The escalating trade war between the United States and China has gone beyond tariffs as the countries increase pressure on each other to cede ground.
It’s no secret that China has long played fast and loose with patent, trade secret and copyright laws in violation of international norms. When called on the carpet, China makes vague concessions, and U.S. companies live with the infractions as the cost of doing business. But the current trade dispute is different and the stakes higher.
How should Washington deal with an authoritarian regime that is expanding its influence abroad and repressing its citizens at home? That is the question the United States faces today in dealing with Xi Jinping’s China. But it is not a new challenge. After World War II, the United States faced another authoritarian state intent on expanding its borders, intimidating its neighbors, undermining democratic institutions, exporting its authoritarian model, and stealing U.S. technology and know-how.
More and more research institutions are cutting their ties to Huawei, the Chinese telecommunications powerhouse, either officially or unofficially. And institutions have reasons to be wary of research money from the world’s largest supplier of telecom equipment, given that Huawei’s been accused of serious crimes in the U.S. It’s also hard if not impossible to separate Huawei from the Chinese government.
Regardless of what led to a failure to conclude a trade agreement between the US and China, the new reality is that hardliners on both sides have now gained the upper hand over those seeking to find an agreed way forward. It means both sides now have fewer inhibitions to provoke the other on trade, and even more sensitive and dangerous subjects.
“The technology war is not going to end,” Alastair Newton, director of Alavan Business Advisory and a former British diplomat, told CNBC’s “Squawk Box” on Wednesday. “Technology is where this battle is going to be fought out, even if we do get a trade deal on bilateral goods.”
If the ongoing tensions between Beijing and Washington force companies to develop two different sets of technologies -- one for China and its aligned countries, and the other for the rest of the world -- then it would be bad news for everyone, according to a senior executive at a multinational tech firm.
As ITIF has argued for more than a decade, there is no question China is the world’s leading practitioner of the dark arts of innovation mercantilism. As such, the United States, and the global trading community more broadly, is well within its rights to insist that China dramatically roll back these egregious and unfair practices, including intellectual property theft, forced technology transfer, and massive industrial subsidies.
It’s thrilling and nail-biting stuff watching the unfolding of what some predict will prove to be the defining event of our time - the onset of a technology cold war between the world’s two superpowers, the US and China. Whether Trump’s tough stance on Huawei turns out to be a hard-ball negotiating tactic or not, the events of the last few weeks will, in all likelihood, set China on a game-changing course towards becoming technologically self-reliant.
America was late to the game--and is now paying the price because China, the world’s second largest and powerful economy behind the U.S., was able to take advantage by stealing secrets from some of the nation’s most critical businesses, including the U.S. government. Secretary of State Mike Pompeo is worried that the communist-led country has stolen defense secrets and used them to technologically advance their own defense systems, in both capacity and intent.