Two books have been published over the past five years that analyze the political and economic relationship between the big tech corporate sector and the U.S. national security state. The first, written by Ho-fung Hung, Clash of Empires, offers an explanation for why the U.S. national security state pivoted away from an economic engagement strategy with China toward a strategy of militarized confrontation. Hung points out that there was always a push from the U.S. national security state, or the military-industrial complex, to categorize China as a security threat and to oppose renewal of China’s most-favored nation status as early as the 1990s. The geopolitical interests of the U.S. state was reinforced by the interests of firms in the U.S. that perceived themselves to be especially vulnerable to trade with China, such as steel and aluminum, and those firms that did not have any investments or plans for investments in the China market. They were joined by U.S. labor federations such as the AFL-CIO, which also opposed renewing China’s MFN status. However this coalition during the 1990s was out-financed and outmaneuvered by a much more powerful cohort of domestic lobbyists representing leading sectors of global capital. This group of transnational capitalists spent big and worked with Chinese political officials to mount an effective lobbying campaign that included ATT, GE, IBM, ExxonMobil, Automobile companies, farm businesses and even sectors of the military-industrial complex that were interested in pursuing more aggressive sales of aircraft (Boeing) and satellites (Hughes) to China.
However, this balance of political forces favoring economic engagement with China changed dramatically after the global capitalist crisis of 2008, for reasons that are detailed and analyzed by Nick Srnicek in his book, Silicon Empires, Polity Press, 2026. Both Hung and Srnicek locate this shifting political landscape to a calculation by transnational capitalists that the engagement strategy with China was becoming too costly by the 2010s, a realization that emerged gradually but ultimately explains why the U.S. national security state pivoted toward a strategy of militarized confrontation.
What is most striking from Srnicek’s book is the careful documentation of how both the U.S and Chinese governments facilitated the rise of their respective big tech sectors by policies that enabled these sectors to consolidate into large-scale oligopolies and to expand their reach as global powerbrokers. The U.S. took the lead here by handing big tech decades of publicly subsidized telecommunications infrastructure for free in the 1990s, then encouraging big tech’s global expansion through aggressive backing from the U.S. government, which included domestic and global support for deregulation of the big tech sector.
This tech-state relationship was initially built around U.S. support for China’s entry into the World Trade Organization by 2001, which provided added momentum to transnational capital to expand foreign direct investment in China, which emerged as the global leader in the production of a wide range of manufactured goods, but was initially quite dependent on U.S. global tech firms for investment in high-tech global value chains. U.S. foreign investors adapted well to their circumstances, massaging their political relationships to the Chinese political and economic elites to pave the way for billions of dollars in annual profits.
At the same time, the Chinese government was adopting a very light regulatory touch to their own big tech sector, whose product innovation and extreme consolidation of ownership was encouraged and facilitated by the state. From the mid-2000s, as growth began to slow in traditional manufacturing sectors, “local governments, especially in coastal provinces, began to take up a model of development based around science and technology” (Srnicek, 83). Srnicek goes on to add:
“Tech firms increasingly became a core part of the restructuring of the Chinese economy as the focus became to develop into an innovation-driven economy. This approach solidified in 2015, with support for the digital economy becoming the core priority of the state, and in 2016, China’s 13th Five-Year Plan (2016-2020) deemed ICT to be the highest priority sector and placed innovation at the forefront of its strategy. As in the United Stares, a coalition of interests solidified between the tech elites and the political elites over this period. The merger of state and platform capitalists can be seen, for instance, in the growing inclusion of tech leaders into the governing bodies of the state-with a number of tech CEOs becoming members of the National People’s Congress” (84).
Chinese policy of state subsidies, light regulation, and promotion of rapidly consolidated tech sectors in the aftermath of the 2008 financial crisis accomplished many of the same outcomes already established in the U.S. Google, Amazon, Meta, Apple and Microsoft grew into global mega-giants in a deregulated and permissive legal structure backed by U.S. global geostrategic power. Likewise, the Chinese state did not apply the new Chinese antitrust law of 2008 against its large-scale domestic big tech platforms, but instead encouraged and facilitated their massive consolidation into domestic and global tech mega players. On the other hand, antitrust law was used against foreign investors, who were faced with more competition in China and upscaling by Chinese mega tech firms on a global scale. This was assisted by massive investments from Chinese firms such as Alibaba ant Tencent, who “spent between 80 and 100 percent of their revenue on investing between 2014 and 2019, whereas the largest big five U.S. tech firms invested only 30-66 percent of their revenue” (86).
This shifting geoeconomic landscape led to a pivot by U.S. mega-tech giants from cooperation with China toward a more confrontational approach, though there are still divisions within this sector as to how confrontational and how non-cooperative the U.S. should be regarding applying sanctions to the China market. The give and take between heightened militarized competition, increased U.S. sanctions by both the Trump and Biden Administrations and the willingness of exceptions to be carved out to ease or remove sanctions that negatively affect big tech firms is readily apparent in the Trump Administration’s decision to allow Nvidia to continue to sell its H200 AI chips to approved Chinese firms. However, the Chinese government refused to approve the purchases, opting instead to prioritize its own domestic chip technology.
The aggressive geopolitical competition between the U.S. and China is thoroughly interdependent with the global tech war between consolidated blocs of transnational capitalists who are aggressively competing for global market share. This has resulted in a shift from neoliberal strategies of transnational global integration of capital toward militarized geopolitical competition between imperial states that back competing blocs of transnational capital. Many of the same big tech firms that were critical of Trump’s China strategy during his first term have shifted in favor during his second term, due to both their reliance on the U.S. state to promote a deregulatory agenda at home and abroad and due to the fact that military spending is proving to be a lucrative way to support some of the enormous costs associated with large-scale and long-term investments in general purpose technologies associated with AI (Srnicek does a masterful job distinguishing among the different types of AI investments and the costs involved). As was the case with neoliberal capitalism, and all forms of capitalism, the U.S. and global publics are expected to bear the costs of these investment expansions, with the domestic and global battles over the construction of data centers emerging as a key arena of future class conflict. More on that topic to come in future blogs.
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