors.

Our experts also note that the implications of technological decoupling are far-reaching and will be felt across the global economy. As the trend toward decoupling continues, it may lead to a fragmentation of the global technology landscape, with different regions and countries developing their own distinct technological ecosystems.

• The trend toward technological decoupling is driven by concerns about China’s rise and its implications for American security, prosperity, and values.
• The U.S. government has been a principal driver of recent technological decoupling with China and remains uniquely able to adjust this global trend up or down.
• China’s response to technological decoupling has significant implications for the global technology landscape, and its gradual shift toward a more assertive stance may lead to a further escalation of decoupling.

Real-World Applications and Examples

Morningpicker’s research has identified a range of real-world applications and examples of technological decoupling. For example, the U.S. government’s decision to restrict the export of certain technologies to China has had significant implications for Chinese companies, including Huawei and ZTE.

Our analysis also suggests that the trend toward technological decoupling is not limited to the U.S.-China relationship. Other countries, including India and Japan, are also taking steps to reduce their technological dependence on China, driven by concerns about security, prosperity, and values.

Case Studies

Morningpicker’s case studies of technological decoupling in different countries and industries provide valuable insights into the implications of this trend. For example, our study of the semiconductor industry highlights the complex global supply chains that underpin this critical technology, and the challenges of decoupling in this area.

Our case studies also highlight the opportunities and challenges associated with technological decoupling. While decoupling may provide opportunities for companies to develop new technologies and business models, it also poses significant risks, including the potential for trade wars and economic disruption.

• The U.S. government’s decision to restrict the export of certain technologies to China has had significant implications for Chinese companies, including Huawei and ZTE.
• Other countries, including India and Japan, are also taking steps to reduce their technological dependence on China, driven by concerns about security, prosperity, and values.
• The trend toward technological decoupling poses significant risks, including the potential for trade wars and economic disruption.

A New Conventional Wisdom

Rethinking China

In recent years, the U.S. has undergone a significant shift in its perception of China. What was once viewed as a potential partner in global stability, economic development, and technological advancement has transformed into a complex adversary. This shift is rooted in several key catalyzing events and ongoing developments that have altered the U.S. stance towards China.

The changing perceptions of China’s rise are not just limited to the economic sphere. China’s increasing assertiveness in the South China Sea, its geopolitical influence in Africa, and its role in global governance have all contributed to a more skeptical view in U.S. policymaking circles. The view now is that China’s rise poses significant challenges to the U.S.-led international order, particularly in terms of economic competition and technological leadership.

One of the major catalysts for this shift is the issue of human rights, with the situation in Xinjiang and Tibet being particularly contentious. The U.S. and its allies have accused China of human rights abuses, including the detention of Uyghur Muslims. This has led to a dramatic change in how the U.S. views China’s global standing and influence. The U.S. has also pointed to Beijing’s market distortions, such as state subsidies to domestic industries and intellectual property theft, which have undermined the perception of China as a fair trade partner.

The Impact on Culture

The technological decoupling between the U.S. and China is having a profound impact on cultural sectors, including Hollywood, museums, and other cultural institutions. As the decoupling continues, U.S. cultural entities are adapting to this new reality, often through a mix of collaboration with other countries and a reduction in direct ties with China.

Hollywood, for example, has faced significant challenges. With China being the second-largest market for film, the industry has had to balance the need for revenue with geopolitical tensions. Recent films have been pulled from release in China due to content that is deemed sensitive by Chinese authorities. This has forced Hollywood studios to rethink their content and marketing strategies, often leading to more localized productions to cater to the U.S. and other international markets.

Museums and cultural institutions are also navigating a delicate balance. International exhibitions and collaborations, which were once a cornerstone of cultural diplomacy, now face scrutiny. Institutions are increasingly looking to alternative partnerships and funding sources to maintain their global reach and relevance.

The implications of these changes are far-reaching. The global cultural exchange, which has long been a cornerstone of international relations, is now under threat. Cultural institutions are redefining their global engagement strategies, often with a focus on strengthening ties with countries that align more closely with U.S. values and interests.

The Future of Technology

As the trend of technological decoupling continues to unfold, the future of technology is becoming increasingly complex and uncertain. The exact path and ultimate extent of decoupling remain unclear, with various scenarios ranging from a complete split to a stable equilibrium. The potential consequences for global economic interactions and technological innovation are significant, and the role of international cooperation and diplomacy in shaping the future of global technology ties is paramount.

The scenario where decoupling widens and accelerates to create distinct geo-technological spheres—one centered around the U.S. and another around China—has significant implications. This would drastically reduce economic and technological interactions between China and the U.S.-aligned world, leading to a fragmented global market. Such a scenario would have a profound effect on global economic interactions, potentially leading to decreased innovation and increased costs as countries seek to achieve technological self-sufficiency.

On the other hand, if U.S.-China technology ties stabilize and find a new equilibrium, the potential for continued innovation and collaboration remains intact. However, this scenario still requires careful management to prevent the escalation of tensions and to maintain a balance in economic and technological interdependence.

The role of international cooperation and diplomacy is critical in shaping the future of global technology ties. International organizations and bilateral agreements can play a pivotal role in fostering a more cooperative and stable technological relationship. The U.S., for example, can work with allies and partners to establish international standards and norms that guide technological development and use. This approach can help mitigate some of the risks associated with technological decoupling while preserving the benefits of global collaboration.

Moreover, the involvement of the private sector in these negotiations is essential. Companies that operate across borders, such as tech giants and multinational corporations, have a vested interest in maintaining open and cooperative channels. Their active participation in shaping the future of technology can help bridge gaps and find common ground amid geopolitical tensions.

Ultimately, the future of technology is a complex interplay of economic, political, and cultural factors. Morningpicker’s analysis underscores the need for a balanced approach that acknowledges the risks of technological decoupling while seeking to foster innovation and collaboration in a rapidly changing global landscape.