[Global Focus] Fierce US-China Hegemony Battle Intensifies with the Return of Trump

"Tariff War Begins After Launch of New U.S. Administration"
Intense Competition in Technology Sector... China Also Actively Restrains U.S.
Japanese Research Institute Predicts Gap Between Two Countries Will Persist Even After 50 Years

As U.S. President Donald Trump returns after four years, the U.S.-China hegemonic rivalry is intensifying. Immediately after his inauguration, he imposed two rounds of 10% tariffs on Chinese products, totaling 20%, and is preparing for reciprocal tariffs. Recently, he has even considered a drastic measure to impose port entry fees on all Chinese vessels docking at U.S. ports and on Chinese shipping companies, targeting China's shipbuilding and shipping industries.

The competition between the two countries is especially fierce in the technology sector. On the 25th, the U.S. Department of Commerce added more than 50 Chinese technology companies to the so-called blacklist and export control list. The Commerce Department stated this was to prevent U.S. technology from being used in the development of Chinese military supercomputers, but major foreign media outlets such as CNBC analyzed it as a move to curb China's pursuit of artificial intelligence (AI) and semiconductors. Before President Trump’s inauguration, the Biden administration announced an AI chip export control system that classifies countries worldwide into three tiers to block indirect exports through third countries.

"Passport Confiscation"... Changed U.S.-China Technology Hegemony Rivalry in Trump’s Second Term

While the Trump first-term administration and the Biden administration appeared to unilaterally block China’s access to advanced technology, the situation has changed in Trump’s second term. Amid U.S. offensives, China, having secured its own technological capabilities, is both restrained by and restraining the U.S.

A representative case is the confiscation of passports from employees of the Chinese AI startup DeepSeek, which caused a global stir over concerns about talent outflow. Earlier, the Wall Street Journal (WSJ) reported on the 1st that the Chinese government advised AI researchers and entrepreneurs to avoid visiting the U.S. and other Western countries due to concerns about leaks of confidential information.

The ban on U.S. company Nvidia, which dominates the global AI chip market, was also imposed. The Financial Times (FT) reported on the 26th that China’s National Development and Reform Commission (NDRC) introduced regulations requiring Chinese companies to use energy-efficient chips when building AI data centers. Currently, the Nvidia H20 chip, which has reduced performance for export to China, is the most widely used in China, but this product does not meet the new regulations. It is known that regulators recently prohibited major Chinese IT companies from purchasing H20 chips, leading to interpretations that this is effectively a ban on Nvidia chips.

This is not limited to the AI sector. According to FT, BYD, Tesla’s competitor and China’s largest electric vehicle manufacturer, announced plans to build a factory in Mexico in 2023 but has yet to receive approval from Chinese authorities due to concerns about advanced technology leaking to neighboring the U.S.

GDP $29 Trillion VS $18 Trillion... When Will China Catch Up to the U.S. Economy?

This year, China set an economic growth target of around 5% at its largest political event, the Two Sessions (National People's Congress and Chinese People's Political Consultative Conference). Chinese President Xi Jinping declared at the 19th National Congress of the Communist Party in 2017 that China aims to become the world’s strongest power by 2050. According to experts, to surpass the U.S. by then, China must sustain growth of about 5% annually. Amid the Trump administration’s renewed tariff war, China faces overlapping challenges such as a real estate market collapse, weakening domestic demand, and declining foreign investment. This is why the Chinese government is pouring 398.1 billion yuan into research and development (R&D) this year to achieve a “technological rise.” Some forecasts suggest that including local government and separate budgets, investments could exceed 80 trillion won.

According to the IMF, in 2024, the GDPs of the U.S. and China are projected to be $29.17 trillion and $18.27 trillion, respectively. This year, the U.S. and China’s GDPs are expected to reach $30.34 trillion and $19.53 trillion, respectively.

Despite the fierce hegemonic competition, the economic gap between the two countries is expected to persist. Goldman Sachs once predicted in 2022 that the U.S. GDP would fall behind China’s. However, recent forecasts suggest that the U.S. will still lead China even 50 years from now. According to the mid-term report of the long-term economic forecast recently released by the Japan Center for Economic Research (JCER), by 2075, the GDPs of the U.S. and China are estimated to be $53.3 trillion and $34.6 trillion, respectively. The institute expects China’s total fertility rate (the average number of children a woman is expected to have in her lifetime) to drop to 0.8 by 2075, stating, “China’s economy will slow due to population decline, and the U.S.-China economic order will not be reversed.”