Technology Cold War: Causes, Effects, Way Forward

Technology Cold war

The World is set to witness another cold war in the 21st century. The 5G technology and race to dominate it has been intensified with the US-led West and China engaging in a multilayered competition. The US President has called for international blacklisting of Huawei which is right now leading the 5G tech research and implementation. Banning of Chinese Apps on the backdrop of the COVID-19 pandemic is the next step in line with the ensued cold war.

Technology Cold War

What is the Cold war?

  • The cold war refers to the confrontational relations between the US-led liberal alliance and USSR led communist alliance that largely impacted the world order post World War II till 1990-91 (Disintegration of USSR).
  • The cold war defined largely the relations between the countries around the world as the world was divided between two poles.
  • The Cold war is called so because there was no large-scale military confrontation between the two blocs but there remained a consistent threat of it. The two blocs just marginally avoided a major nuclear war when the Cuban missile crisis happened.
  • The period was characterized by mutual distrust, intense competition in every field possible such as military, economy, space, culture, etc.
  • But after the disintegration of the USSR, the US has been arguably single pole of the world and the was no competitor to it for a decade and a half.
  • But due to the rise of China as a revisionist power who challenges the US hegemony (supremacy) the world is about to witness a full-scale cold war according to experts. And the current technological cold war may be the beginning of that.

What is the Technological cold war?

  • The US has been the technology superpower since the last century. Its technological domination can be seen from the fact that the first three largest tech companies are found to be American Apple, Microsoft, and Google. The US leads the world in Space, Superconductor technology, military equipment, etc.
  • They have virtually dominated singlehandedly in research and development, innovation, technology for the better part of the last century.
  • But in recent times China has been challenging this tech dominance with exponential growth in quantum computing, Artificial Intelligence, telecom, etc.
  • The big Chinese companies like Alibaba, Tencent, Huawei are fast growing up to be the biggest companies in the world.
  • This Chinese surge in the Research and Development has threatened the US dominance and there are debates that whether the US can maintain its preponderance in the technology sector.
  • The US has also been wary of the Chinese rise and has been engaged in a battle to contain the Chinese surge and maintain its supremacy.
  • The recent US administration stance about Huawei’s global expansion and the banning of Chinese apps showcases the US determination about containing Chinese footprint in the global tech-ecosystem.
  • Recently the US has moved to block China’s access to chipmaking tools and designated Huawei, ZTE as national security threat With the 5G tech-war imminent, the technology cold war will impact other countries including India.
  • In retaliation, China has also taken steps such as Closing down of US consulate etc. But this confrontation is set to intensify.

Most probable and repeated topics of upsc prelims

Has the US started this technology cold war?

  • The Chinese economic policies have been driven by domestic manufacturing protected from outside competition and with full state backing.
  • China has largely benefited from global trade regimes such as WTO and has used them fully to bring about huge growth despite of its protectionist policies.
  • China has traditionally resisted allowing American big-data companies such as Facebook and Google to operate within its jurisdiction.
  • Despite that, the American tech giants have earned significantly in the Chinese market and Vice versa.
  • The latest US action against Huawei marked the first real prohibitory action by the US (western government for that matter) in nearly two decades.

Why Huawei is considered a threat?

  • Huawei is founded by an ex-Chinese Army man which grew from a small company reselling imported items to being one of the global leaders in mobile manufacturing.
  • Huawei is currently thought to be leading the 5G research and implementation.
  • In 2017 China passed National Intelligence Law mandating all Chinese companies and citizens must help the government to assist the national intelligence effort. China Calls it a national security measure.
  • But the fear is, if Huawei supplies any country’s 5G network, Huawei could pass the data to the Chinese government.
  • The US-led West believes that Huawei is a pawn in the hands of the Chinese government and engaging in global espionage. In a future where our society, economy, and overall life are governed by digital technology, Huawei backed by the Chinese government could pose a serious threat according to the US experts.
  • Also, US apprehensions about china indulging in intellectual property theft and violating international Intellectual property rules.

What are the US-led Western actions against Chinese tech companies?

  • Recently, The US administration barred any company which uses US technology from dealing with Chinese companies.
  • US administration has released an executive order banning Tik Tok and WeChat (Courts rescinded it later). WeChat banning is of importance as it hits the Chinese citizens living in the USA as it is an important part of their lives. Some run their businesses through WeChat.
  • The experts fear that using Apps like WeChat, The Chinese government censors’ discussions and information sharing about key issues such as the COVID-19 situation in China.
  • The US allies like the UK have also moved forward to contain Huawei’s expansion when it banned Huawei and decided to remove Huawei in 5G networks completely by 2027.

What are the implications of a technology cold war?

  • Experts feel that the imminent tech cold war is largely because of distrust and can be more impactful than the previous cold war.
  • The repercussions of the cold war will be accentuated by the technological advancement that has taken place. Hence it is in the interest of both US and China to solve the issues and make a truce.
  • The tech cold war will hit the global supply chain of technology equipment. It has already hit the semiconductor industry
  • Observers see the technology cold war being extended beyond US-China and compel other countries such as India to effectively choose between the US or China.
  • It is seen as a geopolitical struggle over technology that threatens to divide the world into two distinct technological bloc
  • This could lead to blocs attempting to block each other’s access to its advanced know-how.
  • This tech war is essentially a data war as the bloc which has access to most of the data will have a strategic edg Many Countries have recently called for data sovereignty.
  • The EU implemented its General Data Protection Regulation in 2018. China has passed a sweeping Cyber-Security law and India is working on major data protection
  • Though the US is slow in data regulation, it still controls the industry and its network architecture that handles global digital flows.
  • According to the European Centre for International Political Economy’s Digital Trade Restrictiveness Index, the overall degree of data control has doubled in the past decade.
  • As in 5G technology development, Huawei is leading the race, any viable 5G rollout will depend on Chinese Firms, but the trick is America leads the Chipmaking industry and Chinese firms will need the American semiconductor manufacturing sector to move forward.
  • Hence it will be a very tricky cold war as both blocs will be wary of each other and also need each other.
  • Experts feel that the US-led blockade of Chinese firms will in the long run be harmful to themselves as it will trigger bigger efforts by the Chinese to attain self-reliance in chip and another tool making.
  • If that happens it will create further distrust as in such cases others will lack information about Chinese equipment entirely.

