Digital revolution. China-US tensions, an opportunity for Europe?

Last updated on January 13th, 2021 at 06:22 am

Digital revolution: UNCTAD, the United Nations Conference on Trade and Development, recently compared the development between the financial crisis of 2008 and the present day, in full coronavirus emergency. The comparison is useful to understand that the current situation is leading to the emergence of new markets and new companies, alongside the deepening of the crisis of other companies and other traditional sectors. The great driving force of low cost, in particular of travel, which has facilitated the spread of tourist facilities and services with very low productivity, will no longer work as before and this will lead, among other things, to a profound restructuring of tourism.

But the infrastructure and access to the network has exploded in the twelve years that separate us from the previous financial crisis, and in this context, the competition between the two giants the United States and China represents a huge challenge for the European Union, which it also tries to give positive answers to the crisis. The reference framework for the tensions between the US and China is characterized by the American will to resist the rise of the Chinese superpower, at perhaps the most delicate moment of the leadership of President Xi Jinping and, perhaps, also of President Donald Trump.

On the other hand, the legitimacy of the Chinese Communist Party (CCP) power lies in the extraordinary economic growth, which has brought dividends certainly distributed in a very unequal way and in the absence of guarantees on individual rights and on human rights of minorities, but so high. to feed a popular consensus without alternatives. Now, after the COVID-19 pandemic’s outbreak, growth forecasts have vanished, accentuating a slowdown trend that can largely be attributed to structural weaknesses in the Chinese economy, including rising debt, unproductive investments, demographic shifts, and renewed government support for inefficient state-owned companies.

However, Western concerns about Beijing’s emerging hegemony, and American concerns, in particular, have never been higher. According to the US Department of Justice, between 2011 and 2018, 90% of state-led espionage cases were attributable to China, and thus 2/3 of intellectual property thefts attributable to the private sector. Xi Jinping’s leadership aims to strengthen China’s international economic, military and technological position, within a strengthened control of the CCP: minorities, oppositions, and areas that do not intend to align are considered dangerous adversaries. To speed up the process, he has for years started an effective model of transmission and interconnection between the civil and military sectors, as the American Congress acknowledges, not without concern.

The coronavirus emergency represents a test case for this strategy. His raid took the local authorities of the province of Hubei by surprise, which was also serious because, in Wuhan, the capital of the province, there is the only biological laboratory of level 4 in China, created with the collaboration of France and where a researcher of international stature developed important knowledge about the “viral reserves” represented by bats and immediately sequenced the SARS-CoV-2 virus responsible for the epidemic. The central government reacted to the initial delay with very drastic and effective measures, blocking the epidemic in the country, with very high costs, but with the declared aim of demonstrating this ability to govern to the world: we recall the images of the dozens of bulldozers that cleared the area where the new hospitals for coronavirus patients in Wuhan would be built in a week.

The United States has grossly underestimated the impact of the coronavirus, not only in health terms but also in political and economic terms. They did not understand that China would play all out on containment, to demonstrate, within the country and abroad, the Party’s grip on strategic problems. But they did not even understand how China intended to leverage the internal lockdown, to accelerate the digitization processes already in full development with the emergence of technological giants of primary global importance and, in fact, the only competitors of the American giants.

With which, however, President Trump did not define any strategic approach during his mandate. It is interesting to note that the reference for the Google-Apple agreement to make the operating systems of mobile phones communicate in order to recognize each other via Bluetooth, has as a regulatory horizon, the protection of privacy defined by the European Union.

The coronavirus has therefore also become a field of competition between the US and China, where it is the second to have gained margins. Also, thanks to an extensive adoption of new solutions and apps dedicated to monitoring, tracking, and control. This effort has translated into a further leap forward from the point of view of Internet penetration in the daily life of the Chinese.

According to a study of the World Bank, investment in infrastructure contributes to the development of productivity and economic growth of a country, increasingly as the integration of international markets growths. The Chinese economy has systematically developed the country’s infrastructure. It was able to do that because it found no obstacles in the property rights of families or businesses, in fact still subordinated to the planning of the CCP, and it wanted to do so by activating the financial capital available to the central government and the Provinces.

In the telecommunications and internet sector, this development has been prodigious, accompanied by an even more significant growth in technological capacity and willingness to innovate, fuelled by an educated and ambitious young population: from 2008 to 2019, internet users were grown by 300% reaching 900 million people. The network-based economy is changing Chinese society more rapidly than it is in the West. Among the population that uses the internet: 1 out of 3 order food online 1 out of 2 buy online, 3 out of 4 make payments online, 9 out of 10 use online streaming.