The Intelligence: The next stage of the tech wars

This episode explores the ongoing tech wars between America and China, focusing on their impacts on global technology and economy.

1. The U.S. and China are deeply entrenched in a battle for tech supremacy, affecting sectors like AI and green technologies.
2. Both nations employ strategies of subsidies and trade barriers, aiming to curtail the other’s technological advances.
3. China has achieved significant control over solar and battery sectors, posing challenges to U.S. industrial strategies.
4. The episode speculates on the implications of the upcoming U.S. presidential election on these tech wars.
5. Economic and environmental impacts of the tech wars are global, influencing policies and markets worldwide.

1: Introduction

Jason Palmer introduces the episode's focus on the tech wars between the U.S. and China, emphasizing their global impact. Jason Palmer: "Every weekday, we provide a fresh perspective on the events shaping your world."

2: The Tech Wars So Far

Detailed discussion on the origins and current state of the tech wars, highlighting key strategies by the U.S. and China. Hal Hodson: "America kind of started it...China has been subsidizing both green technologies and semiconductors for a very long time."

3: Future Prospects

Exploration of potential future developments in the tech wars, depending on the outcome of the U.S. presidential election. Hal Hodson: "Either Donald Trump or Joe Biden is elected in November...Bidens approach has been to be much more conciliatory."

4: Global Impacts

Analysis of how the tech wars could affect global economic growth and technological development. Ore Okambi: "The fastest way to do it would be to buy the good quality, cheap Chinese components that are available."

1. Stay informed on global tech policies to understand potential impacts on the economy and personal investments.
2. Consider the source and manufacturing conditions of tech products, recognizing the geopolitical implications.
3. Support policies and companies that advocate for fair and sustainable tech development.
4. Engage in discussions about the balance between technological advancement and environmental sustainability.
5. Monitor changes in tech import/export regulations that could affect product availability and prices.

The battles for supremacy in chipmaking and green technology industries are raging on. Re-electing Donald Trump will likely make America’s approach even more anti-China, and a move towards autarky comes with costs. How the landmarked Seaport Tower has pitted preservationists against developers (10:18). And a tribute to the zoologist who really, really loved giraffes (18:18).

People

Hal Hodson

Companies

TSMC, Intel, SK Hynix, Samsung, BYD, CATL

Books

None

Guest Name(s):

Hal Hodson

Content Warnings:

None

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Jason Palmer

The Economist hello, and welcome to the intelligence from the Economist. I'm Jason Palmer. And I'm ore Okambi. Every weekday, we provide a fresh perspective on the events shaping your world.

The age old battle between developers and preservationists is on show at Seaport Tower in New York. We look at the curious committee that decides what gets approved and what doesn't, and ask if the city can build its future without destroying its past. And our obituaries editor pays tribute to Anne Innes Dagg, the woman who really loved giraffes.

Ore Okambi

But first, for years now, America and China have been locked in a tech war, a battle for supremacy in everything from pharma to AI. This conflict started under Donald Trump, for whom China was something of an obsession. China. China.

China. China. China. China. And it continued when Joe Biden entered the White House.

I made sure that we have the most advanced technologies that we've developed and invented, and they can't be sent to China. Both presidents have subsidized cutting edge american industry and put up trade barriers, all while China forged ahead. China is now a world leader in EV's batteries and solar panels, and it has plans to dominate chips, too. Conflict over these industries, green energy and semiconductors is already reshaping relationships and supply chains around the world, and the costs are mounting. America and China have been grappling over the control of advanced technologies for about five or six years now.

Ore Okambi

Hal Hodson is our America's editor, and. It looks as though pretty much no matter who goes into the White House in January next year, Biden or Trump, that conflict, that disruption is going to continue because neither America nor China is going to back off from this struggle. It is far too existential. It is essentially about who controls the future of the planet. Bring us up to speed.

