The US-China Tech Divorce
Can these Siamese twins be separated? Will one or both survive?
As CEO Tim Cook spends the weekend at the China Development Forum in Beijing, he states the obvious: Apple’s business is a coproduction of Silicon Valley and Shenzhen. While governments on both sides attempt to thwart what has been a successful model in the name of national security, the likelihood of a divorce that leaves both parties impoverished but that enriches and empowers politicians is increasingly likely. Are the US and China sparring spouses who will be able to go on to lead their separate lives - or are they Siamese twins, one or both of whom might die or be disabled if they are separated?
The most recent phase of globalization that created widespread economic growth took place in an era that was dominated by one “empire” that projected its power and influence across the globe, the United States. Can globalization endure in a world with two empires, and where neutrality is difficult for all other players? That is where we find ourselves today. Based on land mass alone, since we tend to think of empires in terms of territory, the Chinese sphere of influence has increased nearly three times by its alliance with Russia, from 9.6 million km² in China added to Russia’s 17.1 million km². Of course, this is not really a partnership without limits, but the same could be said of the US and its allies.
As President Xi Jinping begins his third five-year term, his new prime minister, Premier Li Qiang is signaling foreign enterprises that China is open for business once again. The United States is hesitant to believe that the pivot is real and investors are cautious. After all, over the past week as global CEO’s flew to Beijing, there was news that one Japanese executive in China had been detained, and the Chinese employees of the Beijing office of a global due diligence firm had also been arrested.