Escaping a weaponized network: China’s reaction to the United States escalating technology controls

Abstract This paper explores weaponized interdependence and tipping point dynamics. The United States employs export controls to maintain technological leadership and restrict China's access to essential semiconductor technology. Conversely, China intensifies its investment in the semiconductor sector, aiming for technological independence and lessening its dependence on U.S.-controlled technologies. The paper introduces a Stackelberg nested game model to analyze the strategic interactions between the U.S., China, and Chinese semiconductor companies. A tipping point indicates a departure from a unified global network to a polarized structure of technological spheres led by the U.S. and China. Utilizing Bayesian Q-learning, the paper uncovers that continuous escalations could result in detrimental outcomes, including wasted resources and a split global technology regime. The study underscores the limitations of weaponized interdependence as a long-term strategic tool and calls for a recalibration of strategies to prevent irreversible fragmentation of the global technological landscape.