The United States has again accused China of technology theft. Photo: iStock
China has used technology in a big way to help people buy online. Photo: iStock

Peace summit? The signs are pointing to an ugly fiasco. With the trade talks between United States President Donald Trump and China’s head of state Xi Jinping looming on the horizon at the G20 meeting in Buenos Aires later this month, the atmosphere has become decidedly frosty.

Accusations of technology theft through intellectual property infringements surfaced again earlier this week when the office of US Trade Representative Robert Lighthizer released a 53-page report.

In the blink of an eye, it illustrated the chasm which exists between Washington and Beijing.

“China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property and innovation, and indeed appears to have taken further unreasonable actions in recent months,” the study said.

The document highlighted China Telecom and how the state-owned conglomerate engaged in a campaign to “hijack internet traffic and direct it through mainland servers for possible collection and analysis.”

This practice was reported by Asia Times last month.

To combat what is perceived to be a ‘national threat,’ the Trump administration will push ahead with plans to tighten restrictions on technology exports.

Already the White House has imposed duties on Chinese imports worth nearly US$250 billion in tit-for-tat tariffs, increasing the pressure on the world’s second-largest economy.

Latest move

Still, this latest move has been condemned by the state-owned Global Times, which is run by the Communist Party’s official newspaper, the People’s Daily.

In an editorial, it said:

“The planned export controls include 14 advanced technology categories such as artificial intelligence, microprocessors, quantum computing and robotics. The notice didn’t refer specifically to China, but it is believed the restriction is primarily targeting the country.

“Beijing needs to remain calm while Washington is impulsive. It has become a trend in the US to expand technological export restrictions against China, but it’s uncertain to what extent Washington will enforce the restrictions. China shouldn’t be swayed from the course of opening-up because of Washington’s restrictions.”

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Against this bickering backdrop, Deutsche Bank stressed that the decision would have a “profound and long-lasting adverse impact” on Sino-US relations.

“Many technologies and products are used for both military and civil purposes,” Zhiwei Zhang and Yi Xiong, analysts at the Frankfurt-based bank, wrote in a note, which was reported by Bloomberg.

“In an economic Cold War, even if the controls are not imposed on certain products at the current stage, companies will likely feel the potential risk if the tension escalates between China and the US down the road,” they added.

Filtered down

Flashpoints have been a regular occurrence between the two countries during the past nine months and this has filtered down into China’s economy. Last week, a batch of data released by the National Bureau of Statistics painted a mixed picture.

While industrial output and investment grew faster than expected in October on the back of a raft of government measures, retail sales have softened.

The property market has also suffered while new car sales have stalled as consumers rein in spending. Local government and corporate debt are other ongoing issues.

As for international markets, they have reacted wildly after the trade spat spilled over at the Asia Pacific Economic Co-operation meeting at the weekend.

“We suggest a certain country matches its words with deeds, rather than wag the finger at others,” Hua Chunying, China’s Foreign Ministry spokesperson, said in a statement after an uncompromising speech by US Vice-President Mike Pence at APEC.

“The [US] should treat all countries on an equal footing, respect other countries’ rights of following a development path that accords with their own national conditions.”

Peace summit? To thrash out a deal both sides will have to dial down the rhetoric in Buenos Aires.

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