Is telecoms IP squabbling about to crash the global economy?
- With Huawei and China’s high tech sector in the crosshairs it feels so
- Is it about bullying China into a less ‘aggressive’ high tech policy
- Or can the discussion turn into trying to find a ‘win-win’
It looks as though the US/China trade talks are going to be conducted both inside and outside the meeting room, not just by the US side, but by Chinese spokespersons too.
Step forward Chinese foreign ministry spokesman, Geng Shuang, who said that the problem was that the US side was unwilling to accept China’s industrial development.
“The United States is the world's top power in terms of technology, we acknowledge that," Geng Shuang said. "But we hope that the US can see the scientific and technological progress of other countries with an open and inclusive attitude. It must allow others to make progress while developing itself."
This week US intelligence officials told Congress (and the world) that China is the biggest commercial and military threat to the United States. Another intelligence report said that Chinese policy was to steal or copy technologies it cannot make itself.
Apparently in response, Geng Shuang said that it was "totally unreasonable to make random accusations," like that at the start of talks.
Geng Shuang has some good points, but up to now the Chinese side of the story hasn’t been articulated effectively (or found its way onto the ‘Mainstream Media’).
Stealing ‘secrets’ (IP theft, or at least accusations of IP theft) is a game that is played by US technology companies against each other and anyone else who threatens. In fact big tech company behaviour is about having enough IP in the locker to counter-sue anyone who tries to get you first - on the basis of real or imagined IP theft.
So to make any headway in the global markets for smartphones you have to at least ‘sail close to the wind’ to fight through the legal thicket protecting literally thousands of patents. Chinese companies included.
As for ‘demanding access to technology’ in return for establishing a presence in the Chinese market in a joint venture. This has been standard practice in China since the early 1990s to my certain knowledge, and was considered hard but fair by the European companies who gained from it. After all, incoming companies did have the choice of saying ‘no’.
Do we really think the basis of globalisation in the 1990s was an understanding that China should just supply abundant low grade labour to make things while the ‘west’ would stay in control of the IP and the high technology that it enabled?
Now the negotiators are meeting in Washington and the clock is counting down to a fast approaching March 2nd deadline, at which point Trump is poised to escalate the existing tariffs on $200 billion worth of Chinese imports from 10 per cent to 25 per cent if an acceptable (to Trump) deal is not struck.
If that happens many in the US are pointing out that the results might be catastrophic. The implication of raising tariffs in this way would eventually be ‘an unwinding’ of what are now entwined economies, with causes and effects rippling right through both the US and China and on to the rest of the world.
Firstly, China can’t just respond instantly and re-orient its economy in such a way that it mends the physical goods trade differential between China and the US. Huge lumbering and interdependent economies just can’t work like that, as we’re beginning to appreciate in what increasingly looks like a ‘car crash’ Brexit with calculations of its impact being made nightly on the television news.
Secondly, such a course would almost certainly plunge China (which is already teetering on the edge of a recession as it tries to cope with slowing growth) into economic chaos and might take the US (and probably the rest of the world) with it.
If any good comes out of Brexit, it might be that the economic misery it might cause will give pause for thought to Trump when it comes to following suit with an even heavier blow to the global economy (or, if Trump pulls the trigger first, maybe the initial shockwaves will be enough to ensure that the UK and Europe don’t follow on). Let’s hope so.
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