Why is the US-China confrontation heating up?

Why is the US-China confrontation heating up?

About 10 years ago, it was the Americans who started funding projects to revitalize the old Silk Road — the land route connecting China to Europe. I specifically remember how an American official told me not to waste my time with projects on Israel-Palestine, and to look more closely at Central Asia. People were doing things like sending test containers over Silk Road train tracks just to see how much time it would take. Projections at the time made a striking case. Companies — many of them American — were going to reorient their supply chain logistics according to this plan. 

The Chinese took it and made it their own. A few years ago, President Xi Jinping put forward the Belt and Road Initiative, a vision in which planners in Beijing want to direct $26 trillion by 2030. Today, the Americans are talking about Chinese colonialism in Asia, warning against thinly-concealed plots of Chinese hegemony. This is a profound change in the rhetoric.

This week, China was celebrating the 40th anniversary of the Great Opening, the process that was started by Deng Xiaoping on Dec. 18, 1978. China’s transformation was a monumental historical event – it lifted around 800 million people out of poverty. That’s how the world achieved the Millennium Development Goals. The Americans were initially in favor of this process, mind you, thinking that it would benefit them somehow. Yet now the remarkable success of the Chinese transformation process seems to have raised concerns in Washington. This isn’t just about Trump, it is a shift in how powerful people in the West see the world.

What is the reason for these concerns? I think it is about the role of China in the new industrial revolution (NIR). Let’s look at a simple indicator: Unicorns. These are tech startups that have more than a billion dollars in investment.

Look at a list of unicorns since 2010, and 26 percent of the 184 unicorns at the time (48) are Chinese. Of these, 60 percent entered the list either in 2017 or 2018. China has become a land of unicorns, and with China, the time for a startup to go beyond the $1 billion limit has profoundly shortened.

How did this happen? Simple. The 1.3 billion Chinese produce more data than 326 million Americans. Data is an incredibly valuable commodity, and in China, it is also state property. That is not the case in the U.S. Data is the new electricity in NIR, from AI to biotechnology. Chinese are now using their data as an industrial policy tool, mind you. All this makes the West nervous, and opens new possibilities for the developing world.

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