US-China Technological Rivalry and its Implications for the Three Seas Initiative (3SI)

Abstract

Purpose: The article aims to explore the motivations and balance of power in the US-China technological rivalry in the semiconductor and AI sectors. The secondary goal is to explain how changes in the distribution of power between China and the US affect the behaviors and security of the 3SI. Design/Methodology/Approach: The authors adopt the neorealist approach, which focuses on the analysis of structural shifts in the distribution of material power among China and the US and their influence on states' behaviors. The paper focuses on the semiconductor and Artificial Intelligence (AI) sectors as they are considered to play a crucial role in the economic development in the first half of the 21st century. Findings: Microprocessors and AI are identified as the key technologies for successful internal and external threat balancing, ensuring state security in the medium-and long-term. It is also argued that systemic US-China rivalry imposes structural stresses on the international system, and this process also exerts influence on the security in the 3SI region. Governments of 3SI are prompted to reduce the scale of cooperation with China by adopting a more restrictive approach toward the 5G procurement rules, digital infrastructure, and Foreign Direct Investment. China's rising technological capabilities serve as the primary motivation behind the US efforts to create the block of democratic digital economies oriented toward balancing China's rising power. Practical implications: Given the increasingly competitive nature of the international economy, it becomes imperative for state actors to promote the innovation-driven development which guarantees the advancement in Global Value Chains (GVCs) and sustained high growth rates. Originality/Value: The analysis provides a concise assessment of the state of technological rivalry between the US and China as well as insights into how this process may influence regional initiatives and frameworks.