What are the effects on India?

  • As the tech cold war begins, India holds an increasingly volatile position at the center of this geopolitical struggle.
  • US administration has always seen India as a geopolitical counterbalance to China. The border issues in Ladakh has widened the rift between the two countries even more.
  • Recently, the Chinese interest in the Indian digital market has increased. With Alibaba and Tencent leading the way, Chinese venture capital investment in India total $4.3 bn in the last three years.
  • Many tech companies and startup such as PayTM have Chinese investments. Chinese investment forms an important source of investment for a large number of startups.
  • Recent standoff in Ladakh and COVID-19 induced bad reputation made India to take precautionary measures. It introduced measures in FDI to negate any hostile investments in Indian companies by the Chinese.
  • India also banned over 110 Chinese apps sitting data security and snooping issues. India has also clearly indicated to its telecom industry to avoid Chinese equipment in future investments.
  • It will hurt Huawei the most as it has been one of the three largest telecom equipment suppliers in India.
  • With the growing tech war, India is set to be one of the main turfs of it because of the large digital market too has.
  • The attempts to block Chinese investment has been beneficial for American companies. Facebook recently invested $5.7 bn in Jio platforms. Google also pledged $10 bn of investments in India as a part of an India digitization fund.
  • India has been moving closer to the US in the past years. The USA’s strategic embrace of India has a give the potential to attract more investment in sunrise sectors.
  • Yet, the downside of this should not be overlooked. India’s harsh turn in sentiments against China can be seen as an unpredictable nature of India’s emerging market. This could make investors wary of long-term investments.
  • The recent case of Vodafone India’s warning to shut India operations after the SC rejected deferment of payments.
  • Though US-India relations are closer than before, the Chinese response must not be undermined. India depends on China for many of its Industries, most importantly the pharma companies that depend on API imports from China.

Way Forward

  • Just as oil opened new possibilities in the 20th century, data has become the lifeblood of trade in this century.
  • Data flows increasingly underpin trade in physical goods, too, supporting complex global value chains and emerging technologies such as blockchain, artificial intelligence, and the Internet of Things
  • The amount of cross-border bandwidth in use increased 148 times between 2005 and 2017, according to Mckinsey and Co.
  • Different countries have different views, capabilities in data protection, and technology. The world is more complex than it was during the previous cold war. All countries cannot afford to be ground in another power struggle.
  • The data protection regimes and data sovereignty clauses will not be efficiently applied in many countries due to a lack of capabilities.
  • In such a case, the middle countries will become data colonies of tech superpowers. In the age of democracy deficit in already existing global institutions, this potential seems very scary where some tech superpowers will control other middle and underdeveloped nations through data monopoly.
  • The Artificial Intelligence and Internet of Things are facing such questions and without equitable distribution of benefits, those who have command in these areas are set to rule the world.
  • The World is grappling with the issue of COVID-19. Though most of the countries have opened their economy, the vaccine is nowhere near. Plus, the talk of vaccine nationalism is making the post-vaccine development phase critical.
  • Also, many have warned that this pandemic will not be the last one and many more will come and without preparedness, world blockade will be the only option.
  • If the distrust continues, many flashpoints could lead to military confrontations. Ladakh has provided one already.
  • The world already has so many problems. The rising de-globalization will lead to the fragmentation of common efforts against global warming, terrorism, and in case of migration.
  • There must be a global democratic effort in diffusing tensions. Sane leadership can provide an effective direction where the US and China can peacefully co-exist and gain from each other’s expertise.
  • The Osaka Declaration of G20 last year can be a building block as it affirmed international dialogue in the digital economy to maximize the benefits to the world.
  • The US and China are home to most of the big-tech companies. Instead of treating each other’s firms as competitors and national security threat leaders in both countries should seek industry consensus and best practices can be used to establish global standards.
  • The secrecy and mistrust only fuels confrontation. There should be open discussion as happened in the détente phase in the previous cold war. Treaties based on the New Start treaty, SALT treaties can be directives in confidence-building in current times.
  • The alliances like alliance for multilateralism can prove to diffuse tensions and prevent the division of the world into two camps.
  • For India, it is important to not bandwagon under any camps based on confrontation. We must maintain our strategic autonomy in global affairs.
  • For one we must increase our capacity and make policies to make companies store Indian data safely within India only. At the same time, we must improve state capacity to secure local data from global snooping and espionage.
  • Secondly, India’s developmental demands cannot be overshadowed by the global power rivalry. It must work to maximize the benefits that the current situation brings but at the same time, it must work to defuse tensions.
  • A peaceful, multilateral world is in India’s interest. At the same time, a democratic global order is essential for a country like India. Any escalation in tech-cold war is not in India’s strategic interests.
  • India must work with neutral countries to build consensus against the cold war and use platforms like the UN to build dialogue between the warring countries.


The world is at an important crossroads now. It must be united and fight against common threats. The technology is of destructive potential when it comes to confrontation. We must understand it and use it for the benefit of humankind and not fall prey to distrust and the dangers of wars. The technology cold war as it as stared has only instability to offer.

Practice Question for Mains

The Technology cold war between the US and China is both blessing and a curse for India. Elaborate (250 words)

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