Aug 13, 2019

The great global decoupling

Illustration: Rebecca Zisser/Axios

All signs point to a decades-long cold war with China, one reshaping global alliances, politics and economies.

Why it matters: The trade war is but a very small skirmish in a much bigger and wider battle for global dominance. It’s easier to see this cold war turn hot than turn off. And, for the first time, you can see the possibility of China and America decoupling — creating two distinct, rival global systems and power structures. 

The big picture: Beyond trade, the 2 superpowers are competing on intellectual property and technological mastery, political influence across the developing world via economic assistance (China's Belt and Road Initiative), diplomatic agreements, multinational institutions (Asia Infrastructure Investment Bank), and military sales (missiles, subs, drones, training).

  • Collectively, this translates to a competition of political systems — a new cold war.
  • One of the clearest manifestations of this is in tech: The internet is "splitting in two," as the Wall Street Journal put it, and giant companies from the U.S. and China are racing for advantages, hidden and overt, around the world.

Between the lines: Bill Bishop of Sinocism tells me that President Xi Jinping and his team have concluded that China is far too reliant on the U.S. for technology and agriculture.

  • So they have accelerated efforts to become self-sufficient, while also diversifying their reliance away from the U.S.
  • Even if there is a trade deal, that shift will not reverse.

Now, China is blaming Washington for its own economic and internal strains:

  • The NY Times reports from Beijing that "hostility toward America," by Chinese officials and state-run news organizations, "has escalated ... in tandem with two of China’s big problems: a slowing economy complicated by trade tensions and turbulence in Hong Kong that has no end in sight."
  • "Beijing also does not appear to see an end to its differences with Washington over the Chinese telecommunications giant Huawei, which was blacklisted by the Trump administration as a security threat," the Times added.

What's next: On Nov. 9, it'll be 30 years since the Berlin Wall fell. For most of that time, the U.S. had no real rival for global supremacy. Now, America is in a fight it could lose.

  • "All roads used to lead to Rome. Now they lead to Beijing," Oxford professor of global history Peter Frankopan writes in "The New Silk Roads," out in March.
  • "We are living in the Asian century already."

The bottom line: The U.S. lost its way after the Cold War, creating a crossroads similar to the one after World War II: a multidecade civilizational struggle.

Go deeper: The forever trade war

Go deeper

Tech's long hot summer of antitrust

Illustration: Aïda Amer/Axios

Google, Facebook and other tech giants face a summer of regulatory grilling as long-running investigations into potential anticompetitive practices likely come to a head.

The big picture: Probes into the power of Big Tech launched by federal and state authorities are turning a year old, and observers expect action in the form of formal lawsuits and potentially damning reports — even as the companies have become a lifeline for Americans during the pandemic lockdown.

Palantir CEO hits Silicon Valley "monoculture," may leave California

Palantir is "getting close" to a decision on whether to move the company out of California, CEO Alex Karp said in an interview for "Axios on HBO."

The state of play: "We haven't picked a place yet, but it's going to be closer to the East Coast than the West Coast. ... If I had to guess, I would guess something like Colorado."

A reckoning for Russia's space program

Illustration: Aïda Amer/Axios

SpaceX's first attempt at launching astronauts from American soil this week is a historic moment that will stress the decades-long relationship between the U.S. and Russia in space.

Why it matters: Since the Cold War, the U.S. and Russia have collaborated intimately in space. As the U.S. regains the ability to launch people with its own rockets, the future of Russia's already struggling civil space program — and how the U.S. will collaborate with it — is unclear.