Photo: IC

While the US economy takes a major hit from the coronavirus pandemic, major US stock indices seemed to ignore the battered economic fundamentals and rally to hit new highs. On Tuesday, the S&P 500 index finished at 3,389.78, marking an all-time closing high, while the NASDAQ Composite Index also scored a record close at 11,210.84.

Why has Wall Street refused to factor in the recession faced by its economy? One explanation might be that the market value of US technology companies has soared during the outbreak, driving most stock indices back to their pre-pandemic levels. 

At present, five tech giants - Apple, Microsoft, Amazon, Alphabet and Facebook - now make up more than a fifth of the S&P 500. Such a concentration is understandable given that these digital giants have mostly outperformed the market this year thanks to their robust business growth during the coronavirus pandemic.

Nevertheless, there is an even more important message behind the US' recent stock market performance, and that is that America's economic structure is undergoing a major transformation during the pandemic. Even the world economy is likely to see the technology sector play a major role in boosting economic growth in the near future.

Against such a backdrop of profound economic transformation, the Trump administration's recent push for technological decoupling may have even more far-reaching strategic implications. In the past, the US government lent strong support to domestic manufacturing behemoths such as Boeing despite criticism from various quarters. Now, as high-tech firms become the new source of economic growth, the US government will certainly try to ensure the domination of American companies in the next round of global economic transformation.

In this sense, the Trump administration's crackdown on Chinese tech firms can also be seen as part of an effort to strengthen the competitive advantage of US high-tech companies so they are able to accelerate global expansion and technological domination. 

The US announced on Monday it was tightening restrictions on Huawei so as to cut off its supplies of commercially available chips. The government also ordered popular Chinese-owned social media platform TikTok to sell its US businesses to a US buyer before a specified deadline. Evidently, all of these moves have been aimed at suffocating the development and growth of China's most successful tech companies.

If the US suppression of Chinese firms continues in the coming months, no matter what the presidential election result, American high-tech companies will obtain great competitive advantages, thus prompting a more smooth economic restructuring. And if Chinese companies are hit hard by the US attacks, the future technology gap between the US and China could be used as leverage for concessions by the Chinese side in the technology sector. As such, the US' pursuit of technological decoupling from China could be a political ploy to target greater market share in the future.

Under such circumstances, in addition to demanding fair treatment for its companies, China needs to promote the development of its own tech companies. After all, it has become more urgent than ever for Chinese tech companies to improve their technological competitiveness in order to fight their way out of the increasingly fierce tech confrontations between the two countries.