The G20 in a De-Globalizing World: What's a Middle Power to Do?

The current world order is covered in shadow, and we need to make special efforts to find reasons to remain optimistic. How do we manage the consequences of a world falling apart and countries moving in different directions? This is a big challenge for all countries.

Techno-nationalism Intensifies US-China Conflict

The United States is showing a solid streak of techno-nationalism – as is China.   Techno-nationalism involves invoking national security to frame the economic and technological development of particular products or sectors.  Key examples now include semiconductors, artificial intelligence, quantum computing, and other technologies defined as vital to national advantage.

National security has expanded to include not only military use or civilian dual-use technologies but also those that can generate economic gains and advantages in the era of the 4th Industrial Revolution.

High tech is the most immediate fault line in a geo-political competition that seems to be intensifying.

China’s Made in China 2025 has a strong techno-nationalist core. It is doubling down on self-reliance in key technologies.

US restrictions on semiconductor sales to China and telecommunication equipment bans against companies like Huawei are prime examples.  The US Congress and administration are expanding the number of Chinese companies and sectors viewed through a national security prism, including in environmental and agriculture areas.

It is unclear how far the ensuing decoupling and de-globalization of production and trading systems will extend, but the trend line is deeply worrying.  The mutual interdependence of the Chinese and American economies, which was a stabilizing force in the relationship, is increasingly being framed as a vulnerability.

The global impact is significant and growing, especially for many countries that have benefited from a Rules-based multilateral trading system and deepening globalization of innovation and production.

How are Middle Powers reacting?  Canada and Singapore are interesting comparisons.

Canada remains committed to inclusive multilateral institutions, including the WTO and UN and, at the regional level, APEC and the ASEAN-led processes.  But it is also lining up with the US and “like-minded” friends and allies against China in several areas, including decoupling from China-centred supply chains in critical minerals and putting new restrictions on university-based research collaborations.

By contrast, Singapore is signaling alarm at the downward spiral in US-China relations and calling for a renewed commitment to an inclusive multilateral trading system rather than a division into competing blocs of the like-minded.  Trust may not be possible right now, but stabilization is necessary to “bend the trajectory away from enmity” before a tech Cold War becomes even more dangerous.

Sino-American strategic competition in an Indo-Pacific era is not automatically destined for war.  But its chances are increased as economic integration frays, supply chains are pulled apart, and techno-nationalism extends deeper and wider.