Illustration: Sarah Grillo / Axios

The global economic and tech system appears to be breaking in two, one led by the U.S. and the other by China, in an unfolding new world resembling the competing geopolitical spheres of the Cold War.

The big picture: One of the eeriest features of this apparent future will be new virtual and legal "borders," a formalization of attempts already afoot by the U.S. and China to bar the other from the sphere they themselves control.

  • "We will reborder" to keep unwanted Chinese companies out of U.S.-led parts of the world, Janice Gross Stein, political science professor at the University of Toronto, tells Axios.
  • "China is already rebordering," walling off its people from the global internet, Stein said on the sidelines of the Halifax International Security Conference, a gathering of military and security officials from the world's democracies.

Driving the news: Lying behind this coming world of new borders is, from the U.S. side, a more palpable realization that China's rise means a sharp diminution of U.S. power and possibly living standards.

  • President Trump has declared a trade war and demanded that Beijing stop trying to be No. 1. But China is pushing back, a dynamic made most recently clear in Papua, New Guinea, over the weekend, where the U.S. and China bickered publicly in a way not seen between great powers since the actual Cold War three decades ago.
  • The main battleground for the future is tech — the race to dominate artificial intelligence, robotics, quantum computing, green energy, electric cars, and so on. With the trillions of dollars and military power to be gained through these and other technologies, China is out to build itself up and preserve its closed political system; the U.S. objective is to maintain the global dominance it has enjoyed since World War II.

In the West, the rebordering, as Stein calls it, will take the form of regulation of technology companies — not to protect consumer privacy, but for national security. Stein sees a change in public and government perception in which advanced technology is seen much more clearly as having dual use — for both consumers and armies.

With the shift in attitudes, regulation will come "in a way that would have been inconceivable five years ago," Stein said.

"The regulatory state is coming back."
— Janice Stein, University of Toronto

Some say that Congress itself may not have the mettle to crack down so hard:

  • Nicholas Burns, a former senior U.S. diplomat and now a professor at Harvard, tells Axios that there is a "trust-busting spirit coming out of Europe," but that he is not certain it will spread to the U.S.
  • And Sen. Chris Coons of Delaware said Congress will talk about regulation, but ultimately may not approve anything. "We will haul [the tech executives] in front of us and yell a lot," he told the conference.

But, just on privacy grounds, the ground seems to be already fertile for regulation:

  • In a poll yesterday by SurveyMonkey for "Axios on HBO," 57% of American adults agreed that social media giants are hurting democracy and free speech. And 55% want the government to regulate them.
  • Apple CEO Tim Cook, speaking to "Axios on HBO," called regulation of Big Tech "inevitable" because "the free market is not working."

What's next: Notwithstanding Cook's remarks, expect tech executives to fight. As of now, they say they are only superficially monopolistic — that they fiercely compete among each other for ad dollars, and for the future of AI. Sooner than many people presume, they say, there will be even more savage, direct commercial competition with Chinese big tech companies. But that is the same dynamic that thinkers like Stein think will bring the sharp new tech divide, separated into U.S. and Chinese zones.

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