Moscow Draws Conclusions from Technology Battle of Beijing and Washington
Modern world technologies are increasingly becoming not only a way to make people’s lives easier, but also tools for influence both in the business community and at the world stage.

Today it can be more and more often observed that there are not only geopolitical but also geo-economic tensions rising between the USA and China, and development and distribution of technologies, especially in manufacturing computer, smartphone, server, cell tower components etc., are a part of these tensions.

The United States have imposed a number of sanctions on Beijing to curb its technological development. However, these restrictive measures are hitting American tech corporations hard. Restrictions on their access to the fast-growing Chinese market lead to significant reductions of their profit volumes and lower investments into innovations, crucially important in the semiconductor industry. Apart from the restrictions versus China, the American leadership has kicked up its technology policy at the background of some successes of China. Last year the US Government intervened in the tech sector with its multi-billion injections into critical technologies. It is related to the fact that the American administration focuses on microelectronics production and strives to build a reliable supply chain based on domestic manufacturing and cooperation with partners. The Republican and the Democratic parties of the USA have achieved consensus over containment of the technological development of China.

China, under pressure from the USA, is focusing on import substitution in order to produce equipment for manufacturing microelectronics and components. Along with this, Beijing is bypassing American sanctions by licensing exports of some rare elements (lithium, germanium etc.), used in high-tech sectors and especially in electronics. This licensing is aimed at slowing down introduction of new restrictive measures against China, at maintaining options to evade sanctions and buying time for import substitution of production assets. For import substitution purposes Beijing also engages foreign professionals and researchers, offering them high remuneration and comfortable packages for relocation to China. At the same time the Chinese leadership is ramping up its technology cooperation with those countries that have technology potential and technology base for design and development of advanced technologies (for example, with Russia and Iran).

What does this technology standoff between the USA and China mean for the world and Russia? This conflict today is setting up conditions for technological bipolarity, which, however, will be asymmetrical in nature. China’s technological development, most likely, will be walled in its country and in a number of partner countries. At the same time the USA today are building new production chains and infrastructure with their partner countries, which may potentially lead to ousting China outside the countries with developed economies and to strong competition in Middle Eastern and African countries. But any major division of the world in the tech sector is rather unlikely, because currently it is next to impossible to set up completely independent supply chains for microelectronics elements due to high tech market specifics.

For Russia, this tech standoff creates a number of risks and opportunities. The limited volume of the high tech market and its structure do not let the country create the full range of high technologies in the microelectronics sector, especially microchips. In these conditions Russia needs to develop a proper strategy, combining self-sufficiency in critical tech sectors. In other high-tech sectors Russia could be a part of high tech production chains, but only in individual sections, where it would be hard to replace Russia. Russia also needs to develop artificial intelligence technologies, where there are no undisputed leaders now, and also raise its human resource potential to create cutting-edge technologies and production facilities. Moscow’s educational institutions in this area and economic opportunities could   be instrumental in achieving successes in high tech development.

Konstantin Sukhoverkhov, program coordinator, Russian International Affairs Council (RIAC)