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‘Curbs against entities related to Chinese military should not be unwound to increase political engagement’

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China has officially rolled out its export curbs on gallium and germanium-related products, a retaliatory move against the restrictions imposed on its semiconductor sector by countries such as the US, Japan and the Netherlands. In an e-mail interaction with businessline, Danielle Cave, Director-Executive, Strategy & Research, Australian Strategic Policy Institute, who is also one of the authors of The Critical Technology Tracker report (https://techtracker.aspi.org.au/) that caused quite a stir as it highlighted how Western democracies are losing their global technological edge to China with the latter’s lead in 37 out of 44 technologies, shared her insights on multiple facets of the US-China trade war and other related issues. Edited excerpts:

The US-China trade war seems headed for a crescendo with both countries imposing curbs on export of various products and raw materials. What kind of impact these moves would have in critical and emerging technology domains. In other words, would the measures against China succeed as a weapon against the ‘Peak China’ phenomenon?

Trade is a necessity and inherently positive for all countries and societies. But where a balanced trade relationship becomes imbalanced and a dependency forms, the vulnerabilities grow and it can enable economic coercion. We have seen this through Europe’s relationship with Russia, and in particular, energy dependence. And, we see it through many relationships in the Indo-Pacific with China. For this reason, limiting the existing strategic competition to one of US-China tensions does not do justice to the reality that the competition is between open societies and authoritarian regimes.

The days of the free market in which governments do not get involved in incoming and outgoing investment are over as Beijing’s fusion of economy and security and civil and military sectors means the market is no longer free. It requires governments to enable trade but insist on the undertaking of due diligence. This is absolutely vital when it comes to technology — no longer can western or open society universities, research institutes and governments only understand what their objective is with tech development and collaboration. They must also understand who their international partners are and what their intent is. So it doesn’t need comprehensive decoupling.

Rather trade, investment and collaboration with due diligence means doing so with trusted and reliable partners and working out those foreign entities that are too high a risk to do business with. This is what the EU and US are calling de-risking now (and which is the focus of the EU’s economic strategy). This can also be referred to as selective decoupling. Australia started this with the banning of high-risk vendors in 5G, back in 2018. This is why understanding the intersection of critical technologies and security is so important — what are those technologies that impact security and society and must therefore only be worked on with trusted and reliable partners. Groupings like AUKUS [trilateral security pact between Australia, the UK and the US](especially through Pillar 2) and the Quad are trying to do this in different ways. Democratic governments must learn the lessons of the past and ensure they place greater importance on diversification, secure supply chains and long-term sovereignty than they do on short-term economic gain. This means, for example, that ongoing tech restrictions on those high-risk vendors or those entities linked to the Chinese military (for example) should continue, and such restrictions shouldn’t be unwound in an attempt to increase trade or political engagement.

Should the tit-for-tat curbs (more from the Chinese side) be read more like a signal of what could follow if US and other countries were to stay on collision course with China and therefore act as a deterrent?

This is not tit-for-tat but consistency…and it is consistent policy making and political responses that is the key. This consistency is required to help deter Beijing from increasing its malicious activity. Inconsistency incentivises more malicious behaviour, including economic coercion, cyber intrusions, foreign interference and territorial encroachment.

There is also a body of opinion that suggests that the curbs would affect the US more, which perhaps is exemplified by Nvidia’s comments that ban on sales of AI chips to China would cause “permanent loss of opportunities”. Do you agree?

On chips, I think this has been coming for a long time but I really don’t have depth on the industry to comment on Nvidia’s comments, although I think some of my points above apply.

Some experts have suggested that China could shift some of its units for making low- and middle-range semiconductors to SEZs in places like Hainan, which then could be monitored by the global community. Will this work? Any other suggestions on options that could be explored by both countries to deescalate the situation.

It’s an interesting idea and I have seen it bounced around. Perhaps it could work for some countries, in some limited circumstances. But hard to see that gaining traction when it comes to critical, sensitive and/or defence technologies…at least those being built by/for the US markets, and other select markets. The trust is just not there to support such a monitoring system.

You were bullish on India’s prospects given the progress it has made in critical technologies. You had also highlighted India’s image as a “trusted tech partner”. What should India be doing to consolidate its position and surge ahead?

India needs to enhance, retain and regain more of its talent pool to leap into the top tier with China and the US. India can drive practical outcomes from Quad and play a powerful role in setting international technology standards, especially in areas where it excels, such as AI, computing and energy technologies. A natural starting point is our recommendation for a streamlined technology visa programme to enable STEM talent to study and work among Quad countries. India should also look to build stronger partnerships with other countries in the Indo-Pacific, including South Korea and Taiwan. I would also throw out there that India should explore complementary technology partnerships with like-minded countries. Russia, despite being a long-term partner for India, doesn’t fall into this basket. If you look at our Critical Tech Tracker work and you look at Russia’s performance you find they are high on many technologies for ‘quantity’ of research output but never for ‘quality’. A notable insight from this work was that many countries, especially Russia, for example, frequently perform well in many technologies according to research volume but drop below the top 20 when evaluated by the H-index or their share of top 10 per cent of publications. High volumes of low-quality research isn’t the pathway to success in technology innovation.”

Published on August 4, 2023





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