USA vs. China: A new world order in the digital era?
With China's new digital power, the struggle for geopolitical dominance is accentuated. The US sees itself challenged by China. Politically and economically, the effects are already clearly noticeable. A white paper by Vontobel and Eurasia Group analyzes the implications for financial markets.
For decades, the US and Europe have been working to attract Chinese investors and to build and expand their trade relations with China. From Nixon to Obama, political leaders hoped that intensive economic ties would bind China more closely to Western values, especially to our understanding of democracy and free market economics.
New technologies, new freedoms – and misunderstandings
Meanwhile, China has become a world power in trade and is holding the mirror up to the West itself. To the astonishment of many actors, China’s digitization did not lead to the long-awaited opening, but rather to a new form of technology-supported governance: a development that is diametrically opposed to the Western understanding of innovation and is revealing of the cultural divides between China and the West.
Who will define tomorrow’s rules of the game?
The China of today wants to have a say in world politics on equal terms with the USA. In this respect, it is benefiting from a balance of power that, economically and militarily, is shifting less and less in favor of the United States. In this stalemate, digitization will tip the scales – and become the arena of an actual arms race: Who controls whom? And who is being controlled without knowing it?
We are witnesses in the struggle for the next era of world order
With China's new digital power, the struggle for geopolitical dominance is accentuated. It is no longer about individual battles such as the Trump administration’s campaign against the technology company Huawei. The real conflict is about which of the two political systems is more successful – in all respects. Today we are witnessing an arms race that has erupted as a result of values that are fundamentally different and deeply rooted culturally.
Who will be the new superpower in the digital age? The race is in full swing: technologically, economically, but also militarily. The US sees itself challenged by China in this arena; politically and economically, the effects are already clearly noticeable – with all their risks and opportunities. All the more reason why investors should keep an eye on and analyze the situation.
Exclusively via vontobel.com: The complete white paper “The Next Digital Superpower”
Read our white paper on this topic, written by Vontobel together with experts from the American think tank Eurasia Group, known for its geopolitical analyses. In this white paper, our experts analyze the structures of the new power relationships and their historical conditions. They subsequently outline three scenarios for the future of the relationship between the US and China, and their macroeconomic implications for investors.