The New Cold War is a Technological (Stock) War

Analyzing the technological and financial competition among major powers, capturing opportunities in the crypto sector, and participating in industry pricing arbitrage through primary derivatives.

Written by: Zuo Ye

The new cold war has no iron curtain, only mutual entanglement.

The Cold War between the US and the Soviet Union since 1945 is often described as a series of localized hot wars under the overarching threat of nuclear crisis, with both sides ready for a steel clash on the Eastern European plains at any moment.

However, bypassing the bloody battles of World War II, since the Great Depression of 1929, the Soviet Union has been absorbing American technology and capital, until after World War II, when London established a vast European dollar system, primarily serving the Soviet bloc.

From this perspective, viewing the Cold War as a "trade war" makes sense. The Soviet Union established the Comecon system, which was inherently weaker than the US and the West's General Agreement on Tariffs and Trade (the predecessor of the WTO), IMF, and World Bank, as the latter included sufficient competition within the financial system.

When your enemy also relies on the dollar, the outcome of this contest has long been decided.

Old Cold War Trade, New Cold War Finance

Economic crises are the periodic clearing mechanisms of capitalism, and each crisis's survivors complicate the American financial system, reflecting the overreactions of past crises.

The economic crisis of 1907 not only led to the creation of the Federal Reserve, but by 1913, the US GDP and industrial output had already surpassed that of the UK. The Great Depression that began in 1929, although rooted in the abnormal prosperity of the stock market, was essentially due to America's inability or unwillingness to maintain a global trade system centered around itself.

In fact, the Soviet Union's ability to attract American production capacity after the Great Depression was related to the ideological weakness compared to the reality of survival; life always takes precedence over politics, both for the Soviet Union and for the US.

It can be simply understood that the world system before World War II was centered around trade, i.e., the cross-border flow of physical goods. The supply chains, SWIFT, and the dollar we are familiar with were not important at that time; the tariff system was the key to whether trade could proceed.

With this mindset, the post-World War II Soviet Union chose the Comecon system, where trade settlements between countries were conducted in "transferable rubles (TR)", essentially a form of accounting points, highly regulated and lacking sufficient flexibility.

However, at that time, the US did not choose financial laissez-faire or disorderly freedom. To a large extent, the post-war Western trade system remained regulated. The heavy industry within the Comecon system could guarantee the most basic survival needs, while the Soviet Union's oil industry was always hard currency in the ravaged European reconstruction.

The real shift began with neoliberalism since the 1970s, where countries like the US and the UK first dismantled their production lines, diverting them to private or Asian hands, with the only condition being acceptance of American technological control, financial order, and the dollar system. This was undoubtedly suicidal from the perspective of the Soviet Union. Did the US expect to rely on Disney and foreigners to defend itself?

Image Caption: Historical challengers to the American system

Image Source: @zuoyeweb3

In the end, the US, mired in the Vietnam quagmire and the oil crisis, defeated the Soviet Union's steel tide with Disney.

It is hard to say what the Soviet Union did wrong. The hollowing out of American industry still leaves scars today, and the angry rednecks chose Trump. "Iron Lady" Margaret Thatcher chose to trample the coal miners of Ogilvie, leaving a collective trauma in the UK that has yet to heal.

However, the legacy of the Soviet bloc was too rich. As markets and labor continuously flowed to Europe and the US, Google founder Brin and Ethereum leader Vitalik reaped invisible rewards. They were prisoners of Disney, not AK-47s produced by oil trade.

Therefore, one cannot simply say that the WTO defeated Comecon, nor can one simply think that Star Wars brought down the Soviet Union. The social mobilization and penetration power of finance have long been underestimated. U2 could not cross the Soviet MiG corridor, but the dollar could, and Victor Choi could too.

By exploiting and creating the Soviet Union's demand for dollars, the Soviet Union ultimately bought the noose that would strangle it.

If the Soviet Union was a financial war against the outside, then the US-Japan friction was an internal effort to establish new norms.

At that time, it was precisely Japan's national power that supported DRAM during its critical period;

Whether it was the Plaza Accord of 1985 or the subsequent mixed legislative, judicial, and executive restrictions on the Japanese semiconductor industry, the US has always prioritized trade, ultimately placing its bets on finance—US Treasury bonds.

Especially under the pretext of Japanese companies like Mitsubishi and Hitachi "stealing" American semiconductor IP, the 301 investigation emerged. In 1987, Reagan even sanctioned the Japanese semiconductor industry and began transferring semiconductor technology to allies like Taiwan and South Korea.

At this time, it was merely Changxin replacing Toshiba, and Kimi K3 encountering A .

Compared to the Soviet Union's trade demand for dollars, Japan's demand for US Treasury bonds surged after the Plaza Accord, as part of the "macroeconomic" cooperation between both sides, and the liberalization of exchange rates was also a direct product of this movement.

Image Caption: US Treasury Bond Race

Image Source: @zuoyeweb3

From the Soviet Union's oil trade for dollars to Japan's semiconductors for US Treasury bonds, America's financial tactics have always been a step ahead.

China is no exception. It entered the WTO in 2001, living a hard life of exchanging 800 million shirts for Boeing airplanes, and then faced a "trade war" in 2018, still familiar with the tariff stick + 301 investigation.

