Flashpoints | Economy

Can an Antifragile Mindset Help Reframe the China-US Tech Rivalry?

If removed from its zero-sum framing, the China-U.S. tech competition could actually be good for both countries in the long term.

Can an Antifragile Mindset Help Reframe the China-US Tech Rivalry?
Credit: Depositphotos

Can rivalry be good for countries in the long term? If we examine current media coverage and analysis concerning China-U.S. tech rivalry, there would be little support for this view. Many, if not most narratives are framed negatively, in line with conventional wisdom that rivalry between countries creates disorder and is therefore undesirable.

Furthermore, with buzzwords such as “cold war” and “great game” being used as shorthand descriptions, China-U.S. tech rivalry is being perceived by some as existential for both countries. Politicians and officials in both China and the United States are viewing dominance in tech as synonymous with safeguarding vital national security interests and the key to controlling the future.

China-U.S. tech rivalry may indeed be an existential concern in some sectors and certainly has national security implications, but at the same time, it has motivated both countries to invest in growing their innovation and manufacturing capacities, which in the long term is likely to absorb the impact of future disorder and benefit both countries.

The idea that countries – or any system in general – can gain from disorder such as that created by China-U.S. rivalry was coined by the Lebanese American scholar Nassim Nicholas Taleb in a 2012 book titled “Antifragility.” In his book, Taleb distinguishes between the triad of fragility, robustness, and antifragility. Antifragility stands in opposition to fragility, which Taleb defines as an aversion to disorder. It also goes beyond robustness, which is the ability return to the status quo. This suggests that the long-term survival of any system will depend in part on how antifragile it is.

Although it has created considerable uncertainty and volatility in the short term, China-U.S. tech rivalry can potentially reduce fragility or even shape an antifragile mindset toward policy in the long term. Competition serves as a constant stress-test to the status quo, motivating each country to improve existing systems while reducing or removing any dependencies on rivals.

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If both countries adopt an antifragile approach to their tech rivalry, this will mean recognizing that they need each other to avoid stagnation and using competition as an opportunity to build up capabilities and spare capacity, which would minimize dependence and reduce the potential impact of future disorder.

In the case of semiconductor chips – a focal point of China-U.S. tech rivalry – we can already observe these dynamics at play. While China has long desired self-sufficiency in chip manufacturing, its recent push to develop domestic chip manufacturing can be partly attributed to intensifying rivalry with the United States, which has sought to regulate Chinese companies’ access to U.S. chip technology.

In 2020, for example, the Trump administration added China’s largest chip manufacturer – Semiconductor Manufacturing International Corporation (SMIC) – to the Department of Commerce’s Entity List, forcing its U.S. suppliers to seek approval for licenses to continue exporting their technology.

The Biden administration has maintained this approach to export controls by adding other Chinese chip manufacturers to the Entity List, and has also introduced measures aimed at improving the resilience of U.S. chip supply chains. Furthermore, both houses of the U.S,. Congress have passed bills with provisions to support domestic chip manufacturing.

China has responded to U.S. pressure by doubling down on its efforts to achieve self-sufficiency. During the recently concluded “Two Sessions” – the annual meetings of China’s two key political decision-making bodies, the National People’s Congress and the Chinese People’s Political Consultative Conference – the push for self-sufficiency in manufacturing semiconductor chips was high on the agenda, with further support for chip manufacturers.

A common reading of these developments pertaining to chips is that China and the United States are headed for a “decoupling,” with bifurcated chip supply chains and innovation and manufacturing ecosystems. However, decoupling would neither be realistic nor advantageous for both countries.

This is because China currently drives approximately 50 percent of global semiconductor demand — forgoing the Chinese market would mean a significant loss in revenue for U.S. semiconductor firms. At the same time, China is struggling to reach its goal to have 70 percent of its chip demand met domestically by 2025 and will remain dependent on external suppliers for some time.

Even though rivalry is a motivating factor, the reality is that both China and the United States are also striving toward different goals. China wants to achieve self-sufficiency and reduce its interdependence on a strategic rival with the potential to lock it out of a critical technology, while the United States wants to protect its dominant position, which benefits its companies and workers.

The question, then, is whether these dynamics will persist and influence the texture of China-U.S. tech rivalry more generally. While it is tempting to see antifragility as a silver bullet, there are still limits to how much disorder countries can absorb – rivalry should ultimately not lead to a destructive scenario, such as decoupling.

Even if fears of a decoupling have yet to materialize, it cannot be entirely ruled out either. Ideally, adopting an antifragile mindset can help both China and the United States to look beyond the distraction of achieving dominance in the short term, even if this might seem counterintuitive for two competing superpowers.