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Global supply chains (GSCs) 鈥� which account for around  鈥� are often referred to as the backbone of the world economy. As tensions rise between major powers鈥攅specially the United States and China 鈥� many commentators fear for the future of GSC鈥檚 and hence . Such projections overlook how geopolitical rivalries have stimulated the development of advanced technologies, which in turn enabled the rise and ongoing transformation of .

A close look at the US-led development of technology during the Cold War shows that it enabled the formation and expansion of many contemporary global supply chains. China in turn has made efforts to catch-up to US technological development, and in response, the US has been deploying strategies to curb China鈥檚 tech rise amid a new geopolitical rivalry.

Beyond borders: technology drives supply chains 

Much of the current debate focuses on where supply chains are located鈥攚hether companies should 鈥渞e-shore鈥� production (bringing manufacturing back to a company鈥檚 home country) or rely on 鈥渇riend-shoring鈥� (moving manufacturing to friendly countries). But just as critical, and far less discussed, is the role of advanced technology in shaping how supply chain鈥檚 function.

Transnational corporations (TNCs) depend on sophisticated Information and Communication Technologies (ICTs) to manage vast, interconnected production networks. These tools enable real-time data sharing, enforce standards across suppliers, and reduce costs. They also help spread high-productivity techniques throughout a company鈥檚 supply base.

Importantly, ICTs allow TNCs to control production costs and dictate prices paid to suppliers. This explains a key fact about the proliferation of global supply chains: a small number of, mostly US, TNCs dominate world trade and have concentrated income at the top of the world economy. But ICTs aren鈥檛 just business tools鈥攖hey鈥檙e also central to national security. 

Dual-use technologies: business meets defense 

ICTs are classic dual-use technologies. They serve both commercial and military purposes. Their development has been shaped by geopolitical rivalries, starting with the Cold War competition between the US and the Soviet Union, and now with China.

After World War II, the US aimed to build a capitalist world order in its own image. Free trade鈥� or at least freer than the empire-based systems that came before鈥攚as a key pillar of this order. American firms, supported by the state, expanded globally and became dominant players.

US defense planners saw technological superiority as vital to national security. In 1957 the Soviet Union鈥檚 launch of the Sputnik satellite 鈥� suggesting technological parity with the US. In response the US created the  (DARPA) the following year to drive innovation. The agency鈥檚 work led to foundational breakthroughs. These included (or the significant development of) radar, computers, integrated circuits, semiconductors and most famously, the internet. The Economist calls DARPA 鈥榯he agency that 

DARPA remains active today, funding cutting-edge research in areas like artificial intelligence (AI). AI is transforming supply chains by improving forecasting, logistics, and responsiveness. But the race to lead in AI is about more than business鈥攊t鈥檚 geopolitical. Such innovations have come about through deliberate policy designed to secure American dominance.

These technologies 鈥� from the internet to AI 鈥� have not just strengthened the military. They have also allowed US firms to outsource production while maintaining control over quality, standards, and pricing鈥攅ven among nominally independent suppliers.

By the 1980s, globalization was in full swing. US companies combined high-tech oversight with low-cost labor, especially in China. By the 2010s Walmart, the world鈥檚 largest retailer, .

American firms benefited from China鈥檚 manufacturing power, while China gained access to advanced technologies. 

DeepSeek and the rise of Chinese AI 

In the context of multiple crises 鈥� from the 2008 global financial collapse to contemporary wars and environmental disasters 鈥� AI is being touted by experts as key to making supply chains resilient to external shocks.

But just as geopolitical rivalries stimulated the establishment of the internet and other key technologies, so too are they influencing the AI race. The emergence of , a Chinese AI rival to US-based ChatGPT, highlights such geopolitical dynamics. DeepSeek鈥檚 rise was fuelled by China鈥檚 push for domestic chip innovation鈥攁 direct response to geopolitically-motivated US export restrictions. It鈥檚 part of a broader strategy to challenge American tech dominance.

There is little coincidence perhaps, that the emergence of DeepSeek 鈥� open source, produced more cheaply and using fewer chips than ChatGPT 鈥� was hailed as AI鈥檚 鈥淪putnik鈥� moment. That is, a development that will accelerate state-directed R&D across AI and many related technologies.

China鈥檚 ambitions go back decades. Since the late 1970s, under Deng Xiaoping, the country has worked to join the global economy. Initially a low-cost production hub, China gradually shifted toward technology development and transfer, often nudging foreign firms to collaborate.

In the early years, US leaders welcomed China鈥檚 integration. But by the 2010s, China鈥檚 tech progress began to worry Washington. Under President Obama, the US launched a 鈥減ivot to Asia鈥� aimed at containing China鈥檚 rise.

Unlike many countries in the Global South, China has strong central economic coordination. This has enabled long-term tech development鈥攐ften with help from American firms eager to tap into China鈥檚 labor market, even though the US state is increasingly berating such firms for allowing China to obtain their ideas and technologies.

US companies like Intel, IBM, General Electric, and Advanced Micro Devices have invested heavily in China. Intel alone has backed 15 semiconductor startups, 16 AI ventures, and dozens more in virtual reality, electric vehicles, and cloud services鈥攈olding stakes in 

China鈥檚 strategic tech push 

In 2023, President Xi Jinping emphasized the importance of 鈥渋ntegrated national strategies and strategic capabilities鈥� in China鈥檚 quest for global power. That includes major investments in space technology, AI, and quantum computing鈥攁ll aimed at boosting economic and military strength. China鈥檚 speedy development of electric and autonomous vehicles, robotics, and battery technologies are thanks, in part, to its rapid tech development.

Just like US military expenditure, China鈥檚 military spending increases effective demand for new technologies. Under Xi, China鈥檚 military spending more than doubled between 2012 and 2021. The country now has the largest military in Asia, though its defense budget remains about .

China鈥檚 rise to the tech frontier poses a dual threat to American dominance鈥攅conomically and militarily.

Washington鈥檚 response: containment and confrontation 

The US has responded with increasing aggression. A senior official at the Center for Strategic and International Studies described the Biden administration鈥檚 approach as 鈥渁ctively strangling large segments of the Chinese technology industry鈥攕trangling with an 鈥�. Under President Trump, these efforts have intensified.

Yes, geopolitical tensions are rising. But framing this as a clash between geopolitics and the existence of global supply chains misses the key elements of this moment.

In truth, geopolitical competition has fuelled the development of the very technologies that power global supply chains 鈥� from information and communication technologies and the internet to AI and advanced chip manufacturing. The continued and further development of such, and perhaps novel, technologies will in all probability contribute to the evolution and change of geopolitical and economic dynamics.

This article is based on the paper, 鈥�鈥�, in the Journal of Economic Geography.

Benjamin Selwyn听is a professor of international relations and international development at the University of Sussex, Brighton, UK. His publications include The Struggle for Development (Polity Press: 2017).