China-USA: Ideology No Longer Matters

For those who came of age during the Cold War, like many of the current leaders of China and the United States, it can be difficult to see the US-China trade war through anything other than an ideological lens. However, those ideologues advocating for model rivalry in these two counties either face criticism or outright ridicule when they encounter the average man on the street.

Ideology, however, no longer matters as much as it did during the Cold War. Most elites and citizens in technologically advanced countries like China and the United States see the world differently. Ideology should not get in the way of doing business across borders. Most people want their iPhones to be as inexpensive as possible and work well, even if it means that ideologically divergent places like China and the United States need to work together.

Liberalism survived the Cold War and became the dominant international ideology, which strengthened strategic cooperation among the Western countries. Nevertheless, liberalism has suffered a fate similar to what communism endured since 2016, when Britain voted to leave the European Union and Donald Trump was elected president.  Cracks in the liberal consensus, however, had appeared before the Brexit vote and the rise of Trump. In 2014, when Washington accused China of currency manipulation, the UK, Washington’s most reliable ally, took a step to serve as the Western hub for financing and trade in RMB and by April 2016, the UK had become the second-largest offshore RMB clearing centre. It was Britain again, which joined the Chinese-led investment bank AIIB in March 2015, without any consultation with the United States, which made Washington very angry. The following April, Germany, France, Italy and other European states followed the suite of Britain.

The rift between the United States and its allies widened further under the Trump administration. Washington’s European allies were publicly confrontational over trade tariffs, military expenditures, climate change, and the Iran deal. Nowadays, no European ally believes that the American government respects their views or interests. At the Munich Security Conference in February 2019, German Chancellor Angela Merkel and Vice President Mike Pence exchanged harsh words over the Iran nuclear deal, which illustrated how strained the trans-Atlantic relationship had become. Prime Minister Abe adjusted Japan’s policy toward China from confrontation to conciliation and payed a state visit to Beijing in October.

Instead of focusing on winning an ideological dispute, the major powers are prioritising the competition for technological and economic superiority. For instance, the United States-China trade war is focused on the technology sectors instead of the trade balance. The United States government has reiterated that one important goal of the trade war is to protect America’s intellectual property. In the past year, all of the conflicts between China and the United States were over matters concerning the flow information regarding technological advancement. Since then, the US has set visa restrictions on Chinese students of science and engineering. The conflict over the allowance of Huawei, a Chinese telecom equipment giant, attempting to roll out 5G networks was, at its core, a battle over whether Chinese or US-based companies will set the standard for next-generation telecommunications innovations.

Washington has encouraged its allies to block Huawei from their 5G networks. The Australian federal government is the strongest supporter of the US on this issue. In 2018, it banned Huawei from the country's 5G network, citing security risks. Canada, another strong supporter of the US, actively responded to America’s request and arrested Huawei’s CFO Sabrina Meng Wanzhou on 6 December 2018 in Vancouver. Two days later, Japan decided to exclude both Huawei Technologies and ZTE, another Chinese telecoms equipment giant, from public procurement in Japan. But the Japanese government suddenly changed its policy on 29 March 2019 and no longer prohibits the purchase of Huawei equipment.

However, by February 2019, cracks had appeared in the West’s support for America’s campaign to keep Huawei out of 5G mobile networks around the world. Once more, the UK was the first Western country to express a desire for further cooperation with Huawei. In early February, its intelligence agency concluded that there are ways to limit the risks associated with using Huawei equipment to build next-generation wireless networks. This conclusion has undermined the American-led campaign against Huawei. Soon after, the German, New Zealand, and Italian governments also ruled out banning Huawei's participation in rolling out telecommunication services. Despite the Australian federal government’s firm opposition to Huawei, Western Australia, in March 2019, informed Huawei that it could still deliver the digital radio system for a metropolitan rail system. By June 2019, Huawei has signed 46 contracts with companies from 30 countries.

These incidences demonstrate that it is not ideological superiority that is driving policy decisions, but rather the fight over control of global technological standards and superiority in the digital economy. The major powers see the internet and digital technology as the way of the future. Because there is no international standard for the emergent technology, historical lessons suggest that those who are able to control the standards are those who will wield the power in the decades to come. This is likely why the major powers are no longer focused on ideology and are more focused on gaining control over the international standards in the foreseeable future.  

Regarding non-political issues, there are both political and economic reasons for major powers to be divided by technology more than ideology at present. In recent years, China has also reduced its technological gap with the US. This phenomenon has caused people re-evaluate the roles of ideology and technology in yielding a high quality of life. Ideology is seemingly less important, whereas technology has gained importance, especially when one considers that China’s rise benefited greatly from Deng Xiaoping’s pragmatism in avoiding ideological debates at home and abroad. This outlook drives policymakers to side with countries which provide affordable, high-quality, technologically-advanced goods and services instead of ideological reasons.

Economically, the rapid growth of the digital economy has convinced people that new technology is more crucial than shared ideology in protecting national interests. In the last fifteen years, the growth rate of the digital economy has been 2.5 times that of global GDP growth. Most people, including policymakers, often think of digital technology as encompassing all advanced technologies. When a substantial amount of the national wealth is generated mainly from digital technology, people will believe in the magical power of technological invention instead of political systems. This kind of belief drives policymakers to concern themselves with gaining a technological advantage rather than with the inventor’s ideology.

As the China-US bipolarisation accelerates, countries may increasingly be under pressure to choose sides between America and China. Unlike the two-bloc world of the Cold War, the coming bipolar world will involve choosing sides on non-political issues, and according to technological needs rather than picking one side to provide for all technological needs. Since technological superiority has come to determine the result of the strategic competition among the major powers, we cannot rule out the possibility that policymakers, even on some political issues, may identify international partners and competitors based on the technology they need more than the ideology they share. The result of the strategic competition between the United States and China is more likely to be determined by who has more technological influence rather than ideological impact on the rest of the world.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.