Which tech passport has the most global muscle?
~ By Charmaine Mirza
Riding high on the bubbly (made in England, of course) effervescence of Brexit, BoJo’s pulled his latest “Trump” card out of his rumpled Old Etonian suit and has done what England does best – i.e. divide and rule in the latest tech stand off between Washington and Beijing.
“The United States has backed off from earlier threats to abandon a trade deal with Great Britain if Boris Johnson’s government allowed Huawei to build part of its 5G network,” The Daily Telegraph reported on January 25, 2020. (We thought it was an amusing coincidence that 25 January 2020 marks the start of the Year of the Metal Rat. The Rat being the first sign of the 12 animal cycle in Chinese Astrology, is considered a harbinger of new beginnings).
Flummoxed by the flexing of all this geopolitical muscle over technology? Inchin Closer decodes the conflict.
What IS the Tech War All About?
While Huawei is being made the poster child for several countries’ data security concerns, it’s not the only company to be placed on Trump’s Entity List, as a part of the US trade sanctions on China.
Several countries deem Huawei a “High Risk” vendor. One wonders whether this is purely because of national security concerns or whether it’s because they fear that Huawei’s lean, mean cutting edge tech machines will eclipse their own obese and flagging IT sectors.
“Britain’s spy agencies have long argued that any risks from using Huawei can be contained, and that US calls for a total ban are disproportionate. The company has been supplying equipment in the UK since 2003, and is already subject to regular review by an arm of the GCHQ intelligence agency,” reported the Guardian
But security concerns apart, perhaps England’s green light for Huawei is a glaring red flag for Trump’s bull in a china shop approach to global economics as it cedes valuable English tech turf to the Chinese. So he did what he does best – and imposed trade sanctions on Chinese telecommunications majors – including Huawei, among others.
“The Trump administration placed Huawei on a trade blacklist in May, effectively barring the Chinese telecommunications equipment maker from buying US components and technology without government approval.” – according to TechNode.
Why does it matter? Primarily because several Chinese telecom companies buy their semiconductor chips from the USA. In fact, the Chinese and Taiwanese manufacturers have been the biggest buyer of US made semiconductor chips for several electronic devices – till now.
According to TechNode:
“Ongoing trade tensions and a technology cold war between the US and China may spur a “de-Americanization” of global supply chains, according to a report by global trade nonprofit Hinrich Foundation. (India – take note!)
Why it matters: US export restrictions on major Chinese tech companies such as Huawei will force global semiconductor companies to source non-American parts, causing a reconfiguration of supply chains to meet thresholds set by the US government, according to the report.
- To ship to companies on the US commerce department’s Entity List, suppliers around the world must ensure their products contain less than 10% of US technology if they are made in the US and 25% for non-US made products.
- China is currently the largest importer of integrated circuits in the world with $300 billion worth of microchip technology being imported to the country in 2018, said the report.”
~ This article is the first part of a two part series on the 5G tug of war between China and the United States of America. Read part 2, to know where we are headed.