Posted by on July 30, 2019 1:00 pm
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By Daniel McGroarty, TES GeoPolicy Editor

 

 

“There is also something fundamentally wrong with the interim deal…  That arrangement boosts America’s sale of primary products, a badge of a basic economy, at the cost of ceding high-tech leadership.” 

 

 

That’s the closing note in a thought-provoking piece by Gordon Chang at the Gatestone Institute by way of Powerline, taking a careful look at the interplay of the simultaneous trade war and tech war being waged by the U.S. and China.

 

 

Chang deconstructs press reports on the “small agreement” being rumored as the likely outcome of the new round of U.S.-China trade talks — a deal in which, on its face, appears to favor the U.S., with China agreeing to buy more American-grown soybeans and agricultural staples, at the same time the U.S. lifts the ban on the sale of U.S. semiconductor chips and other essentials to China’s 5G giant, Huawei.  In terms of trade, it’s always interesting when one side’s concession — to buy more of your products — comes with a request that your concession must be…  to sell the other side even more of your products.  So interesting, in fact, that Chang challenges us to look a little deeper.

 

 

Such a deal might make for a few good U.S. quarters in terms of the U.S.-China trade balance, but the commercial bump for the U.S. economy comes at a high cost:  the reprieve on selling to Huawei lets the Chinese company off the ropes — and back into the 5G battle, where each contract won worldwide raises the likelihood of future deals to expand its network.  And while Huawei may be “the world’s largest networking-equipment manufacturer and second-largest smartphone maker,” Chang tags it as “an across-the-board bad actor…. How so? Think of two words: stealing and spying.”

 

 

Chang notes that Huawei was swiping IP nearly at birth, from Cisco Systems, Nortel Networks and others, while Chinese law requires the network behemoth to allow Chinese intelligence agencies access to whatever data passes through Huawei servers.  It’s all well and good to covet streaming video at 5G’s light-speed downloads, but perhaps we can do so without surrendering our civil liberties, search histories and IP trade secrets to China?

 

 

As the U.S. trade talk delegates do their last-minute prep for the new round of negotiations, let’s hope they step away from the trade table long enough to give Chang’s latest a careful read.

 

 


Daniel McGroarty, TES GeoPolicy editor, served in senior positions in the White House and Department of Defense, and has testified in the U.S. Senate and House on critical minerals issues.  McGroarty is principal of Washington, D.C.-based Carmot Strategic Group, and president of the American Resources Policy Network, a non-partisan virtual think tank dedicated to informing the public on the importance of developing U.S. metal and mineral resources.  The views expressed here are his own.