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The Art of Dealing with Competition and Cooperation between US and China


05-22-2020

                                                Lin  Yang

We live in a critical time. Few world leaders could have imagined that the humanity in 2020, armed with advanced technology and unparalleled civilization, would be on pause plagued by a pandemic. The unprecedented difficulties our society is facing pose tremendous challenges for world leaders and each of us to ponder questions: from how individuals stay connected with each other to how countries co-exist with each other; from isolation to reduce human contact to maintaining the global virtual connectedness; from preparing for the pandemic with minimized disruption in economic activities to reopening the economy without risking public health; from competing for global medical supply chain security to collaborating on finding a cure or vaccine for the virus; from building up domestic solidarity (or patriotism/nationalism) to avoid the expense of dismantling international cooperation. How to balance these complexities in the uncertainties will have a massive impact on the world political, economic and societal order post-pandemic.

Headlines these days, however, are filled with war of words seeking blames for the virus. The disinformation and anti-sentiments on both sides of US and China towards each other are increasingly dangerous. Even if the Coronavirus did not awaken leaders to cooperate, it should at least demonstrate that competing efforts could not resolve the virus totally, and antagonism will not guarantee any win. Winning is leading, but not beating competitor with self loss. US and China leaders in the past decades chose the avenue of engagement, exploring complementary interests for win-win outcomes. This unprecedented new era needs visionary leaders to stand up with the new reality wisely and balance the competition and cooperation to re-calibrate for co-existence and new success despite the differences.   

Many scream out predictions for post coronavirus era: “De-globalization”, “regionalization” or “localization”. The global supply chain disruption has awakened many businesses to rethink their offshore manufacturing and business partnerships. Discussions are underway on how to rebuild or diversify the supply chains. National borders and airlines have been temporarily closed which may have unintended effect on building up real walls between nations;

Co-incidentally, the current wave of technology revolution seem to enable these economic and geopolitical changes. While the internet revolution decades ago democratized information flow and made globalization trending, the new AI+5G+IoT revolution will automate or augment repetitive human labor, potentially democratizing labor and logistics costs, and leveling the playing field for global businesses. If the Coronavirus crisis will indeed accelerate the return of localization of supply chains, we may see many new smart and intelligent manufacturing facilities emerging locally, with the transmit of labor and talent from long distance globally.

These new technologies will reshape the global landscape by further revolutionizing industries more than just people’s lives, thus re-defining each country’s national competitiveness. Therefore, each country is racing for technological supremacy in this new eco-system by protecting own knowledge and self interests.      

Following the 2008 financial crisis, China rejuvenated the economy by injecting 4 trillion yuan (586 Billion USD) stimulus package which went primarily to infrastructure development nationwide. This time, China has plans which are estimated around $1.4 trillion USD to build up “new digital infrastructure”, including 5G, AI, data centers, cloud computing, industrial internet, as well as new “digital transformation partnership action plan” for small and medium enterprises, in order to boost its economic recovery as well as tech self-reliance post COVID era.

These lead to new dynamics. Will China be leapfrogging again post COVID? Or will China lose its competitive advantage if multinational companies pull out their manufacturing facilities? Will the tech decoupling protect US more than it harms China? 

Over the years, China built up its “Made in China” manufacturing capabilities with full value chain, but also its gigantic market. China’s industrial might provide tremendous use cases for AI, 5G and IoT adoption, for example smart manufacturing, smart cities, smart grid, etc, which then produce abundant data and further enhances these smart solutions.

The US continues to hold its leading position in advanced research in many emerging technologies, including in the pharmaceutical and biotech industries that can help treat coronavirus. These research needs to find use cases and markets to maximize their value. However, some worry that deploying US technology in China may enhance China’s industrial competitiveness further. Think about China’s gigantic urbanization process over the past decades, which has provided a vast experimental field for international architects, leading to an explosion in flamboyantly beautiful airports, stadiums and skyscrapers across China.

Additionally, the US and China have vast differences in historical heritage, culture, and values, which may impact how those technologies are utilized and governed. Further, many emerging technologies could be used in both commercial and strategic areas, leading to concerns of security ramifications.

These risks pose new dilemmas for policy makers. One, competing for supremacy. But does supremacy mean self gaining more or the other side losing more? Two, prioritizing economics and security. Clearly, there is a delicate balance between protecting security and optimizing the economic growth, and it needs to be thought out and executed with wisdom and foresight. Even though the newly released “United States Strategic Approach to China” on May 20, 2020 lays out a competitive roadmap, it did not rule out cooperation completely, but with “results-oriented” and “when interests aligned”, etc.

COVID-19 is accelerating this new round of digital transformation and industrial revolutions worldwide. Designing new frameworks to co-exist and exploring new shared interests must be key to maintain the world’s open innovation ecosystem. Competition and cooperation are not contradictory; cooperation is embedded in the very idea of competition. Robust competition leads to speedy advancement and heightened prosperity. Disengagement or building barriers could risk disintegrating of the global innovation ecosystem—or being left out of the system, harming both self interest and the eco-system as a whole.

Fortunately, technology advancement in general is a virtuous cycle, with both local and global benefit. Each country’s science and technology input could contribute value to the overall science discovery and technology advancement of the human society, as well as the global effort to address environmental, public health, natural disaster, cybersecurity challenges, etc. Defining multilateral standards around adoption, ethics and accountability for emerging technologies also need collaborative efforts to ensure global compatibility, efficiency and interoperability.

 We should feel fortunate that we could witness another revolution in human history and reap its benefits in our professional and personal lives. This will only happen if our leaders can master the art of competing for prosperity while finding new common interests to collaborate. This is the art of new leadership.

 (The Article is published on World Economic Forum Global Agenda as “US and China must learn to balance competition and cooperation in the coming era”)

 


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