China Power | Diplomacy | East Asia

U.S.-China Trade War and the Fourth Industrial Revolution

A new era is dawning, presaged by dark clouds between the world’s two leading economies.

Jin Kai
U.S.-China Trade War and the Fourth Industrial Revolution
Credit: Pixabay

The first industrial revolution, which commenced in the second half of the 18th century, was driven in large part by technological innovation — the steam engine. It was a prelude to the “machine age” which unfurled the rule of capitalism, driven by Britain, to the whole world. A century later, the second industrial revolution began. The late 19th century marked the beginning of the “electronic age,” during which the old capitalist countries entered a stage of imperialism. The era witnessed later the fall of Britain and the rise of the United States. The third industrial revolution started after World War II and significantly led human society into the “information age” with computing technology, biotechnology, and information technology. The United States has been an almost unchallenged world leader in both technological innovation and political, economic, and military predominance since.

These industrial revolutions profoundly changed the political and economic landscapes of the world several times by significantly altering the productivity and production relations in and among countries, be they close or far to the core of the revolution. Out of all the impacts and consequences brought by the previous industrial revolutions, there were, of course, large-scale wars among major powers, be they hot or cold. These industrial revolutions ultimately changed the way we perceive, live, and act.

Now, we see the commencement of a fourth industrial revolution, and with the exhilarating innovative combination of virtual technology, quantum technology, and intelligent technology particularly on the basis of high-speed Internet of Things (IoT), the fourth industrial revolution may once again “revolutionize” human’s understanding of the world and itself. This seems to be a reasonably exciting moment for all.

However, returning back to the arena of world politics, dark clouds are gathering, particularly between the world’s two leading economies, China and the United States.  Made in China 2025, a strategic industrial plan issued by the Chinese government in 2015, may ultimately be judged as an iconic event that ignited the fuse of the present U.S. trade war on China. 

As a strategic plan made by a major world economy in the face the fourth industrial revolution, China’s plan has been built on significant achievements realized during the past few decades: China holds one of the most complete industrial systems and supply-chains in the world and its manufacturing industry ranks first in the world in terms of size and total volume. More importantly, China has already become a world leader in nationwide infrastructure and telecommunication “interconnectivity,” and this is particularly important for various innovative industrial applications and appliances in the fourth industrial revolution. 

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These, plus with China’s political and policy coherence and consistency, its infrastructure-building capacity, and its huge consumer market, all are part of the inherent advantages that Beijing holds as it participates in the ongoing fourth revolutionary industrial competition among major powers. Yet, China is still far behind developed countries such as the United States in terms of industrial structure, capacity efficiency, and particularly core technologies and key components. 

That may partially explain why the U.S. trade war with China began with a preemptive and targeted strike on China’s high-tech industry. In fact, China has made surprising quantitative achievements and a number of limited qualitative ones as well (like technological achievements by Huawei and other leading Chinese high-tech companies) in its grand national industrial rise. This, however, might have been a strategically alarming issue for the United States. If China continues to realize more qualitative achievements as it indeed has been trying to do so, then who will be the true leader in the fourth industrial revolution that may once again fundamentally change the political, economic, and social landscape of the world?

The same question may also go to China, in a more specific context: How would China perceive and act in the new era that might be deeply changed by the incoming fourth industrial revolution? At least, “common destiny” may help us understand China’s perception and self-perception in the world – a worldview that respects historical and cultural diversity, and sees and the world as an interconnected and open one. Unfortunately, in the current realist world politics, China’s industrial ambitions and its grand worldview still face significant and enduring challenges. As the U.S. trade war with China escalates, the political and economic landscape of the world is undergoing a series of fundamental changes. A question then remains: What role will the United States continue to play?