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‘Óur survival is at stake now,’ Trump has shattered the Chinese dream of technological domination in the last two years

Amit Agrahari by Amit Agrahari
22 May 2020
in Opinions
trump china

(PC: The Indian Express)

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After Xi Jinping took over China as the ‘paramount leader’ in late 2012, the country was in the early stages of technological development. But from the very day of the taking over the country, Xi Jinping unveiled the plan of “Chinese dream” with the aim to make it a technological powerhouse.

For a few years after that, Chinese technology companies grew exponentially not just in the domestic market but in international markets too. The best example of Chinese technology companies’ growth would be domination of the Indian smartphone industry in barely three or four years.

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Similarly, Chinese companies expanded to other countries around the globe and within no time China has 9 companies in top 20 technology companies by valuation. Huawei, the market leader which enjoys backing of the Chinese Communist Party, got project to roll-out 5G infrastructure in countries across Europe.

In the meantime, People’s Liberation Army- the armed forces of the Chinese Communist Party which owns the Chinese state- started using data from Chinese tech companies to devise strategy against foreign countries. Chinese military was drawing of 6G dream for modernization of armed forces and plan wartime a scenario at a time the world is stuck in 4G. Everything was going as planned by Xi Jinping, who aims Global domination of China, but then Trump came to power, riding on anti-China campaign.

Trump started tightening the screws and started plugging the loopholes using which Chinese companies were taking advantage of the US. In August 2018, Trump signed a bill which banned use of equipment of Chinese companies like Huawei, ZTE by US government as various reports have published earlier have pointed out that these companies are threat to national security.

Almost a year later, in May 2019, US government put Huawei and its affiliates under export control list for supplying products to Iran, which banned even private US companies from supplying equipment and services to the company. American giants like Google, Microsoft, Intel, and Qualcomm, on which Huawei was dependent to carry out its operations, suspended business with the company.

The next two blows on Chinese technological establishment came in last few days after the outbreak of Coronavirus, which ravaged the American economy and caused Trump’s ‘tech war ‘against China.

On last Friday, the US released new guidelines regarding the export of semiconductors, the most essential part of any consumer electronics and technology equipment. As per new guidelines, any foreign company which seeks to export semiconductors based on secret American design has to apply for a license to US Department of Commerce, which the department is most likely to deny.

After the move, Chinese technology giant with annual revenue of more than 120 billion dollars said that its “survival” is at stake now. “We will now work hard to figure out how to survive,” said Guo Ping, rotating chairman, at Huawei’s annual analyst conference. “Survival is the keyword for us now.”

The US Commerce Secretary explicitly said that the Department will “narrowly and strategically target Huawei’s acquisition of semiconductors”. Given the fact that semiconductors are the most essential device for any consumer electronics or telecommunication device; this ban would result in the collapse of Huawei.

After the ban on semiconductor exports, yesterday US Senate passed a bill with bipartisan consensus banning the listing of Chinese companies on American companies if they do not follow US accounting standards.

Almost all major Chinese technology players like Alibaba, Baidu, and Tencent are listed at American stock exchanges- NYSE and NASDAQ. Given the fact US has most sophisticated; most capitalized- valuation at 32 trillion dollars, almost 4 times more than Chinese stock markets; and most advanced stock markets in the world, the ban means Chinese companies would be starved out of capital to finance future projects unless they move to other stock markets like London Stock Exchange or Hong Kong stock exchange, which is easier said than done.

Major technology companies like Huawei, ZTE, and BBK Electronics are already suffering unprecedented loss due to global lockdown and American restriction placed since last year; with new rules in place, these companies are set to collapse.

In the last two years, Trump has shattered the Chinese technology domination dream which relied on companies like Huawei and ZTE. China aimed to become global superpower by taking early mover advantage in 5G and 6G technology, and Xi Jinping’s plans were working but then came Trump.

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