The US and China are caught in a difficult trade battle, that could dip into a full blown trade war. The most highly contested part of the trade dispute is dealing with intellectual property. The Chinese have a price they require companies to pay for providing access to their 1.2-billion people. That price is that you need to share your technology with the government if you plan to engage in commerce within China. One of the most bitterly fought battles is over Huawei, the Chinese telecoms group that has shaken the world by establishing a lead in 5G, the fast wireless networks that will connect the next generation of devices.
The US is Very Concerned About Huawei
American officials are concerned about Huawei’s influence and they are coercing allies to get rid of Huawei’s equipment stating it could be a security threat. In fact, US Vice President Mike Pence said that the US cannot ensure the defense of the West if allies are dependent on technology that was developed in the East. Additionally, to add to the issues related to the company, Huawei’s chief financial officer Meng Wanzhou and daughter of company founder Ren Zhengfei is under house arrest in Vancouver on U.S. charges that the company violated sanctions on Iran.
The arrest of Meng Wanzhou came just as Washington and Beijing reached a truce to halt in the escalation of tariffs. This timing and President Donald Trump’s suggestion that he could use Meng as a bargaining chip in the negotiations prompted an outcry from Chinese officials, who painted her arrest as a power play.
Is the US Losing its Grip on Leading Technology?
The White House is defending technology on all fronts. The Trump administration vetoed the attempted $142 billion acquisition of US chip company Qualcomm by Singapore-based Broadcom, citing Chinese links. The question is whether this aggressive action against Chinese technology is changing sentiment? It appears that with its aggressive response to Huawei, the White House has shattered the illusion of US tech supremacy. But owning the backbone of the next generation of wireless-connected devices might be a very big achievement.
The introduction of 5G across Asia by an Asian company could generate strong demand across the region for an alternative to the iPhone. Apple has recently made amends with QUALCOMM, and will not be using the Huawei chips. The lead in 5G, will increase the availability of real-time mobile trading platforms and will allow Huawei to approach regions outside of Asia, and potentially infiltrate into Europe. The battle for economic prosperity is currently on display as the US and China duke it out, in front of the entire world. If the US wins, it will provide the backdrop for other countries to make new bilateral agreements with China. Its unclear if the US can make inroads with China which would come if China allowed US companies equal access.