The US-China rivalry is putting innovation at risk – is it worth it?

The US-China rivalry is putting innovation at risk – is it worth it?

Back in January, we warned that an intensifying "Tech Cold War" between the US and China over technology and trade could plunge global innovation into a deep freeze as both countries impose fresh restrictions on the free flows of money, people, and information that (throughout history) have powered new ideas.

We're not at the winter solstice of innovation just yet, but the US's move last week to restrict Chinese networking equipment giant Huawei's access to US markets and technology sent an awfully chilly wind through the tech sector.

Here are two ways that a decoupling of the Chinese and American tech sectors could damage innovation in the US:

  • Less good money: Huawei spends roughly $10 billion a year buying hardware and software from US firms. Total Chinese tech industry purchases are many times greater than that. A portion of that money is reinvested by Silicon Valley in R&D to help develop the next generation of innovative tech products. If Chinese firms can't – or won't – buy from American companies, a lot of R&D cash will vanish.
  • Fewer good brains: US semiconductor companies are already struggling to hire highly coveted Chinese engineers as the Trump administration slow-rolls their visa applications over national security fears. But top tech talent is hard to come by, and there aren't always qualified workers from the US or other countries available to pick up the slack.

The upshot: The United States has plenty of well-founded grievances with how China runs its economy and its increasingly powerful tech sector. But the costs of Washington's more confrontational approach are already becoming apparent. Those costs will rise further if the US and China's deeply linked tech sectors decouple more fully and formally, as some China hawks in the US hope. At what point do the costs start to outweigh the benefits?

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On Bank of America's That Made All the Difference podcast, Secretary of the Smithsonian Lonnie Bunch shares his journey and present-day work creating exhibits that inspire visitors to help our country live up to its ideals.

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A few weeks ago, a Signal reader emailed me to ask why so much of our coverage of the world is so damn dark. Aren't there any good news stories out there?

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There's a lot of doom and gloom in the world these days, and much cause for pessimism. Still, the advent of new technologies and scientific advancements has lifted billions out of poverty and increased quality of life for many over the last half century. Since 1990, global average life expectancy has increased by eight years to 73, while GDP per capita has also grown exponentially, doubling over the past decade alone. We take a look at how life expectancy and GDP per capita have evolved globally from 1960-2019.

Get insights on the latest news in US politics from Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington:

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