Anyone who thinks US-China relations couldn’t deteriorate any further might have to try avoiding the news for a while. Judging from recent developments, they might be about to get a whole lot worse.
While the world waits on news about a possible trade breakthrough that will allow the Trump administration to holster its tariff guns for the time being, a related battle for technological supremacy is being fought on a different front. Many have speculated that the tariffs themselves are actually aimed at China’s high-tech ambitions, not the trade deficit often cited by US President Donald Trump. Washington’s weapons are not, however, limited to tariffs.
After a move last week to restrict US component manufacturers from selling to Chinese telecommunications firm ZTE, it was reported on Wednesday that the US Department of Justice (DOJ) was investigating Huawei for violating sanctions on Iran. The ban slapped on ZTE, also related to Iran sanctions violations, has been described as a near-fatal blow to the firm that relies heavily on imports from US suppliers.
The DOJ investigation into Huawei, first reported by The Wall Street Journal, is one more indication of Washington’s growing anxiety as China makes headway becoming a leading global player in high-tech industries. Political pressure has largely kept Huawei out of the US market, with the Chinese behemoth in effect prohibited from selling telecommunication equipment to US service providers. Wireless carriers have also been pressured not to sell its mobile phones.
The action against ZTE, and the ongoing investigation into Huawei, come as both companies position themselves to lead a transition to fifth-generation wireless networks. China plans commercial production of its first 5G smartphones next year, Caixin reported on Monday, amid expectation of a national network by 2020.
While Huawei is well positioned to set standards for the new generation in wireless networks, the US has been trying to rally opposition among allies to using the Chinese firm’s technology. During a state visit to Washington in February, Australian Prime Minister Malcolm Turnbull was reportedly briefed by US intelligence officials on the dangers of using Huawei’s 5G technology. In a presentation prepared by a senior White House official proposing a national 5G network in the US, which was roundly shot down, one bullet point read “Japan all in,” suggesting the US ally had been approached regarding the proposal.
Commenting on the ZTE ban, a longtime adviser to both Chinese leaders and multinational corporations, Robert Lawrence Kuhn, wrote on Tuesday that he was starting to worry about a “looming tech war.”
“I’ve been concerned, but not worried, over what others have called ‘a looming trade war,’” Kuhn said. “But I am now worried over what I will call a ‘looming tech war,’ because the structural imperatives go deeper.”
The investigation into Huawei is another sign that these “structural imperatives” are driving an aggressive US strategy to defend its leadership in high-technology industries at all costs. Judging from recent legislation and action taken by government agencies, the strategy also appears to have broad support among US lawmakers of both major political parties and the Trump administration.