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US-China tech tensions: the impact on the global digital landscape
As the digital world continues to grow and evolve, there still exists a digital divide between the US and China. Alexis Serfaty, director of geotechnology at Eurasia Group, in a GZERO livestream presented by Visa, says that has long as US-China relations continue to be involved in a “tech cold war,” other countries, especially in developed regions, may find themselves compelled to take sides when it comes to adopting new technology infrastructure and standards. Global data divergencies and disparities in regulation of data would eventually fall on to the consumer, as their own experiences and standards would diverge, says Serfaty.
Serfaty goes on to say this alignment with either the US or China could also impact tech-related supply chains and global partnerships. An example lies in Europe, where despite some nations still utilizing Huawei equipment in their 5G networks, the European Union and several member states are progressively banning Chinese-made equipment. In parallel, the United States is poised not only to enhance its lead over China in advanced technologies but also to maintain that lead indefinitely.
The geopolitical tensions between the US and China in shaping the future of digitization is posing challenges and opportunities for nations striving to navigate this evolving digital landscape, highlights Serfaty.
To hear more about the challenges and opportunities that nation-states face when it comes to digitization, and how it could shape a more inclusive and resilient future, watch the full livestream here:
What Ukraine's digital revolution teaches the world
TikTok, Huawei, and the US-China tech arms race
“When the Chinese get good at something, all of the sudden, the United States says, ‘This is a national security risk.’”
That’s what Shaun Rein, founder and managing director of the China Market Research Group, argued on GZERO World with Ian Bremmer while discussing the increasingly hostile geopolitical environment between the two superpowers.
Greenland's melting glaciers
Hard Numbers: Greenland's zombie ice, Sudanese journos unionize, India’s 5G plan, "Man of the Hole" dies
10.6: Greenland’s rapidly melting ice sheet will add 10.6 inches to already-rising sea levels in the long term, according to a new study. This deluge is because of “zombie ice,” which is essentially still attached to thicker areas of ice but not getting fed by larger glaciers due to low snow levels.
30: Sudanese journalists have created the country’s first union in more than thirty years. Former longtime dictator Omar al-Bashir (1993-2019) was notorious for torturing and imprisoning reporters, while press freedom has again come under siege since the military took over in a coup last fall.
25 billion: Indian billionaire Mukesh Ambani announced a $25 billion plan to launch 5G throughout parts of the country within the next few months, with hopes of rolling it out nationwide by Dec. 2023. Tech companies including Meta and Google have struck deals with Ambani’s telecom company to try and expand their market share in India, on track to become the world’s most populous country next year
1: The last member of an Indigenous tribe in Brazil was recently found dead, marking the first confirmed loss of one of the country’s uncontactable tribes. He was known only as the "Man of the Hole'' because of the dozens of trenches he’d dug in his territory over the years. There are estimated to be 114 Indigenous tribes in Brazil, but only 28 have been identified.
Hard Numbers: GDP wars, WTO rules in Beijing’s favor, Africans support Chinese engagement, China winning 5G battle
5.9: China’s GDP could grow on average 5.9 percent per year until 2025, according to the Center for Economics and Business Research, which predicts that China will overtake the US as the world’s largest economy by the end of the decade. The Chinese economy was worth $18 trillion in 2021, compared to America’s $23 trillion.
645 million: Amid an ongoing trade war between the world’s top two economies, the World Trade Organization ruled last week that Beijing can slap $645 million worth of tariffs on US goods. A decade ago, the US placed tariffs on some Chinese products, including steel pipes and solar panels, saying that Beijing was giving unfair subsidies to state-owned companies.
59: The US has been trying to discredit China’s growing influence in Africa, but it’s not working: 59 percent of Africans view China’s economic and political clout favorably. Almost exactly the same number — 58 percent — feel the same about the US.
90: More than 90 countries have signed up to use 5G networks made by the Chinese telecom giant Huawei. Meanwhile, only eight nations have so far agreed to join the US ban on Huawei. Why? Many analysts say it’s because China offers way superior 5G infrastructure.
A man reacts during a rally to support the National Defense Force and to condemn the expansion of the Tigray People Liberation Front fighters into Amhara and Afar regional territories at the Meskel Square in Addis Ababa, Ethiopia August 8, 2021.
