Publication of KISDI Premium Report (22-05) “Technological Hegemony Competition between the U.S. and China: Seven Fronts and Counter-Strategy”

“The middle position and solidarity with middle-range power are not realistic in the technological hegemony competition era.

Our task is to promote national strategies to overcome the dilemma of the alliance within the technological zone of the U.S. and western nations.”

The technological hegemony competition between the U.S. and China is now in a deepening process phase of expanding each of its global influence of technological norms and re-organization of networks in data, services, and science and technology human resources and R&D in addition to global value chains (GVCs), and have resulted in already forming the exclusive technological zone of the U.S., Europe, and Japan. Thus, it is urgently needed to promote a strategy to maximize our national interest in our zone.

Strategy to maximize the national interest in the technological alliance and partnership

▲ Response to the competition within the technological zone: Policy competition to attract capital and human resources; ▲ Securing a transparent and reliable decision-making process within the technical zone and establishing a mechanism for coordination of interests; ▲ Establishing the government-business network, policy coordination, and communication system; ▲ Selection considering various areas, levels, binding powers, and participating countries of cooperation and alliances; ▲ Preventing the possibility of weaponization of interdependence from other technology zones; ▲ Benchmarking the technological alliance and cooperation between the U.S., EU, and Japan; ▲ Preparing key areas of technological alliance and cooperation such as data and standards; ▲ Expanding technological alliances and cooperation

KISDI (President Ho-yeol Kwon) has published the KISDI Premium Report (22-05) “Technological Hegemony Competition between the U.S. and China: Seven Fronts and Response Strategies” recently.

The U.S.-China technological hegemony competition has led to targeted decoupling around the technologies geared to the Fourth Industrial Revolution, which has been conducted around the following seven fronts.

1. Re-organization of GVC: Re-structuring GVCs of strategically important industries according to home and alliance nations;

2. Re-organization of networks of science and technological human resources and R&D;

3. Re-organization of data and services;

4. Restrictions on investment and M&A at domestic technology companies of competing blocks, decoupling of the capital market and blocking of knowledge and technology flow through export control, etc.;

5. Competition between technological norms that control the information flow;

6. Competition for securing the influence of developing countries to expand the global market and norms between technological zones;

7. Competition over technology to conduct conventional warfare and cyberwarfare

This report keenly highlighted the ongoing formation of an exclusive technological zone among the U.S., Europe, and Japan in the process of the above technological hegemony competition through the EU-U.S. Trade & Technology Council and U.S.-Japan Competitiveness and Resilience Partnership. Accordingly, the report pointed out that the balancer theory or solidarity with middle-range power, which means non-participation by the U.S. and western technological blocks, is not realistic due to the following reasons, and in fact, is in the interest of China rather than ourselves.

The reasons are as follows: First, there is no significant target of solidarity. Second, China cannot offer alternatives to engage major countries in GVC technology and achieve mutual benefits. Third, as the GVC re-organization is reinforced, there is also a limit to influencing other nations by leveraging the domestic market. Fourth, if China succeeds to a certain extent in technological rising and establishment of an independent supply chain in the long term, there is a high possibility that foreign companies will be expelled from the Chinese market.

Under these environmental changes, the competition within the technological zone may also be deepened based on national self-interest as revealed in the U.S. Inflation Reduction Act. Accordingly, eight strategic directions were proposed to cope with this.

1. Response to the competition within the technological zone: policy competition to attract capital and human resources;

2. Securing a transparent and reliable decision-making process within the technical zone and establishing a mechanism for coordination of interests;

3. Establishing the government-business network, policy coordination, and communication system

4. Selection in terms of various areas, levels, binding powers, and participating countries of cooperation and alliances

5. Preventing the prospect of weaponization of interdependence from other technology zones

6. Benchmarking technological alliance and cooperation between the U.S., EU, and Japan

7. Preparing key areas of technological alliance and cooperation such as data and standards

8. Expanding technological alliances and cooperation

As a side note, Gae-Iyong Choi published a popular book titled “The Age of Cold Peace: U.S.-China Technological Hegemony after the Ukraine War” recently, which analyzed the competition strategy on semiconductors and AI as the key to the technological hegemony between the two nations, the system between democracy and authoritarianism, and the link between values and technology policy, while delivering powerful insights. This book was introduced as the Book of the Month in the Monthly Joongang September issue Shin Dong-A November issue