A fine piece of journalism by John Shiffman and Duff Wilson of Reuters about the difficulties in preventing military use equipment from finding its way to China. It tells the story of a batch of rad-chips, used in satellites, that have been spirited out of the US to China, where they are likely used for its space program. The story gets into all the nuances around the legality of high-technology purchase and export and the issue of China. “By its very definition, black market smuggling is hard to monitor and quantify. Quite often, sensitive US technology is legally shipped to friendly nations and then immediately and illegally reshipped to China.”

I am convinced that this legal-illegal export conundrum is going to begin the affect the shape of the global economy. No longer will it be open borders, free trade, and let’s all hope for the best. The calculus will have to change. But how is anyone’s guess.

The White House is bright enough to realize that the future for the US economy is creating high-end, high-tech, sophisticated goods and services. At the same time, the US is increasingly in a race with China, for increasing technological abilities. China, starting at a lower level, knows it must also pursue new tech industries if it doesn’t want to escape a stagnant, middle income economy trap future. The US must build those industries bigger for the sake of its own future in the world.

To use a term coined by sci-fi author John Brunner the “brain race” is on.

And while it’s not like the Cold War when the global economy was severed, any wide disparities in new technology between China and the West will increasingly carry the potential for destabilization.