What We're Watching: Everyone vs Ethiopian PM, Brazil ditches Huawei, (more) trouble in Sudan, Argentina's midterms, Iraqi powder keg
Opposition forces unite in Ethiopia's civil war. The Tigray People's Liberation Front, which has been locked in a brutal year-long civil war against Ethiopian government forces, has now teamed up with another powerful militant outfit that wants to oust Prime Minister Abiy Ahmed. The TPLF, now in alliance with the Oromo Liberation Army — which claims to represent Ethiopia's largest ethnic group — have swept towards the capital Addis Ababa in recent days, prompting the embattled Abiy to call on civilians to take up arms in defense of the city. The Tigray-Oromo alliance, called the United Front of Ethiopian Federalist Forces, has called for Abiy's immediate ouster, either by negotiation or by force, and for the prosecution of government officials for war crimes. The UN says all sides in the conflict have committed abuses. The US, which has threatened to suspend Ethiopia's trade preferences over the government's alleged war crimes, is currently trying to broker a cease-fire. When Abiy came to power after popular protests in 2018, he was hailed for liberalizing what was formerly an extremely repressive government (controlled, as it happens, by the TPLF). Now it's looking like he may have unleashed the very forces that could tear the country apart and drive him from office — or worse.
Is China shut out of Brazil's 5G comp? Earlier this year, Brazil's President Jair Bolsonaro set an ambitious deadline to roll out 5G broadband – which provides much faster internet connections — by July 2022. In recent days, telecom firms have been vying to get a piece of the pie as the tender process heats up. Indeed, it's a lucrative prospect for telecom companies in a country where more than three-quarters of the population (or roughly 190 million people) are connected to the World Wide Web. But the process has not been smooth sailing because, well: China. Bolsonaro has been under a lot of pressure from China skeptics within his own government, and Washington, to exclude tech giant Huawei from the bidding wars. Bolsonaro ultimately caved, as Beijing has evidently been locked out of the process for now. Claro, a Mexican-Brazilian venture, and Spain's Telefonica seem to have walked away big winners from the 5G auction after putting up the most cash for spectrum rights. But this is all very awkward because Huawei has been a major tech provider in Brazil for decades, and local cell phone operators also rely on Huawei's tech. What's more, excluding Huawei, by far the most cost-effective supplier of 5G equipment in the country, will increase the project's overall cost, which is now expected to exceed $7 billion. Many remain skeptical that this massive task can be pulled off in just nine months. But whenever it does happen, it will be great news for Brazilians, many of whom live in remote areas with shoddy internet access.
Sudan on the brink. Two weeks after a military coup in Sudan, the country's security situation continues to deteriorate. On Sunday, soldiers responded to pro-democracy protests in Khartoum by tear-gassing and arresting more than 100 teachers who refuse to return to work until the transitional civilian-military government is restored. (The intervention drew comparisons to the harsh crackdown against protesters that eventually led to the ousting of longtime despot Omar al-Bashir in 2019.) Meanwhile, civilian PM Abdalla Hamdok remains under house arrest, and the internet is still shut down. Arab League mediators have arrived in the capital to try to mediate between junta leader Gen. Abdel-Fattah Burhan and the pro-civilian forces, but Burhan refuses to even call the power grab a coup. The country's largest union, which played a pivotal role in the 2019 protest movement, has called a two-day national strike — the opening salvo of a campaign of civil disobedience to force the military back to the negotiating table. Since the generals show no signs of backing down, the odds of more bloodshed are growing by the day.
Argentina votes, ruling party in trouble. Argentines go to the polls this coming Sunday to vote in the country's midterm legislative elections, with the ruling leftwing coalition of President Alberto Fernández bracing for heavy losses in both houses of parliament. The result will likely reflect the outcome of last September's primary elections, where the president's allies got clobbered by the center-right opposition. Since then, Fernández has caved to pressure from his powerful VP, former president Cristina Fernández de Kirchner (no relation), to double down on social spending and government intervention in the economy to curb skyrocketing inflation. But it hasn't worked: Fernández has capped prices on a whopping 1,432 products, yet annual inflation remains over 50 percent. Without a senate majority, it'll be very hard for the president to get much done in the second half of his term at the worst possible time: economists fear Argentina may stiff the IMF on part of the $45 billion it owes early next year. Another default could lead to a run on banks like in 2001, when the country suffered one of its worst financial crises ever. With presidential elections not on the horizon for another two years, buckle up for a lot of political instability until then.
Iraqi PM's narrow escape. Iraq's PM Mustafa al-Kadhimi is lucky to be alive after a barrage of explosives was fired at his compound inside a high-security zone, injuring several security personnel. The brazen attack was carried out by pro-Iran militias, who have been violently calling for a recount since their parties did poorly in the recent parliamentary elections. On Friday, the militias tried to breach the fortified area known as the "Green Zone," which includes the PM's compound and Western embassies. Pro-Iran factions are particularly worried that Shia Muslim cleric Muqtada al-Sadr — whose party won the biggest share of votes and is trying to form a government — will try to temper Tehran's growing influence over the oil-rich country. (Al-Sadr has called for way less foreign interference in Iraq from Iran and the West). Even before the recent unrest, things weren't going well in Iraq, where power supplies are scarce and the economy is in shambles. What's more, Iraqis have little faith in the political elite's ability to fix things, as was reflected in the record-low election turnout. We're watching to see if this latest round of violence begets… more violence.
