Contested globalization: US and EU responses to China’s rise as a high-tech power

Abstract

The rise of China has led to a series of conflicts with the leading Western countries. The reasons for these disputes are that Chinese corporations have become serious competitors for US and European companies and that there are diverging approaches of governing the market between Western and Chinese power elites. In China, political and economic power are organized differently than in the US and the EU. The party-state is the (partial) owner of important companies and openly intervenes in the national economy by five-year plans. Furthermore, the Communist Party of China is engaged in companies as a regulatory authority. At the same time, the party-state organizes its rule through output legitimacy and functions in many respects as an indicator-driven, meritocratic system. The expansion of hybrid Chinese party-state capitalism is therefore leading to a new system conflict. Economically, emerging Chinese (state-owned) enterprises are becoming competitors. Politically, the control of sensitive data flows and infrastructure networks is resulting in contention. The article analyzes current conflict dynamics between the US resp. the EU and China in the areas of foreign trade, investment, high technology, and industrial policy. Comparative political economy and world-system analysis guide the analysis. In each case, there are differences in the policy responses: The US has relied on aggressive trade and sanctions policies, while the EU has reacted more defensively. It is shown how these conflicts could change China’s state-driven globalization strategy and contribute to the restructuring of the world economy.