How have these tech wars been going so far? So America kind of started it in a way. You could say that the Chinese started it when they joined the WTO and started to subsidize advanced industries. But this kind of round of fighting was started during Donald Trump's administration. The american strategy has been to try and curb the export of advanced technologies over which America has some control to China and sort of squash chinese use of advanced artificial intelligence.

At the same time, America is subsidizing its own chips market, trying to attract tracked all the world's leading chip companies to build advanced factories on american soil. And that's working. TSMC, Intel, SK, Hynix, Samsung. These are all huge names in chip making, and all of them are building advanced factories in America now with billions of dollars in subsidies from the american government. In green tech, America is in a slightly weaker position because China doesn't just have a massive market into which solar panels, batteries and EV's can be sold, it also has enormous market control via the firms that make those things, companies like longe, BYD and CATL, which are all leaders in solar panels and electric cars.

Americas strategy here is simply to deny chinese firms access to its market via high tariffs and just a generally completely aggressive political environment in which its unthinkable that large chinese installations could be built in America. And also, as with the Chips act, by subsidising the construction of battery factories and EV factories on american soil. Okay, so you've told us a bit about America's strategy, but what about China's? How are they playing into this? In some ways, China is ahead of the game.

China has been subsidizing both green technologies and semiconductors for a very long time, more than a decade. And in green technology at least, this has been an enormous success. Chinese firms now control about 90% of solar panel production, about 80% of battery manufacturing. Their electric vehicle companies are competitive with Tesla and are exporting all over the world. China's play has been to try and produce a lot more.

They have been the ones catching up over the last decade or so, they haven't been responding as aggressively as America has been trying to, for instance, curb the flow of technology into China. There are some things like gallium and germanium exports, which are two metals that are important for green technologies that China has tried to put export controls on. But broadly speaking, China has been a bit more passive than America. It simply continues to build technologies, it continues to subsidize and to try and develop a domestic semiconductor manufacturing industry even in the face of very, very fierce american controls and the addition of allies like the Netherlands and Japan who are working with America to stop the flow of advanced semiconductor manufacturing technology into China. So, hao, what comes next?

What comes next is that either Donald Trump or Joe Biden is elected in November and american firms are much more nervous about the Trump version of the next american government than a Biden one. Bidens approach over the last four years has been to be much more conciliatory. Where the Trump administration before him acted unilaterally and aggressively, and often somewhat chaotically, in the export controls that it placed or the tariffs that it put in place. The Biden administration has built alliances with the Europeans and with the Japanese, with the Koreans, and has tried to make the argument for why it is important for everybody to block the flow of technology into China. But that has also meant tolerating the continued flow of.

Of some technology and investment into China and the flow of products made in China out into the rest of the world. And the big, big difference between a Trump administration and a Biden administration is that a Trump administration looks like it will not tolerate that. You have staffers for congressional Republicans saying things like, no recipient of either ChiPs act money or IRA money. Those are the two big subsidies. Chips is for semiconductors and iras for green technologies.

No recipient of those subsidies is allowed to send anything to China or receive any chinese money whatsoever. There can be not a chinese dollar, not a chinese component anywhere near that american money. So it's a much, much more aggressive approach. And from the chinese side, what comes next is continuing current trends or attempting to. All of their green technology companies are exporting massively all over the world.

They're also installing huge amounts of equipment in China itself. Last year, 2023, China installed more solar panels than America has in its entire history. So that domestic market is a very powerful factor that the chinese companies are able to take advantage of. So that means that these decisions will affect the energy transition. Yeah.

And not just in America, but all over the world. The fastest way to do it would be to buy the good quality, cheap chinese components that are available, whether they're batteries, panels, or EV's. It will be much slower to build up a China free supply chain in the United States. But that appears to be what the Trump administration wishes to do. Sacrifice speed of transition, allow essentially more warming gases to be emitted in the process in order to gain a China free supply chain.

