US Chinese rivalry effect everyone everywhere

April 11, 2018

Two articles: One about the technology race between USA and China on technology and a broader view from Martin Wolf. Martin Wolf:

  • China is an emerging superpower. The US is the incumbent. The potential for destructive clashes between the two giants seems potentially unbounded. Yet the two are also intimately intertwined. If they fail to maintain reasonably co-operative relationships they have the capacity to wreak havoc not only upon each other, but upon the entire world. China is a rival of the US on two dimensions: power and ideology.

  • its (China's) GDP in 2017 was 62 per cent of US levels at market prices and 119 per cent at PPP (Purchasing Power Parity).

  • Size matters. It is quite unlikely that China’s overall economy will not end up far bigger than that of the US, even if, on average, individual Americans remain far more prosperous than individual Chinese. China is also already a more important export market than the US for many significant countries, particularly in east Asia. Moreover, China is spending almost as big a share of GDP on research and development as leading high-income countries. This is a driver of Chinese innovation.

  • The US can huff and puff about Chinese theft of intellectual property. But every catch-up nation, very much including the US in the 19th century, seized the ideas of others and built upon them.

  • The threat is the decadence of the west, very much including the USthe prevalence of rent extraction as a way of economic life, the indifference to the fate of much of its citizenry, the corrupting role of money in politics, the indifference to the truth, and the sacrifice of long-term investment to private and public consumption. It is indeed a tragedy that the best way we could find to escape from a financial crisis was via monetary policies that risked promoting new bubbles. We could be better than this.

https://www.ft.com/content/5f796164-3be1-11e8-b9f9-de94fa33a81e

 

And on the technology race between China and USA, the following discussion is of interest. http://puzzlefinancialadvice.com.au/2018/AFR/180411_AFR_Senior_Australian_UN_official_says_China_US_tech_war_is_unavoidable.pdf  

  • The head of the World Intellectual Property Organisation (WIPO) said history showed that a superpower would seek to protect its interests when its dominance was threatened by a new player. US president Donald Trump has raised concerns about China's intellectual property theft. His actions so far threaten to escalate into a trade war, which could target China's emerging high-tech businesses. "China is here as a major technological power," Dr Gurry told The Australian Financial Review on the sidelines of the Boao Forum. "That is very different thing from the world we have known for the last 200 years. Now we have a new competitor and the game changes."

  • He compared US criticism of China's intellectual property abuse with complaints the United Kingdom made against the United States during the industrial revolution in the second half of the 19th century.

  • However, he said the world needed to accept China would soon rival the US in technology and innovation. China is expected to overtake the United States as the biggest source of patent application in three years. China's Huawei and ZTE were the top filers of patent applications at WIPO in 2017, beating the traditionally-dominant Japanese and US companies. "What we've seen in terms of the statistics is the consequence of an extraordinary effort being made in china over the course of three decades," Dr Gurry said.



 

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