Divergent elite strategies are highly likely to spark a "technological cold war" with competing systems of governance, finance, and digital infrastructure.

This is not merely a theoretical possibility but an ongoing process, as the U.S., China, and Europe are already building separate technological ecosystems based on their core values and priorities.

The competition is moving beyond military and economic rivalry to a fundamental clash over how technology should be developed, governed, and used.

The Governance Divide: Values in Code 

The most profound consequence of this technological cold war is the emergence of two or more competing models for how technology integrates with society. Elites are embedding their political and social values directly into their digital infrastructure.

• China's State-Centric Model: Chinese elites see technology as a tool for national security and social control. The Chinese government's "whole-of-nation" strategy is designed to create a unified, state-controlled digital ecosystem. This is exemplified by the Digital Silk Road, which exports a complete package of 5G networks, smart city surveillance systems, and digital payment platforms. This technology enables a system of digital authoritarianism, where data is a tool for state governance and surveillance. Countries that adopt this model are not just buying technology; they are adopting a governance framework that prioritizes political stability and state power over individual privacy and freedom of expression.

• Europe's Human-Centric Model: European elites are building a model based on individual rights and ethical governance. The GDPR and the AI Act are not just regulations; they are a statement of values. Europe is attempting to create a technological ecosystem where data privacy is a fundamental right, algorithms are transparent, and a human-centric approach to AI is legally mandated. This model, while attractive to many in democratic societies, struggles to compete on speed and scale with the more agile U.S. and China. Europe's "regulatory superpower" role is a powerful source of influence, but its effectiveness is limited by its lack of domestic digital champions.

• America's Market-Centric Model: The U.S. is building a system based on private-sector innovation and market dominance. American elites believe that a hands-off regulatory approach and a strong venture capital ecosystem will produce the most innovative technologies. This has led to the global dominance of U.S. tech giants in social media, search, and cloud computing. The U.S. model, however, has been criticized for prioritizing profit over privacy and for creating powerful tech monopolies. In the context of a technological cold war, the U.S. is now using this private-sector power as a tool of statecraft, as seen in export controls on advanced semiconductors and sanctions on Chinese tech companies.

"This divergence means that a country's choice of digital infrastructure will increasingly be a political and ideological one. Nations in the developing world will be pressured to align with either a U.S.-led system that prioritizes a free market or a Chinese-led one that prioritizes state control".

Fragmentation of Finance and Digital Infrastructure 

A technological cold war would inevitably lead to a fracturing of global finance and digital infrastructure, creating competing, and potentially incompatible, systems.

• Separate Digital Infrastructures: The most visible sign of a technological cold war is the emergence of competing digital infrastructures. The U.S. and its allies are attempting to build an alternative to Huawei's 5G networks, a move that could lead to two separate, incompatible digital spheres. This fragmentation would not just affect telecommunications but also the underlying internet backbone (e.g., submarine cables, satellites) and data centers. A world with two separate internets, one U.S.-aligned and one China-aligned, would disrupt global business and communications.

• Weaponization of Finance: The U.S. dollar's role as the world's reserve currency is tied to its technological and economic supremacy. If China were to lead in a wider range of key technologies, it could use its digital platforms to challenge the U.S. dollar's dominance. China is already a global leader in central bank digital currencies (CBDCs) and is encouraging other nations to use its digital payment systems and a new financial messaging system as an alternative to the U.S.-controlled SWIFT network. This would reduce the effectiveness of U.S. financial sanctions and give China a powerful new tool for economic statecraft.

• Supply Chain "Bifurcation": A technological cold war would force a bifurcation of global supply chains. Companies would be pressured to choose between a U.S.-led and a China-led supply chain, leading to higher costs, reduced efficiency, and a decline in global economic integration. For example, U.S. export controls on advanced semiconductors are forcing companies to "decouple" their supply chains from China, a process that is both costly and time-consuming.

A New Era of Competition and Conflict 

This technological cold war is distinct from the first Cold War in several key ways. The economies of the U.S. and China are deeply intertwined, making a full "decoupling" economically ruinous for both sides. The competition is not just over ideology but over who gets to define the future of technology. This makes the rivalry more complex and potentially more dangerous.

While some believe that this competition could spur innovation, others worry that it could lead to a "race to the bottom" on safety and ethics as nations prioritize speed and dominance over responsible development. The absence of a unified global framework for issues like AI governance and cybersecurity would make it difficult to prevent conflict and ensure stability.

In conclusion, the divergent elite strategies of the U.S., China, and Europe are not just a point of friction; they are a fundamental force pushing the world toward a technological cold war. This conflict is not defined by military blocs but by competing systems of governance, finance, and digital infrastructure, the outcome of which will determine the nature of the global order for decades to come.