Silicon Valley bathed in night lights as the sun rises. Photo: NASA / iStock
Silicon Valley bathed in night lights as the sun rises. Photo: NASA / iStock

High-tech startups could still be next on President Donald Trump’s list as the trade battle between the United States and China escalates. Beijing-backed investment is pouring into sensitive sectors of Silicon Valley, home to the brightest and the best in the US technology field.

“More than 20 Silicon Valley venture capital firms have close ties to a Chinese government funded or state-owned [entities],” Reuters news agency reported.

Danhua Capital, which is funded by state-owned Zhongguancun Development Group, has invested in some of the “most sensitive technology sectors,” including data management and security.

So far, Washington has failed to focus on Chinese funding in American tech startups, but that is likely to change if the US Congress pushes through legislation to allow the government to block foreign investment.

On Thursday, Trump appeared to back off initial threats of limiting Chinese involvement but confirmed that deals and funding would be heavily scrutinized if they crossed into national security territory or sensitive sectors.

Intellectual property rights and high-tech industries have become a key sticking point between the US and China after a tit-for-tat trade dispute, which has spilled over into the broader world economy.

“The fundamental reality is that talk is cheap,” Peter Navarro, the White House trade advisor, told the media in a conference call last week, adding that China “may have underestimated the strong resolve of President Trump.”

“If they thought that they could buy us off cheap with a few extra products sold and allow them to continue to steal our intellectual property and crown jewels, that was a miscalculation,” he added.

Despite three rounds of talks and shuttle diplomacy between Washington and Beijing, both sides have failed to solve their differences as tensions increase.

Treasury Secretary Steven Mnuchin led a US delegation to China earlier this month and tabled a list of demands to tackle allegations of intellectual property theft and other key policies Washington considers unfair.

“The Chinese have said, ‘We want to see the specifics.’ We gave them all the specifics in terms of trade issues. So they can’t say they don’t know what we’re asking for,” Terry Branstad, the US Ambassador to China, said at a conference in Tokyo earlier this week.

“We’re still very far apart. There are many areas where China has promised to do but haven’t [delivered]. We want to see a timetable. We want to see these things happen sooner than later,” he added. “We’d like to see China being just as open as the United States.”

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