Is the US forcing Brazil to go against China or not?
We don't get it: Does the US expect its allies to choose between the US and China or not?
Just a few months ago, US Secretary of State Tony Blinken promised that, although the two countries are in a deepening rivalry over trade, technology and values, Washington "won't force allies into an 'us-or-them' choice with China."
But as we noted yesterday, it seems that during a recent trip to Brasilia, US National Security Adviser Jake Sullivan gave the impression that if Brazil were to ban Huawei from its national 5G auctions later this year, there could be a NATO partnership in it for Brasilia.
The US state department denied that there was a clear quid pro quo — naturally, we shudder to hear those three words again — but Washington certainly appears to be mounting a full-court press to enlist the support of Latin America's largest economy when it comes to facing down the US' "most serious competitor."
For background, under presidents Donald Trump and Joe Biden, the US has been making the (not entirely crazy) case to allies that it's foolish to allow their most critical communications infrastructure to be built by a company under the influence of a government that they could, one day, be in open conflict with. (The US is, of course, hoping those allies will forget credible accusations that the US has itself spied on its allies.)
But the Brazil case is trickier than most.
Yes, far-right former army captain Bolsonaro and his supporters have an intense ideological aversion to communist China. And if a NATO partnership were on the table, it would be great to have ties to the most powerful military alliance in history ]— even if, as Eurasia Group Brazil expert Silvio Cascione pointed out to us, Brazil hasn't waged a war along its borders in 120 years.
Still, the downside for Brazil of cutting Huawei out of its 5G network could be immense. For one thing, all of Brazil's major telecoms companies — which have used Huawei tech for more than two decades — bitterly oppose the move. Last year, they refused to meet with a US official who showed up to talk smack about the Chinese company. That's because Brazil's telcos already use relatively inexpensive Huawei equipment in more than half of their networks, according to a study from last year, and the costs of using comparable European or US-made stuff for new 5G networks would be immense. Brazilian Vice President Hamilton Mourão, seen as a moderating force in the presidential palace, agrees.
More broadly, China could inflict serious harm on the Brazilian economy in response. China has been Brazil's largest trade partner for more than a decade, accounting for about a third of the country's total exports. Much of that comes from Brazil's powerful agriculture sector, which doesn't want to see any ripples in the relationship (even if their friends in the manufacturing sector are furious at Chinese companies for undercutting them on price in recent years.)
But the tradeoffs here aren't Brazil's alone. There's also a circle that needs to be squared on the US side, and it has to do with the Biden administration's "values agenda." This White House has made a point of putting support for democracies back into US foreign policy after the rougher realism of the Trump era. But as Sullivan surely is aware, one of the most brazen assaults on democratic institutions in the world right now is happening in… Brazil.
With polls showing that Bolsonaro — who has badly mishandled the pandemic and is now facing corruption allegations — could get trounced in next year's presidential election, he's spent weeks questioning, without evidence, the integrity of Brazil's voting system. Brazil's highest court is launching a probe into his claims, while he is calling that court's top justice a "son of a whore." This is clearly preparation for a possible Trump-style election rejection next year. And as Cascione has warned, a January 6th crisis in Brazil is absolutely possible.
The Graphic Truth: Who partners with NATO?
The US has reportedly offered Brazil a NATO partnership in exchange for banning Chinese tech giant Huawei from its 5G networks. NATO helps those non-members designated as "partners" build their defense capacity, better manage crises, and benefit from NATO's expertise on counter-terrorism and non-traditional security threats like cyber warfare and piracy. In exchange, partners might be expected to join NATO-led military missions and exchange intelligence. Still, only NATO member countries are entitled to mutual defense by the alliance. We take a look at NATO's partnership tentacles with 40 non-member nations around the world.
Bill Maher is wrong on China
Ian Bremmer's Quick Take:
Happy Monday, everybody. Ian Bremmer here, I've got your Quick Take to start off the week. And today I thought I would address the question, has China won? My friend Bill Maher made news in his always fun and entertaining and quite enjoyable show with a serious rant this past Friday, saying that "we're not a serious people in the United States, we can't do anything, we can't build anything, while China builds their economy and takes over the world. We lost. We just don't know it yet." Here, take a look.
