Trump’s Wall on China: The Danger of the U.S/China Technology Cold War

Trump’s Wall on China: The Danger of the U.S/China Technology Cold War

Trump’s Wall on China

The Danger of the U.S/China Technology Cold War

Following the U.S. government’s ban on China’s tech giant Huawei, a recent report indicated that the U.S. government was considering barring two more Chinese video-surveillance giants, Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co.  According to Deutsche Bank AG, these two companies had taken one-third of the global market for video surveillance. Their camera technology secures businesses, airports, and governments all around the world, including in the U.S. In the U.K., their products were widely used in the subway system and the Houses of Parliament. However, the two companies had raised concerns from Trump’s government that they might engage in espionage.

As early in May 2018, the Trump administration banned ZTE, the second-largest telecom-equipment maker in China. This month, President Donald Trump signed an executive order to restrict the use of technology and equipment from foreign telecommunications companies, after citing “national risk concern”. The U.S. also put Huawei on its blacklist of exports, banning it from purchasing US technology. Then, Google revoked Huawei’s Android licenses. Following the announcement, the three giants of the world’s chip designers and suppliers, Intel, Qualcomm, and Broadcom  joined Google to ban Huawei. The media reported that the US-China science and technology cold war had started, and global technology was under the risk of splitting into two camps dominated by China and the United States.

The expanding sanctions on China

On Wednesday (May 22), UK-based chip designer ARM instructed employees to suspend “all active contracts, support entitlements, and any pending engagements” with Huawei and relative companies to comply with recent US trade restrictions. ARM, headquartered in Cambridge, is considered to be the largest tech firm in the UK. It doesn’t manufacture computer processors but licenses its processor core designs to other chip-makers. This could make Huawei experience a more difficult situation. The alternative supplier of Huawei was from its own HiSilicon, but the fundamental technology was sourced from ARM.

Moreover, the information from Bloomberg indicated that in addition to Hikvision, the Trump administration was also considering to blacklist Megvii, Zhejiang Dahua, Meiya Pico, Iflytek Co. Ltd. and four other video surveillance companies. Other Chinese technology companies had also entered the US government’s strike range. This Monday (May 20), the U.S. Department of Homeland Security (DHS) warned U.S. companies that drones made in China could be harmful to the safety of corporate data. Due to this, the global observer speculated that China’s Shenzhen Dajiang Innovation Technology Co., Ltd, the world’s largest consumer-class drone manufacturer, was likely to be the next target.

In addition to technology companies, the Trump administration’s concerns about China’s rise in technology had also spread to Chinese scientists and technicians working in the United States. On Tuesday (May 21), the Trump administration was reported to delay the approval of Chinese citizens’ applications to work in semiconductor companies. This was intended to protect technology owned by American companies from theft. However, the analysts forecasted that this would hit hundreds of job opportunities in companies such as Intel and Qualcomm.

The rising risk of tech cold war

According to Robert D. Atkinson, the president of the U.S. think tank Information Technology and Innovation Foundation (ITIF), the world is indeed splitting into two technology camps. Like many American government officers, Atkinson accused China of not abiding by global standards and employing systematic deception.

In Atkinson’s view, the Chinese government applied unfair, unethical and illegal means to gain a technical advantage. Atkinson concluded that it was innovative mercantilism that led to the separation of the United States and China. He explained that China’s practice of acquiring U.S. technology through means such as government sanctioned transfer of technologies to China, purchase of US technology with government funds and cyber theft were all practices of innovative mercantilism. This is not helped by the fact that U.S. corporate investment activities in China have been restricted. Unless the Chinese government can change its way, the U.S. would continue its action.

On the other hand, China accused the U.S. of “abusing the power of the state” and trying to obstruct China’s technological development. Last Wednesday (May 22), Chinese Foreign Ministry spokesperson Lu Hao responded to the sanctions against Chinese surveillance equipment manufacturers by saying that the U.S.  was “abusing the power of the state”, and, “discrediting and suppressing companies in other countries”. On Thursday (May 23), the Chinese commerce ministry spokesman, Gao Feng warned that the recent U.S. actions might pose “a great threat to the security of the global industrial and supply chain”.

“If we do not continue to strengthen our efforts in fundamental research and core technologies, our digital economy would become a tall building built on sand,” said by Pony Ma, the CEO of another Chinese tech giant Tencent. Nevertheless, the recent experience has reinforced an important lesson to China that tech security could only come from self-reliance.

By Steven Gao

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