Executive Summary
This academic paper examines the relationship between the U.S. information technology (IT) sector and China's geopolitical risk. Using an ARDL model on monthly data from 1993-2023, the study finds that advancements in the U.S. IT sector significantly and positively influence China's geopolitical risk. The author concludes that the race for technological supremacy, particularly in IT and semiconductors, is a primary driver of geopolitical instability between the two nations, alongside factors like oil prices and global geopolitical risk levels.
Why It Matters
This document is crucial for defense and geopolitical analysts as it empirically links technological competition, specifically in the IT sector, to increased geopolitical risk between major powers like the US and China. Understanding this dynamic is vital for anticipating future flashpoints and strategic policy formulation.
Key Takeaways
- The U.S. IT sector's advancements significantly increase China's geopolitical risk, highlighting technology as a core driver of bilateral tensions.
- The conflict over semiconductors is central to the US-China tech rivalry, driven by concerns over technological supremacy, economic dominance, and national security.
- Unresolved competition for global IT leadership could lead to sustained economic and political instability between major powers.
- The study uses an ARDL model with monthly data from 1993-2023 to establish a causal link.
- The Huawei CFO arrest incident exemplifies the direct geopolitical consequences of IT sector rivalry.
Strategic Relevance
The study provides empirical evidence that technological competition, particularly in the IT sector, is a significant driver of geopolitical risk between the United States and China. This underscores the strategic importance of technological leadership and supply chain control in modern great power competition, influencing defense planning, economic policy, and alliance structures.