The US-China Tech Race
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The world's two largest economies are competing in a tech race that some have compared to the Cold War nuclear and space race between The US and The Soviet Union. Union. So is The US or China currently ahead? And what will determine who ultimately takes the lead in this technological rivalry? I'm Allison Nathan, and this is Goldman Sachs exchanges. Each month, I speak with investors, policymakers, and academics about the most pressing market moving issues for our top of mind report from Goldman Sachs Research. I recently spoke with Mark Kennedy, founding director of the WABA Initiative for Str
I don't think it's being overplayed. Tech isn't just at the center. It's really the switchboard. Because whoever is going to route the data, the standards, the compute in the future is really going to impact every domain, from military might to economic influence to how you reach out with your message. And I think it's not overplayed, but I think what's underplayed is the geopolitical implications of that. When we think about the tech race, we need to understand that there's really four arenas in this tech race. Who leads in the technology? Who leads in applying that technology, who leads in i
So if we think about where each country has leverage and how it's exercising that leverage, how much have the export controls The US has implemented impacted China's technological advancement?
Well, first of all, China was planning dependent on American chips to begin with. The tech restrictions have accelerated their push in that direction. They're finding ways to be able to do with less advanced chips and do have access to US chip technology at some level. So it's slowing them up, but this will not be the silver bullet that will keep The US in the tech lead for an extended period of time.
And if we think about the leverage China has, and we've heard so much about rare earth minerals, will its grip on these rare earths impede The US's ability to maintain its leadership?
It's critical, and they've given us a one year, if it lasts that long, reprieve from the more restrictive controls on rare earths. The US needs to take that seriously, but we've known about this for a while, and we've admired the problem as opposed to really taking deliberate steps. There have been some more recent steps of taking ownership interest in rare earths investing, but here we need our allies. So Australia, Canada, others are vital to those sources of supply. So I think we need to be even more deliberate than we are and take the risk of China's chokehold on this very seriously.
So what else does The US have to do to win the tech race?
You need to have the best technology. We're either flat or reducing our funding for research universities. We're making it harder for the world's best talent to come in. We need to have the scale to match the deliberate effort that China's putting in to own the wiring, own the rails, own the digital flows in the global South, or we're going to sacrifice them. Are we going to live up to the standards that will make sure that the tech we advance is meeting the values and standards that we've always held? There's some question on the former and there's an increasing question on reliability. Witho
The US government does seem to be taking a more active role in important sectors to make progress towards these goals. We've seen, for example, reports that the government is funding or partnering with companies in the rare earth space. So will those kinds of policies move the needle at all?
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