And this isn't just a policy that applies to America, but it's also a policy that applies to countries that are not China, with which America trades. So Republicans in Washington are very exercised about Mexico and Vietnam as a place where chinese components are shipped there and then built into products, and then those are sold to America under the guise of being China free, even though they are not. And so you can expect a crackdown on that as well. And that's going to probably slow down decarbonization across the rest of the planet as well. Well, it sounds like these big industries, chips and green tech, are beginning to split.

Ore Okambi

What might that mean for the world? The first thing it means is slower economic growth. It is just less efficient to have two big systems that produce the same kind of product for different markets when you could be producing them globally. And the IMF calculates that if trade in high tech was to be completely curtailed, that would create an annual hit to global GDP of about 1.2%. That's about a trillion dollars a year.

That's quite an extreme scenario. We're not there yet, but that is definitely the direction of travel. The other thing that's going to be interesting to watch is whether or not China succeeds in its current effort to expand semiconductor production, even though it is blocked from the most advanced manufacturing technologies. Can China do the same thing to older sorts of chips has done with solar panels, batteries and EV's, which is essentially have a manufacturing boom, commoditize them to some extent and sell them cheaply all over the world? If China manages to do that, then America is going to be in an incredibly weak position no matter what kinds of export controls or subsidies it puts in place, because it's going to be competing in all domains with this behemoth chinese manufacturing ecosystem.

Ore Okambi

Hal, thank you so much for coming on the show. Thanks for having me.

Hal Hodson

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I'm currently standing on Water street, which is a little cobbled street in low. Manhattan in the area of seaport. It's a nice sunny afternoon. There are a few helicopters overhead. People are starting to mill around after work.

Quite bustly area and to my direct right, is probably about two or three acres worth of building site, which is where a new high rise tower is. Being proposed to go up. There are a lot of people that, like, own apartments in the neighborhood that. Were like, pretty upset about this going up, especially the people that live over in those buildings, because their view is. Going to be blocked.

It's in the historic district and should. Be part of the historic levels. My thoughts are, you can't stop it. Do I think it's a good idea? It would be quaint.

It would be nice to keep it. The way it is. But half these buildings here are new anyway.

Lizzie Peet

Seaport is a low rise district of New York, which was an old fishing. Quarter and was given protected area status in 1977. Lizzie Peet is a researcher for the Economist. At the moment, this big row is happening over a project dubbed Seaport Tower. What's the nature of the row?

So I think it's important to note the context. First of all, New York is at the moment suffering a pretty dire lack of housing, which has been quite well documented. So every three years, the city releases this housing survey, and in February, the. Most recent one came out, which revealed. A rental vacancy rate at a historic low, just 1.4%.

So the seaport tower comes along as a proposal. It would soar to about 324ft, which, for context, is a bit higher than the Flatiron building, which is a bit. Further up in Manhattan, and it would. Bring 270 new housing units in a really convenient part of town, a significant. Chunk of which would be deemed affordable.

So the row has basically pitted preservationists who want to protect this area against. Developers who argue that it's about time that we build some more housing in this part of town. So what are the preservationists arguments, then? Well, they're basically saying that the costs of this new development would be too high. The area's protected status was actually designated by the Landmarks Preservation Commission, or the LPC.

Lizzie Peet

Whenever it designates an area, that means any construction, demolition or alteration within that area needs its approval. And as we said before, it designated. Seaport in 1977 as protected area. And you can actually find the report still, which talks of it as a trove of some of Manhattan's oldest buildings. With lovely cobbled streets, old merchants counting houses, dockworkers, tenements, a lot of low.

Rise, very sweet little streets. And importantly, it noted the dramatic contrast the area had between the small scale brick buildings and the soaring skyscrapers nearby where Wall street is. And so a lot of preservationists on. The ground fear that this proposed tower. Would permanently change that character, which the LPC pointed out in their report.

So it feels like a fairly familiar argument of, we need more houses, but we need not to destroy what's there. A little bit of nimbyism, right? I mean, you could say that. So the LPC was founded in 1965, and a lot of housing advocates and. Economists argue that since then, its work to landmark certain areas has actually pushed.

