From national security concern to self-destruction: when techno-nationalism goes wrong

Techno-nationalism has long been a tool to joust for supremacy, but now the old rulebook has been thrown out of the window, and the China-US trade war is on a path to create unmerited polarisation in the world. In 2020, restraint is urgently needed to prevent us from pulling apart our globalised world.

Techno-nationalism takes a strategic view of technology, viewing it as fundamental to national security and economic competitiveness. With the ongoing decline of Western-led world order and the increasing power of tech giants, over the past few years, some seem to have woken up to a trajectory they feel uncomfortable with. Governments have unleashed techno-nationalistic policies, dumping serious ethical, legal, and political questions onto private companies and everyday citizens.

It feels like we’re taking a step backwards. During the Cold War, technology, especially space and military technology, acted as a separating force between the US and the Soviet Union. But after the fall of the USSR, the US shed much of its hawkish reputation despite its allies in Europe and Japan holding onto some techno-nationalist traits into the 1990s. A 1993 report to Congress said that instead, the US “continued to define the national interest in terms of the more global objective of promoting free and open trade and investment.”

However, propelled by the ongoing China-US trade war, the last two years have seen the US revert to the extreme techno-nationalism of the Cold War. The most significant of recent moves was the decision to put Huawei and China’s leading AI startups on a trade blacklist that prevents them from buying advanced semiconductors and software from US companies without government approval.

How did we get here in such a short space of time? If you remember back to the beginnings of the trade war, you may remember the rhetoric of “unfair trade practices” such as IP theft. Tit for tat on both sides has made President Trump quickly expand the scope of concerns, so far that it now even encompasses Chinese social networks, as we see with the national security review of TikTok currently underway.

Change of tactics

Offensive techno-nationalism – boosting R&D, cultivating talent, and enabling private sector collaboration – was what helped secure American tech dominance in the past. Even Silicon Valley, a model of private enterprise innovation, owes its early emergency to what Harvard’s Peter Galison describes as a combination of “plentiful sunshine and even more plentiful government money” from military electronics contracts.

Government spending on R&D, which peaked at 2% of GDP in the 1960s, has made the US powerful in tech and interdependent with much of the world, including China. For Qualcomm, one of the US’s major semiconductor producers, more than 60% of its revenues came from China in the first four months of 2018. American semiconductor producers Micron and Broadcom also had similar shares of revenue coming from China. In total, China imported $306 billion worth of chipsets in 2019; the country’s biggest single import, making up 15% of total imports.

China has a mere 5% of the global market share in semiconductors and relies heavily on imports. Credit: Alex Capri

What the US is now doing with China – restricting another country’s firm to technologies deemed critical to national security – is also a traditional defensive tool of techno-nationalism which has benefited the US. However, obstructing non-military companies like Huawei from not just operating in the US but also from producing their products for use in other countries constitutes a fresh escalation in tactics that brings into question proportionality.

Global tensions are also causing countries to view their tech firms as “national sectors, and not global actors,” said Samm Sacks, a senior fellow at Yale Law School’s Paul Tsai China Center who studies cybersecurity and US-China relations. “It’s the idea that a tech company is going into a market on the other side of the world, and now is being asked to carry the flag of the country,” she added. “This is a sea change from even a decade ago.”

Unintended consequences

The problem is, if every commercial technology is now viewed as central to national security, it will seriously harm the borderless innovation that continues to make American tech successful. Furthermore, forcefully decoupling China will remove its interdependence with the West and force it into being a fully-fledged competitor – the exact thing Trump’s trade war is trying to avoid.

Already we see China en route to becoming serious competition to the US with “Made in China 2025,” a national strategic plan which aims to bolster self-reliance by further developing numerous technologies including semiconductors. Previously there seemed nothing alarming about this strategic plan – it’s packaged how Beijing does with many other industrial policies – but the plan will now likely become a critical policy direction of post-pandemic China. The technologies at stake this time, among them AI and quantum computing, will make the battle longer-lasting and more intense than previous ones.

Chinese R&D is on track to surpass the US; some argue it already did in 2019. Credit: NSF

To widen the polarisation, a new bill in the US plans to bar foreign companies from listing on US exchanges if they fail to comply with US auditors for three consecutive years. Beijing does not allow US auditors at the Public Company Accounting Oversight Board (PCAOB) to inspect audits of companies registered in China and Hong Kong, meaning the bill could cause tensions down the line. Already several US-listed Chinese tech stocks are filing IPOs in Hong Kong, signalling a further decoupling between the two countries.

A way out

Techno-nationalism will always be riddled with hypocrisies; this zero-sum mentality causes countries to overreact in ways that damage national and global interests. As we see with the China-US trade war, if every grievance becomes a point of contention, we start to pull apart our globalised world and revert to the extreme polarisation of the Cold War.

If we continue to politicise technology, the results could be dire. For instance, American and Chinese scientists are currently working together on testing COVID-19 treatments and drug candidates, developing vaccines, and understanding the origin and spread of the virus. This bastion of global cooperation shows the importance of working together and reminds us of what is lost when we retreat from our interconnected world.

But that is not to say we should support unfettered techno-globalism – we are right to concern ourselves with national security. However, the US does not have to unravel globalisation to protect themselves and compete effectively with China. The imperatives of techno-nationalism and globalisation need to be effectively balanced, and American firms need to be seen as tools of economic competitiveness and innovation, not as arms of the state.

This year we have met a fork in the road – will we accelerate our polarisation or work towards reconciliation?

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