The global technology industry is hedging its bets. As the United States and China compete for technological supremacy in advanced semiconductor design and manufacturing, software, and other core technologies, global high-tech companies do not plan to pick sides. Rather, they pragmatically aim to compete in both Chinese and U.S. ecosystems regardless of the extra cost and complexity involved. This is the message from 158 senior business executives working for American, Chinese, European, Japanese, Taiwanese, and Korean global high-tech firms whom we polled about the impact of U.S-China tensions on their industry. While these executives regard as inevitable that American and Chinese technological spheres of influence will to some extent separate, they also expect Chinese systems and solutions suppliers to continue to rely on globally sourced (rather than Chinese-developed) technologies. In addition, these executives expect multinational companies of all stripes to double down on their efforts to keep competing in the Chinese market.

With core technologies a central issue in U.S.-China relations, the Commerce Department and other agencies have recently placed greater restrictions on the technologies that can be exported to China, as well as added major Chinese tech companies to the blacklist of firms that can purchase American technology or receive U.S. investment. At the same time, the Chinese government has said it seeks “technology independence”—the vague goal articulated in the most recent five-year plan to reduce the reliance of Chinese high-tech firms on non-Chinese suppliers.

The Biden administration now faces hard choices about whether to continue, accelerate, or alter the policies it inherited from the Trump administration seeking to constrain Chinese access to cutting-edge technology. Indeed, the Biden team is currently carrying out a broad review of U.S. policies toward China that is considering how to best approach Beijing on a range of issues that span military, trade, and technology relations.

Yet for all the geopolitical tension between the United States and China, the outcome will not be driven solely by the White House and Zhongnanhai. How the private sector perceives and responds to those tensions matters a great deal too. Many of the high-tech goods at the center of U.S.-China tensions are manufactured by global companies that compete in both U.S. and Chinese markets or rely on technologies developed or manufactured in the United States and China. Whether these companies commit more heavily to the Chinese or American ecosystems, exit one or the other, or instead play both sides off each other, will have significant implications for the policy options available to officials in Washington and Beijing.

Most respondents in our poll expect both the U.S. and Chinese governments to push policies that encourage greater decoupling, causing the global technology industry to increasingly bifurcate into two spheres. They predict China will continue its traditional industrial policy model of subsidizing national champions in the technology industry and tilting procurement rules to the advantage of local companies. The results of such efforts: Chinese companies will take the lead in some emerging high-tech systems and solutions markets, and while China will continue to close the gap in overall technology capability, the United States will maintain its overall lead in core technology capabilities, such as semiconductors and operating systems. As the U.S. government ramps up competition with China, these executives do not recommend that Washington emulate Beijing through the use of subsidies and politically driven procurement. Rather, they argue for both greater U.S. openness toward foreign capital and tech and a more activist approach to limiting the transfer of key technologies abroad.

Please continue to read this useful research at : https://www.brookings.edu/techstream/how-global-tech-executives-view-u-s-china-tech-competition/