A recent report suggests an ongoing US-China tech war looks likely to escalate further. The report predicts the increased tensions between the two superpowers, which has recently peaked, is likely to have far reaching consequences on the world stage. The resulting upheaval is likely to create a so-called ‘tech wall’, a division of worldwide tech standards, which could result in a cost of over $3.5 trillion to the sector in the coming years.
The report, which was conducted by Deutsche Bank’s (DB) new strategist, tech veteran Apjat Walia, reflects on the wider trade war between the two countries since 2016 and shows no signs of abating. The issues have come to further prominence in the midst of the Covid crisis as constant counter-offensives centered around IP protection and Countermeasures look set to spiral out of control.
The impact has trickled down to individual consumers too, with over 41% of Americans and 35%+ Chinese citizens stating they will not buy each other’s products.
DB has taken a top-down approach to analyze the complex supply-chains and revenues across the global tech industry. China and the United States have become increasingly interconnected since the 1970s and the integration of their technological strategies has become incredibly complex and labyrinthine. The notion therefore, that the two will seek to part ways, is of major concern to global investment and tech development itself.
The bank has highlighted three main areas of concern: loss of demand in the Chinese market, divergence of tech strategy inflating operating costs, and financial incursion of moving the supply chain out of China. It is estimated that over a 5-8 year period the transition in these three areas will cost over $3.5 trillion.
Each country, along with its mutual allies, are set to receive governmental policy support to divergence, especially around AI and Software enhancements. This, however, is only a predicted model, complicated further by an impending U.S election. The changing political path of the U.S. may give rise to some major shifts in approach between the major trade blocs in the ensuing months.
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