By Rahul Bhushan, managing director of ARK Invest Europe
China has a knack for surprising the world, and recent developments have underscored the country’s accelerating technological capabilities.
While much of the global attention remains on the role of the US in the tech industry, China’s tech ecosystem is advancing rapidly, signaling a shift in global dynamics – even despite the 60% import tariff Trump has vowed to place on Chinese goods.
Catalysts for reflection
The proposed levy may not stunt tech’s growth in China, with Huawei recently releasing its Mate 70 Pro, a device that challenges conventional views about Chinese innovation and the global tech landscape.
Powered by HarmonyOS Next – a fully homegrown operating system – and a domestically produced chip, the Mate 70 Pro represents a significant step in China’s push for technological self-reliance. The chip, produced without reliance on Taiwan’s TSMC, demonstrates capabilities, such as near-5G performance, that were once thought to be years away for China.
Despite external pressures from US export controls, these challenges appear to have spurred China’s progress, showcasing a maturing domestic tech ecosystem. The Mate 70 Pro exemplifies China’s increasing independence in the tech space, signaling that it is no longer reliant on foreign supply chains to compete at the highest levels.
See also: How will Trump’s tariffs impact markets?
China’s drive for self-reliance extends beyond hardware to artificial intelligence. Alibaba’s Qwen, which launched QwQ, has made strides with a compact reasoning model that competes with larger counterparts.
At one-fifth the size of OpenAI’s GPT-3, QwQ demonstrates that efficiency and smaller models can be effective, challenging the idea that size directly correlates with capability. This progress shows that the gap between Chinese and American AI may not be as wide as many have assumed.
These advancements are underpinned by significant investments in education and human capital. With a substantial portion of Chinese graduates specializing in STEM fields, China has cultivated a pipeline of talent that is well-positioned to lead in industries requiring advanced technical expertise, such as AI, semiconductors, and renewable energy.
American decoupling
China’s rapid advancements, from the Mate 70 Pro to breakthroughs in AI and autonomous technologies, raise questions about the effectiveness of the American decoupling strategy.
While tariffs and restrictions aim to protect domestic industries, they risk insulating those industries from competitive forces that drive innovation.
See also: Will Trump’s return to the White House derail the green agenda?
Shielding industries from global competition could create a complacency risk, while China continues to leverage challenges as opportunities.
The broader trade landscape
Recent tariff proposals have brought trade issues into sharp focus. New proposals targeting key trading partners, including Canada, Mexico, and China, are aimed at addressing a range of global concerns.
While these tariffs might disrupt supply chains and increase costs in certain sectors, they also underscore how trade policy and tariffs continue to shape global economic interactions.
The global monetary system is another area where shifts are taking place. The growing discussion around alternative currencies by some international groups suggests that the landscape is evolving.
Tariffs and trade policies, while reinforcing the economic position of certain nations, can have ripple effects across global economies. As countries explore alternatives to traditional financial systems, the US strategy may need to consider these dynamics carefully.