But this time, both sides' policy toolbox has shown a complex situation of mixed use. Compared to the Soviet Union, China holds an excessive amount of dollars, and its trade products are not singular but interrelated, tightly linking goods and services.

Compared to Japan, China has already topped the list of US Treasury bond holders, becoming America's largest creditor. However, the US cannot forcibly compel China to abandon its semiconductor industry. Fujian Jinhua was crushed, but Changxin, Changchun, and SMIC continue to thrive.

From 2018 to 2026, during Trump's visit to China, the US used all previous trade—financial war tactics, and then, like the Russia-Ukraine war, in 1h22m speedrun became the prelude to a long entanglement, with both sides falling into a painful standoff, and the technological—financial war thus commenced.

Financialization of Technology, Politicization of Stock Markets

From a historical perspective, the three trade wars have an inherent continuity. The US-Soviet relationship is a parallel system, the US-Japan relationship is a subordinate relationship, and the US-China relationship is an interwoven relationship.

The US acts like a big boss, with each challenger trying hard to take on the challenge, but the Soviet Union could not reach the economic closeness of Japan and the US, dying as a mere outsider, while China is currently the farthest along, having reached the financial sector. This financialization transcends the established frameworks of the dollar and US Treasury bonds, challenging the US for the first time on pricing power.

The US's industrial weakness and financial strength will further amplify financial tools, while China's industrial strength and financial weakness mean that after surviving the traditional trade war, it needs to convert industrial advantages into financial ones. From restricting individuals from buying US stocks to implementing trust taxes, all are aimed at concentrating funds to strengthen its own financial market, thereby feeding back into its industrial system.

Image Caption: Only policy bulls bring benefits

Image Source: @zuoyeweb3

From this perspective, whether it is Lee Jae-myung's call for leverage in March or the restrictions on leverage starting in July, Korea's most beautiful summer is not only short-lived but also extremely volatile due to human intervention.

Meanwhile, the AI, semiconductor, and robotics sectors in the US stock market are experiencing unprecedented prosperity, amidst rumors of DeepSeek R1/Kimi K3/DUV lithography machines, and under the daily calls for interest rate cuts from Trump, having gone through the revolving door of Trump—Biden—Trump, Powell—Kevin Walsh, yet still remaining strong.

This strength represents national will, a collective concept that transcends party lines, or in other words, the US stock market is becoming a new sovereign-level asset.

This is not an exaggeration. The default of the goldsmith banking industry in 1672 ultimately led to the establishment of the Bank of England in 1694, and government bonds truly became "sovereign-level assets". The petrodollar after the collapse of the Bretton Woods system and today's AI US stocks are merely products of crises.

Thus, the 2018 US-China trade war was, in fact, a historic muscle memory of the US, hoping to exclude China from the global economic and trade system through trade war tactics, while referencing the Plaza Accord against Japan, hoping to use financial means to crush China's semiconductor industry.

After the ceasefire in the US-China trade war, Trump will further turn to a technological war, which, to a large extent, manifests itself in financial forms, with the most direct form of finance being the US stock market.

Image Caption: New tactics in the technology war

Image Source: @zuoyeweb3

Today, the confrontation between US and Chinese stock market targets, such as Changxin Technology and Moonlight, are symbols. Changxin Technology has caused significant declines in South Korean semiconductors and US stocks, while Moonlight has raised the US's complex attitude towards open source. Not to mention that the US FCC has already begun to ban robots, targeting the Chinese robotics industry represented by Yuzhu Technology.

This technological war does not imply that the technology industries of the US and the West cannot lead in scale or performance over China. In fact, to a similar extent, China's corresponding targets have completed larger-scale R&D and production based on the foundational work done in the US, and even the sales direction is also aimed at the European and American markets, essentially remaining part of the US-Western system.

Changxin, Hesai, DJI, and even BYD all hope to enter the US market and wish to use dollars, driven by decades of inertia.

However, the world is increasingly divided into two systems, and both sides can inflict heavy damage on each other by achieving natural monopolies in their respective fields, but this damage is targeted at the stock market rather than traditional trade shares.

However, it should be noted that the US stock market has become a new sovereign-level asset, while the A-share market has become a new restricted asset. This does not mean that the two countries' stock markets will rise forever. Similarly, the US Treasury yield is globally recognized as the risk-free rate, and the troubles of US Treasury bonds are a significant issue for the US government; these two matters are isomorphic and in sync.

The real insight lies in the fact that over the past 30 years, consumer-level monopolistic enterprises like Apple and Google, established globally through efficiency, will yield to enterprises that can earn monopolistic profits within their respective systems and regions, becoming new competition targets.

This is more important than whether AI is a bubble or whether the semiconductor summer has ended; everyone must make their own choices.

Conclusion

The most frenzied financial crisis hides the largest Alpha returns in human history.

From the bankrupt bankers of 1672 to the establishment of the Bank of England, it took a generation's youth. Whether it is the discussion of banning robots or the ambiguity of DUV, the subjects served are not market demands but the national will itself.

In a sense, figures like Peter Thiel have seen this shift, with Silicon Valley + military industry, such as Anduril, and crypto VCs also seeing new opportunities, with the US + manufacturing, like Paradigm investing in small processing plants like SendCutSend.

The greater the storm, the more valuable the fish; here’s to this great contest of the world!