Lizzie Peet

Up prices in those areas by blocking construction and creating exclusive enclaves of the well to do. And if you look at some of. The most expensive areas in the city. Today, for example, somewhere like Brooklyn Heights. Which is landmarked, the rents there are pretty extortionate.

So there is obviously a grain of. Truth in that argument. But there are also other factors at play here. A lot of New York is zoned. For example, for detached single family homes.

Lizzie Peet

Particularly areas of Brooklyn and Queens, which. Does really choke out construction of larger and more efficient buildings in those areas. So this kind of row is familiar to New Yorkers, then what's the state of it as regards seaport? So this particular case is really interesting. And has been the subject of quite a long running lawsuit.

So in the 1980s. So this is after it was landmarked. The owner of the same site in. Question at the moment tried multiple times to build a high rise building, and. The commission repeatedly rejected that on the.

Grounds that it would affect the area's character. And then in 2021, the LPC suddenly waved through a tower being proposed by the Howard Hughes Corporation, which is a local developer. And this did raise a few eyebrows. So it got kicked up to the. State Supreme Court, which last January took.

Lizzie Peet

The quite rare step of overturning that decision, basically forcing the LPC to reject the tower. And then in June, an appellate judge reversed that, therefore allowing the tower to. Go ahead and excavations to start. And the latest in this sort of. To and fro between the courts is.

That a local lobby group called the South Street Seaport Coalition has filed a motion with the state's Court of Appeal, which is now waiting to be heard. But, Lizzie, you're a New Yorker here. Where do you think, in general, New Yorkers fall on this kind of question? Whether the old should be knocked down in favor of more housing, cheaper housing? Yeah, I mean, it's a very sort of live question.

Definitely everyone has their own opinion. But I did speak to a bunch. Of preservationists, for example, Andrew Berman, who. Heads Village preservation, which is a local lobby group. And a lot of them are saying to me the same kind of thing, which is that the approval of the seaport tower is symbolic of this slightly more permissive attitude at the LPC, certainly, than it used to be.

And if you look at the numbers, it has made fewer and fewer landmark designations in recent years. That said, though, they're definitely still quite busy and doing a lot of things, so they review about 30 applications a month. But their work to protect the city is definitely facing more pressure than ever. As people struggle to find housing. You mean the LPC itself is getting more pressure?

Yeah, exactly. So there have been a few recent. Incidents, which, again, these preservationists, or people. That worry about the city's heritage, point to in July 2022, the Jacob Dangler. House, which was this quirky 19th century.

Lizzie Peet

Townhouse in Brooklyn, which was actually being. Actively considered for landmarking, was suddenly torn. Down overnight by its owner, which caused a lot of outrage in that community. The LPC said that due to an. Administrative error, it was too late to.

Step in and save the building. And then last year, the Hotel Pennsylvania was razed to the ground despite quite. A lot of widespread objections. The hotel was famous from Glenn Miller's. Six 5000 song, first recorded in 1940 Pennsylvania six 5000.

Lizzie Peet

Incidentally, six 5000 was the hotel's phone number, so that case also caused a. Lot of local outrage. And then even more recently, in December, the commission approved a development next to the merchant's house in the east Village. Which dates from 1832 and is one. Of the city's oldest buildings, which has.

Caused a lot of tension from preservationists who say that construction even just next. Door will cause irreparable structural damage to. The pretty fragile structure itself. And so the city obviously does need more housing. But as all of these rows show.

Finding a happy balance between development and conservation will be really hard. Lizzie, thanks very much for your time. Thanks for having me, Jason.