Bill Maher: In two generations, China has built 500 entire cities from scratch. Moved the majority of their huge population from poverty to the middle class, and mostly cornered the market in 5G and pharmaceuticals. It's got to be something between authoritarian government that tells everyone what to do, and a representative government that can't do anything at all.
Now I got to say this, lots of good stuff in there and it's worth a watch, but I don't agree. And yes, I will say so next time I'm on the show.
China's rise is extraordinary. It's now the second largest economy in the world. China is on track to surpass the US economy now in 2028. Though, that's going to push back by at least a couple of years after this year, when the United States grows by probably 8% and China grows by 5% or a little bit less. They're a tech superpower, in relatively short order in some areas of technology, even on parity with that of the United States. But they're still a poor country, quite a poor country. The average income in China just over $10,000, in the United States it's over $50,000. The Chinese market is closed. They don't allow people to get capital out. And the reason for that is because there would be a lot of capital flight for Chinese investors and Chinese people with cash, that understand that the level of uncertainty of what happens to your money in a country like China, a closed economy, is vastly greater, and therefore unsafe, for you for your children for your future, than in an open economy like the United States.
Now, it's certainly true that China builds faster. They invest massively in infrastructure. Anyone that's been to China, and has been there repeatedly, sees how incredibly the landscape has been changing. Top-down, state directed investment. Yes, it's inefficient, but it moves. And it moves on the back of Chinese labor. It moves on the back of the Chinese government driving that strategy. I'd also note that the average building in China, life expectancy of that building before it falls apart, needs to be destroyed and you need to build another one, is about 35 years on average. It's more than double that in the United States. Quality of build, intrinsic corruption, mismanagement, matters a lot in a country that continues to be, yeah, that poor.
Now also keep in mind that after decades of not spending enough in the United States on our own infrastructure, that is about to change. I would make a very strong call that this year, on the back of the $1.9 trillion of relief and stimulus that we've just approved in the United States, on the back of $4 trillion last year responding to coronavirus. Put that together, it's by far the most effective wide reaching economic response of any major economy in the world. The US will also do another $2 or $3 trillion later this year. And if you're worried about the deficit, look, the fact that the United States has been under investing in human capital and infrastructure means we should do that with the world's reserve currency and with low interest rates and with human capital that's very well-educated on average, but has been under invested in. That's going to make a difference.
Further, coming out of coronavirus, best vaccines in the world, most effective new technologies, Moderna and Pfizer. The Chinese also have vaccines that they're rolling out. If you had to take them and you didn't have access to Moderna and Pfizer, you would take them. It looks like they are safe, but they are not as good. And the fact that the Chinese are now saying that they will expedite Hong Kong travel to the mainland if you've taken Chinese vaccines, but not if you've taken the more effective Moderna or Pfizer vaccines, that's not the kind of thing a country does when it's winning.
The Americans have by far the best universities in the world, dominate the league tables. Tsinghua in Beijing will soon enter the world leagues in terms of top universities in the world. And that's really impressive for a country that is as poor as China, but that's it. No other Chinese universities are close. And that's why Chinese families are willing to pay absolutely top rate to send their kids to second and third and fourth tier American universities, because it gives them a shot. Those are the best places to create opportunity in the future. China produces a lot more AI scientists than the United States, and the best of them desperately want to work in American technology companies. They'll make more, the entrepreneurship is there, that's where they can best assure their future.
I mean, I look at even something as simple as air quality. Beijing today, bringing in at 999 air quality index is like through the charts, staggering. Unhealthy to raise your kids in an urban environment like that. New York city today is 26. Because China, a poor country, still has to rely on so much dirty coal to produce their electricity. The United States, we don't. I mean, are there any Americans trying to get out of the US and desperate to live in China? No. While if you're Chinese and you had the opportunity to come to the United States, even though the American political system is deeply flawed, you still really want to be able to come to the US.
I can go on and on. Look, the United States is not the poster child for good governance these days. I've said it before, I will say it again, no one outside the US is looking at the US and saying, "My God, that is the ideal for the way I would want my government, my political system to work." No one's saying that. And in 1989, when the wall came down, a lot of people said that, and that is an embarrassment for the United States. It's something that is deeply flawed, and we need to spend a lot of time working on before we tell other countries how to run themselves. Our political divisions are horrific. The system has sclerosis. The regulatory environment is frequently captured by special interests, against the interest of average American citizens. We need to fix this. We're not fixing this. And as I said, China will become the largest economy in the world. They have 1.4 billion people compared to 400 million in the United States. I mean, it's not all that surprising, but to say that China has won, is emotional. It's not reality. USA.
That's it for this week, be safe and increasingly avoid fewer people. We're getting there.