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Escalating tensions between the U.S. and China over technology risk stunting innovation and splintering the world economy, according to Robert Koopman, chief economist at the World Trade Organization.
"What I worry about with this technological debate is that we end up with part of the world that follows China's technological or digital lead, part of the world that follows Europe's, part of the world that follows the U.S.," Koopman said in an interview on the sidelines of meetings of the Institute for International Finance in Tokyo.
"Does that mean there is economic disaster that comes out of that? No, I think what it means is that it probably means slower growth for the global economy because of that fragmentation."
The U.S. has moved to block Chinese tech companies from buying American software and components needed to make their products amid an escalating trade conflict between the worlds biggest two economies. The U.S. Department of Commerce has added Huawei Technologies Co. to a blacklist of companies.
Analysts say the tech tensions are part of an emerging and likely protracted strategic rivalry between the two nations.
Under a tech cold war innovation would occur in silos rather than spread around the globe, Koopman cautioned.
"You do want the best and most efficient ideas of technology to go global and everybody will benefit," he said.
Warning that there continues to be signs of weakness in global trade volumes, Koopman said the WTO may need to downgrade their trade growth forecasts due in October.
Much will depend on how much stimulus is rolled out by central banks and governments, he said.
"We see that the trade measures are having an adverse effect," he said. "But if that gets offset by other government policies then it gets hard to net out what the effect will be."
To contact the reporters on this story: Enda Curran in Hong Kong at ecurran8@bloomberg.net;Jeffrey Black in Hong Kong at jblack25@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Henry Hoenig
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