Global outlook summary
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The global information and communications technology (ICT) system is at risk of splintering into US- and Chinese-led spheres of influence. Currently, the US and China are engaged in negotiations in an effort to avoid a further escalation in the trade war. So far, negotiations have been unsuccessful, and The Economist Intelligence Unit's forecast remains that a deal is unlikely before March 1st, meaning that US tariffs on US$200bn-worth of Chinese imports will increase to 25% from 10%. However, the US president, Donald Trump, has said that he will meet his Chinese counterpart, Xi Jinping, later this month, raising the possibility of a limited deal between the two parties. In our view, both sides have a strong incentive to resolve the dispute quickly: China's economy is slowing down amid external and internal pressures, and Mr Trump is facing reelection in 2020 with little to show from his tough approach towards China. Regardless of the outcome of the latest round of negotiations, however, we expect US-China relations to remain tense. The trade war is just one aspect of a much broader strategic rivalry, which is rapidly evolving into an arms race for technological dominance. A recent report from the UN World Intellectual Property Organisation (WIPO) examining patent filings in the field of artificial intelligence (AI) illustrated this point. The study found that two US technology companies, IBM and Microsoft, had the largest portfolio of AI patents, while China accounted for 17 of the top 20 academic institutions involved in AI patenting. Overall, the report shows that AI patent applications have grown exponentially in recent years as the intensity of this competition has increased.