Ore Okambi

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Giraffes have always caused a sensation. Ann Rowe is the Economist's obituaries editor. In 1487, Lorenzo de Medici had a giraffe in Florence which used to wander around the streets and take fruit from the hands of noblewomen at second story windows. In 1827, Charles X of France brought one to Paris and that sparked off a whole wave of giraffe mania, with women piling up their hair and patterned wallpaper in houses meant to look like giraffeskin. And it's even said by some people that it was a giraffe that inspired the design of the Eiffel Tower.

Something just as momentous seemed to happen to Anne in his dag when at the age of two, she went to the Chicago Brookfield zoo on holiday and saw her first giraffe.

And as she got older, she wanted to find out all she possibly could about them in a properly scientific way. But there was just no book that she could find in her native Toronto. And indeed there didn't seem to be any study done anywhere. In fact, there wasn't one. So she realized she would have to write such a book herself.

But she discovered quite soon that it wasn't much fun just studying animals by looking at bits of them in a lab. It was much more interesting to go out in the field and actually watch how they lived. She approached 13 african governments, wrote to their departments of conservation, asking if she could come over and be sponsored. Everyone turned her down really, because she was a girl.

She rather despaired of being able to do this work until a farmer in east Transvaal, Mister Matthew, wrote to her and said she was welcome to come and study at his place. The only trouble was that she had applied to him, disguising herself as a man signing her letter a Innis. But in the end he decided he would let her stay, especially as she rather intrepidly walked quite a distance after her car broke down to get to his ranch in the middle of the night. She recorded very strange behaviour among the male giraffes. They spent an awful lot of their day not only eating, which was what giraffes spent most of their day doing, but also sparring, having mock fights with each other.

They did it so much that when she later examined giraffes skull, she found extra deposits of bone round the horns. But after these sparring fights, theyd always be rather loving to each other and rub necks and rub flanks and even try to mate. And so what she was observing was actually homosexual behavior among animals. She had known of it before, but all the same, it was quite surprising to see it in the wild. And she also felt extremely embarrassed to have to talk about it to her south african hosts, because they treated her as a young lady who was an innocent and didn't know anything about such things.

When she came back after almost a year from Africa, she was burning with two different ambitions. One was to write up everything she'd discovered about giraffes, and the other thing was to really take on inequality wherever she found it.

Where she next found inequality was in her own life. She got buried fairly soon after she got back and made sure she bought the wedding ring herself, so that she didn't feel that Ian had bought her. But she found that being married was absolute death as far as her academic career was concerned.

The authorities, who were all male at canadian universities, were concerned. Women could only be wives and mothers once they were married. They could not do a professional job, they could not spend their time on science as she wanted to. So the door was shut very firmly. On continuing her academic work, she did manage to do a number of research papers.

And of course, she wrote up what she'd learned in Africa in the first ever scientific study of giraffes at full length, which was called the giraffe. It's biology, behaviour and ecology. But then after that, she simply became obscure. No one knew about her. And this didn't change until a woman approached her to make a film about her life.

With giraffes, you needed to be good. And then they just said, well, you're a woman. She ran into the old boys network. And I think it destroyed her career. And this was called the woman who loves giraffes.

She was given the chance to go back to Africa again.

She was in her eighties then. She made the trip and went back to watch the giraffes as she had watched them before. And so, standing on the low veldt, looking through her field glasses at the giraffe running in the distance, she could reflect that, no, they really didn't cohere together as a herd. And that was a striking contrast to the way the dominant males in canadian universities had followed their herd instinct to debar her back in the bad old days.

Ore Okambi

Ann Rowe on Ann Innis Dagg, who has died aged 91.

That's all for this episode of the intelligence. The show's editors are Chris Impey and Jack Gill. Our deputy editor is John Jo Devlin, and our sound designer is Will Rowe. Our senior producers are Rory Galloway and Sarah Languk. Our senior creative producer is William Warren.

Our producer producers are Maggie Kadufa and Benji Guy. And our assistant producer and lead violinist is Henrietta McFarlane. We had extra production help this week from Jonathan Day and Ben Lowings. We'll all see you back here tomorrow for the weekend. Intelligence.