How Should Allies Respond to China’s Technology Competition?
When the Cold War ended, many envisioned a new "end-of-history" era where almost every nation would embrace free trade and comparative advantage—producing what a nation is good at and importing the rest.
But as Rob Atkinson writes for the United States Studies Centre, China and President Xi Jinping had other plans: to dominate the world in a wide array of technology-based industries, both current and emerging, and to use a wide array of economic and trade practices to achieve that goal. And that means Australia — and its core allies and partners — require a new framework for economic and technology statecraft vis-à-vis China.
When China was admitted to the World Trade Organization (WTO) in 2001, a mercantilist fox was let into the free-trade henhouse. China never meant to be a free trader or follow WTO rules. China used the WTO to gain free access to foreign markets, especially US markets, while actively engaging in trade practices that breached WTO norms. This included massive subsidies for domestic producers and forced technology transfers as a condition of market access — neither of which can be effectively prosecuted under WTO rules. The hope for China to embrace a rules-governed, market-based global trade system will not materialise as long as the Chinese Communist Party is in power.
So, what does China want, and how should allies respond?