TheEconomistNovember 21st 2020 191A
merica haslong dominated the world
in information technology (it). Its gov-
ernment, universities and enterprising
spirit have provided it with decades of lead-
ership in hardware and software. Its mili-
tary drones, satellites and “system of sys-
tems” give its armed forces a powerful edge
over those of any competitor. Silicon Valley
is more visited by foreign dignitaries and
finders-of-fact than any other business lo-
cale in the world. One of its tech giants is
currently worth over $2trn; three more are
worth over $1trn. The contribution tech-
nology makes to the buoyancy of its mar-
kets is without equal.
China, too, has digital resources in
abundance, not least its huge population of
1.4bn, which means it will eventually boast
an even deeper pool of data and experts to
develop aimodels. The country’s digital
giants, from Alibaba to Tencent, have al-
ready become ai and cloud-computing
powers in their own right. Its people live
online to an extent that Americans—many
of whom still have cheque books—do not.
The country’s Great Firewall keeps un-
desirable digital content out. Within the
wall, tech firms are allowed to fight it out as
long as they are happy helpers of China’s
surveillance state.
And China is on the move. It is investing
billions in emerging technologies, from ai
and chip fabrication to quantum comput-
ing and 5g, a new generation of mobile net-
works. It is hacking other countries’ com-
puter systems and grabbing intellectual
property where it can. It is packing the or-
ganisations that develop global technical
rules, such as the International Telecom-
munication Union. And it is pulling other
countries into its orbit with initiatives
such as the “digital Silk Road”, helping
them build out their digital infrastructure.
President Donald Trump saw, correctly,
that this made China a serious challenger
to America’s digital supremacy. His hum-
bling of Huawei, a Chinese telecoms-
equipment maker, has begun a decoupling
of Chinese and American itinfrastructures
and of the supply chains between Chinaand America that will continue.
Many device-makers have already
moved part of their production out of Chi-
na and some will end up with two separate
supply chains. Apple’s contract manufac-
turers, for instance, are setting up plants in
India. tsmc, a Taiwanese chip firm, an-
nounced in May that it will build a facility
in Arizona. Feeling its dependence on
American semiconductor technology, Chi-
na is doubling down on efforts to build its
own. In software and other areas, too, bi-
furcation has begun—and not just because
of bans against Chinese apps.
What Mr Trump was unable or unwill-
ing to understand, though, was that China
and America are not the only economies
that matter in this contest, and that fact
provides America with a potentially deci-
sive advantage. India, the European Union,
Japan and others all play crucial roles in the
world’s itsystem—as do tech giants such
as Alphabet, Apple and Microsoft.
All these entities, whether national or
corporate, are at odds with the American
government and often with each other over
something or other in the itworld, wheth-
er it be visas, privacy rights or competition
complaints. But they would also all prefer a
world in which international agreements,
practices and expectations for itembody
the values and interests they share with
America, rather than those of China. And if
democratic countries cannot agree on
common rules in the digital realm, ChinaThe new grand bargain
SAN FRANCISCO
Without teaming up, democracies will not be able to establish a robust
alternative to China’s autocratic technosphere
Briefing Global technopolitics