One of our top risks this year #TheGreatDecoupling. See thread below on why we included this near the top...
(1/10) The Phase 1 trade agreement signed today between the US and China signals a ceasefire in nearly 2.5 year trade dispute. Many issues remain around implementation, enforcement, tariff reduction, etc. All of the really knotty tech related structural issues: pushed to Phase 2
(2/10) Key issues such as subsidies around industrial policy priorities such as Made in China 2025 for 10 key tech industries, market access in sectors such as cloud services, cybersecurity and data governance issues and more have been pushed into the Phase 2 process.
(3/10) With the trade agreement in place, and both sides focused on compliance, pressures building in the many other technology issues in the bilateral relationship will now take center stage, including export controls around emerging and foundational technologies.
(4/10) New US export controls will focus on artificial intelligence, quantum computing, 3D printing, and other emerging technologies. Foundational technologies that could see new controls include semiconductor manufacturing equipment and design tools.
(5/10) In addition, the US export control machine is gearing up to revamp regulations governing US tech content in national security related products. Directed initially at Chinese telecom vendor Huawei, these changes could eventually be extended more broadly.
(6/10) China has just issued a draft of its 1st national Export Control Law, public comments end late Jan. While new draft removes retaliatory provisions for the type of controls US is implementing, the ECL will include lists of controlled items and is in part response to ECRA.
(7/10) In response to restrictions on US suppliers to Huawei and other Chinese tech firms, authorities 1) are taking measures to encourage Chinese firms to reduce exposure to US tech, and 2) improving the tech investment environment to channel more market funding to tech firms.
(8/10) New US rules around the security of ICT supply chains and new powers to review foreign investments in the US are further complicating tech firms efforts to diversify supply chains and drive capital to innovative companies, further contributing to decoupling.
(9/10) These processes mean that companies on both sides of the US China tech competition are "designing out" technology from the other side. This trend will be a huge part of the decoupling, and impact US semiconductor, electronics, and software firms.
(10/10) Other sectors and arenas that are already or will feel the decoupling are STEM related academic research, media and entertainment, and financial services. “Learn more in @EurasiaGroup’s #TopRisks2020 report. eurasiagroup.net/live-post/risk…”
