A U.S.-China high-tech trade war?

Steve Kelman worries that mutual suspicions could lead to much bigger problems.

U.S.-China conversation.  Shutterstock image.

In the wake of the U.S. government indictments of Chinese army officers said to be part of a cyber-hacking, there are warning signs that the Chinese government may be creating problems for U.S. high-tech firms selling in China, which if it continues risks a nasty trade war.

There is a perfect storm of factors that makes the Chinese government suspicious of U.S. IT. The first is that it can give Chinese people access to foreign information and communication channels. Both Google and Gmail, which operate out of Hong Kong after the company left mainland China to protest website blocking, have been periodically unstable and/or unavailable inside China. In the weeks before the 25th anniversary of the Tiananmen Square massacre in early June, the two sites became just about completely unavailable. As of this writing, two weeks after the anniversary, both are still unavailable, except for Gmail accounts set up as a smartphone app.

Second, of course, the Chinese government would like to foster development of their domestic IT industry, with national champions replacing foreign (read U.S.) firms.

Third is the Chinese anger over the U.S. indictments, and worry about U.S. cyber-espionage in China in the wake of the Edward Snowden revelations.

Since the indictments, statements or rumors about Chinese restrictions on U.S. tech firms have multiplied. So far the only officially announced restriction has been a clause in an obscure Chinese government procurement spec for energy-saving PCs and laptops, which stated that “all computer products are not allowed to install Windows 8 operating system.” (The link to this slightly weird announcement is http://www.zycg.gov.cn/article/show/242846 -- it is in Chinese, but GoogleTranslate will translate for you.)

However, there have been rumors, discussed in a detailed New York Times article, about restrictions on purchases of IBM servers by (state-owned) Chinese banks, on government purchases of Cisco equipment, and even on government agency use of Western consulting firms. (All these actions or rumored actions involve only government agencies and maybe state-owned companies, but it is assumed that large private companies would follow the government’s lead if asked, unless there are strong technical or quality reasons not to.)

During a recent trip to China, I had a conversation about this with a U.S.-educated Chinese entrepreneur who also is a senior advisor to the government on tech issues. He presented the only issue as being Chinese worries about the security of U.S. products and the danger of U.S. spying -- arguing the risk was high that U.S.-manufactured products would have back doors allowing access to internal data.

This was, of course, the worry Americans have had about Huawei tech gear in the United States, which has led to that firm being excluded from U.S. government business. The worries seem more justified on our end, frankly, because Chinese firms, even private ones such as Huawei, are under much more government influence and direction. I stated to my friend that even if the U.S. government asked Microsoft to routinely install back doors in Windows8, the company would likely protest and resist -- if for no other reason to reduce the risk of lost sales if such back doors were revealed. (Microsoft and some other U.S. tech firms make source code available to customers who want to check for back doors.)

He then retreated to a different argument: that Windows8, installed in Chinese machines, would automatically send back information to Microsoft in the United States, where the U.S. government could then access it. This accusation also appeared on a Chinese TV report on Windows8. I am not a techie, but I don’t understand what useful data would be available to Microsoft from Windows8 users unless the data were stored on a Microsoft cloud, which is a separate issue.

I hope the Chinese government will reconsider steps that could easily produce a trade war, since the ability to export high tech is very important to the United States. I spoke with a U.S. tech industry official very knowledgeable about U.S.-China tech issues, and he said that he believed Chinese anger over the cyberspying indictments was a very important part of the reactions that have recently taken place. If so, that is actually good news: tempers can cool, but a policy aimed at keeping U.S. companies out of the Chinese market for reasons of economic advantage is harder to reverse.

Stay tuned.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.