The New Cold War is a War of Technology Stocks

Author: Zuo Ye, Crooked Neck Mountain

Finance as a Means of Social Mobilization

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.

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, it makes sense to view the Cold War as a "trade war". 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 games under 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 excessive reactions from past crises.

The economic crisis of 1907 not only led to the creation of the Federal Reserve but also saw the US GDP and industrial output surpassing that of the UK by 1913. The Great Depression that began in 1929, although rooted in the distorted prosperity of the stock market, was fundamentally 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 against 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, meaning the cross-border flow of tangible goods. The familiar supply chains, SWIFT, and the dollar 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, the US at that time did not choose financial laissez-faire or disorderly freedom; to a considerable extent, the post-war Western trade system remained regulated. The heavy industry within the Comecon system could ensure the most basic survival needs, while the Soviet Union's oil industry was always hard currency in the reconstruction of war-torn Europe.

The real shift came with neoliberalism since 1970, where countries like the US and the UK first dismantled their production lines and redirected 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 seen as suicide from the perspective of the Soviet Union. Did the US really intend to rely on Disney and foreigners for its defense?

Image caption: Historical challengers to the American system

Image source: @zuoyeweb3

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

It's hard to say what the Soviet Union did wrong. The hollowing out of American industry has left scars on the Rust Belt, and angry rednecks chose Trump, while "Iron Lady" Margaret Thatcher chose to trample on the coal miners of Ogilvie, leaving Britain with a collective trauma that remains unhealed to this day.

However, the legacy of the Soviet bloc was excessively rich, as markets and labor flowed continuously to Europe and America. Google founder Sergey Brin and Ethereum leader Vitalik Buterin have also reaped invisible benefits; they are prisoners of Disney, not AK-47s produced by oil trade.

Thus, one cannot simply say that the WTO defeated Comecon, nor can one simplistically believe 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 so could Victor Chui.

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

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

At that time, Japan was at a critical period of supporting DRAM with state power;

Whether it was the Plaza Accord of 1985 or the subsequent mixed legislative, judicial, and administrative restrictions on the Japanese semiconductor industry, the US has always prioritized trade, ultimately leading to financial maneuvers—US Treasury bonds.

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

At this moment, Changxin replaced Toshiba, and Kimi K3 faced A\ .

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

Image caption: The race for US Treasury bonds

Image source: @zuoyeweb3

From the Soviet 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 laborious life of exchanging 800 million shirts for Boeing airplanes, and then faced a "trade war" in 2018, still using the familiar tariff stick + 301 investigation.

But this time, both sides' policy toolboxes have shown a complex situation of mixed usage. Compared to the Soviet Union, China holds an excessive amount of dollars, and its trade products are not singular but interconnected, with goods + services closely linked.

Compared to Japan, China has topped the list of holders of US Treasury bonds, becoming America's largest creditor, but the US cannot force China to abandon its semiconductor industry. While Fujian Jinhua was crushed, 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, it quickly became a prelude to a long and painful standoff, with both sides entering a painful confrontation period, and the technology—financial war thus emerged.

Financialization of Technology, Politicization of the Stock Market

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 their best to take on the challenge, but the Soviet Union could not reach the economic closeness of Japan and the US, directly dying as an outsider, while China is currently the furthest along, having reached the financial realm. This financialization transcends the established frameworks of the dollar and US Treasury bonds, challenging the US for the first time in 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 efforts are focused on consolidating funds to strengthen its 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 subsequent restrictions on leverage in July, South Korea's most beautiful summer was 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, the market has remained resilient through the revolving doors of Trump—Biden—Trump and Powell—Kevin Walsh.

This resilience 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 King Charles II of England on 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 that emerged after the collapse of the Bretton Woods system and today's AI-driven US stocks are merely products of crises.

Therefore, the 2018 US-China trade war is, 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, aiming to use financial means to crush China's semiconductor industry.

After the ceasefire in the US-China trade war, Trump will further shift to a technology war, which, to a considerable extent, manifests 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 Dark Side of the Moon, are significant. Changxin Technology has caused a sharp decline in South Korean semiconductors and US stocks, while Dark Side of the Moon has triggered a complex attitude from the US 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 technology war does not imply that the US and Western technology industries cannot lead in scale or performance over China. In fact, to the same extent, China's corresponding targets have completed larger-scale R&D and production based on the 0~1 foundation established in the US, with sales also directed towards the European and American markets, fundamentally 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 splitting into two systems, and both sides can inflict severe 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.

It is important to note that while the US stock market has become a new sovereign-level asset, the A-share market has become a new restricted asset. This does not mean that the stock markets of both countries will rise indefinitely. Similar to how US Treasury bond rates are globally recognized as risk-free rates, the troubles of US Treasury bonds present significant challenges for the US government; these two matters are interconnected.

The real revelation lies in the fact that over the past 30 years, consumer-level monopolistic enterprises like Apple and Google, established globally with 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 insane financial crisis harbors the greatest Alpha returns in human history.

From the bankruptcy of bankers in 1672 to the establishment of the Bank of England, it took a generation's youth. Whether it is the discussion on 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. Silicon Valley + military industry, like Anduril, and VC in the crypto space have also seen new opportunities. The US + manufacturing, like Paradigm investing in small processing plants like SendCutSend.

Fortunately, TradeXYZ has also pre-priced Changxin with Pre-IPO Perp, at least in the face of the two great powers, arbitrage remains the most expensive entry and exit channel.

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