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Can Tech Globalization Succeed With the U.S. and China At Odds?

The geopolitics of technology continues to get more and more fraught. While the U.S. has dominated most spheres of tech for some decades, China is challenging that dominance in area after area. The U.S. is now trying to use its remaining dominance to pressure China politically and economically, denying China access to American semiconductors and other tech, while banning Chinese technology here. China has, in turn, begun its own crash program to advance in semiconductors, which will significantly diminish opportunities for its former American suppliers. An even deeper schism seems possible, which would be terrible for everyone. Is tech détente possible? Could the world’s top tech powers ever reverse course and begin to cooperate?

A huge area of unresolved tension is in wireless, particularly next-generation 5G technology. China’s Huawei is the world’s biggest producer of infrastructure for 5G, universally believed to be the interstitial tissue upon which the next generation of a digital society will be built. The company holds considerably more patents on 5G than any other company. But the U.S. and many European governments and other, mostly developed countries, have banned or severely restricted the installation of Huawei technologies, mostly for fear they could be used by the Chinese government for espionage or subversion. And the U.S. under President Donald Trump decreed Huawei could not buy U.S. semiconductors or the Android mobile phone operating system, among other things, partly because the company was accused of violating U.S. sanctions on sales to Iran. Biden so far seems likely to maintain the approach. The chip and software ban has significantly harmed Huawei’s ability to build and sell cellphones, and its latest financial results documented the financial impact. Meanwhile, Huawei has had huge success building wireless networks in much of the developing world, largely because its prices are generally considerably lower than those of top competitors like Ericsson, Nokia and Samsung.

Huawei wireless infrastructure is almost completely banned from the U.S. Its executives call that a major loss for the country. “5G will enable the future of every sector–manufacturing, transportation, banking, education, and health care,” says Joy Tan, senior vice president for public affairs of Huawei USA. “So if a country is slow in deploying 5G the digital transformation of every industry will slow as well, with financial impact on all these industries.” She points to a study by Charles River Associates that found, Tan says, that if Huawei did not participate in the U.S. 5G build-out, that would contribute to a reduction in U.S. GDP of $241 billion over the following six years. Tan also vehemently denies that Huawei technologies represent a security threat to the countries where they are installed.

Techonomy has partnered with Huawei to explore the consequences of declining global tech cooperation with a panel discussion, and Tan will sit on it Wednesday, April 14 at 1pm EDT. Joining her will be two leading American analysts of global business relations. Zachary Karabell is a opinion writer for many major American publications, and in 2009 wrote Superfusion: How China and America Became One Economy and Why the World’s Prosperity Depends on It. He believes that a confrontational approach is not serving the U.S. well, nor achieving its desired ends. Referring to an entire panoply of recent punitive gestures against China, Karabell recently wrote in Foreign Policy:“Trump’s approach only succeeded in increasing animosity and reducing Chinese investment and purchases from the United States…Now, U.S. President Joe Biden appears to be adopting large swaths of Trump’s policies, and even many of the former president’s basic presumptions…Those ideas were wrong under Trump. They remain so under Biden.” He also wrote that “The United States has never had to confront an economic and military power that it cannot coerce easily nor confront directly.”

The third panelist will be Scott Malcomson, a longtime journalist and tech analyst who wrote a 2015 book called Splinternet: How Geopolitics and Commerce are Fragmenting the World Wide Web. Very recently he did a close study of how Chinese companies are selling tech in certain countries around the world. He is not convinced that Chinese tech is without risks for other countries. “Chinese companies will do whatever they have to do in order to remain in favor with the state,” he told me. But he is also sympathetic to Chinese complaints about the harmfulness of tech sanctions. “If the end point of Western policy is to make it impossible for China’s tech sector to advance, that isn’t just like beating them at Go. That’s taking their future away.” It’s the inverse of Tan’s argument about the U.S.

These issues are tough to reconcile, which is why it’s a great topic for discussion. Malcomson also notes that the U.S. itself is no paragon when it comes to intrusive tech: “We are no more forthcoming about our own actual capabilities for infiltrating and surveilling foreign networks and companies. We are better than anybody at that and do it at a volume greater than anyone else.” But he does add a significant qualifier: “What we don’t have is quasi-state-sponsored hackers doing cyber ransacking expeditions.” He thinks China, among other countries, is itself guilty of that.

To figure out what all this means for globalization, the question on the one hand is whether current approaches will achieve their desired result. All three of our panelists would say no. But on the other, are there alternative policies that would?

I end this piece with a note of optimism from Malcomson: “The somewhat underappreciated genius of the tech sector is that at the academic or hacker entrepreneur level there is still an innovative culture moving forward. If you look at the research papers you’ll see people from Google and from China co-writing papers. Open source and AI stuff is still being done by an international research community that goes ahead as if the Chinese Communist Party and the Pentagon don’t exist. And that will continue, I hope. So you can have technological progress even when you have hostile politics, up to a point. Ultimately, governments cannot generate technological progress at the same rate that this system can.”

One Response to “Can Tech Globalization Succeed With the U.S. and China At Odds?”

  1. ronald holmes says:

    2020 is the demarcation point in the human drama. covid 19 is an instructive catalyst for unmasking multiple mandates: respect for nature, with particular regard for everyone’s vulnerability relative to planet harmonization; the realization that community consciousness at every level, individual, local, regional national should be increasingly be imbued as “common sense”.

    civilization is leaving a 7,000 year old “AGE OF SURVIVAL” characterized by: a global climate event, endemic warfare and building walls. our consuming need for food shelter and clothing matriculated into folks measuring themselves in self defeating illusions of wealth and power….sad and barbaric since we have soooo much.

    kindly note that language is the delimiter of learning. covid 19m introduced america to the word exponential and its vast ubiquity and accelerated pervasiveness. the imprinting of this single word should allow american basic “good value system and noteworthy american spirit” to engage the miraculous bounty of exponential technology and its multifarious social transitioning into multi-platform exponential exponentialism.

    america was almost lost to the world to a craven Trump tyrant. our values were splayed upon the cross of uncertainty like a virgin being sacrificed for political purpose. joe biden is a good man. our trauma and potential needs to be reconciled with china’s techno-emergence, europe’s proud history and pockets of socialism as well as supporting a pained world.

    ronald c holmes…..i clould go on.

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