TRADE US tech restrictions ‘stem from fear’

Domestic companies should be more independent in R&D

The US government is increasingly on the alert against Chinese companies’ investment in their technology sector for fear that China might overtake their technical advantages, experts said.

The US government is mulling a crackdown on investment from China in the tech sector by invoking a law for national emergencies, according to a report from Bloomberg on Tuesday, citing people familiar with the matter.

According to the report, the Trump administration is now working on plans to identify the sectors in which Chinese companies would be banned from investing, which may include semiconductors and 5G wireless communications.

Another report on Wednesday, also by Bloomberg, said that US President Donald Trump is considering curbs on 10 strategic industries that form the thrust of the China-proposed “Made in China 2025” initiative. With those measures, the Trump administration has fanned the flames of a tariff war with China.

Gao Feng, a spokesperson for the Ministry of Commerce, said Thursday that China has not wavered in its determination and confidence to open up its markets, and will not change its direction under external pressure.

Major Chinese firms, including Huawei Technologies Ltd, Alibaba Group Holding, electronics giant Hisense Group and domestic phone maker OnePlus, which have all invested in the US market, declined to comment as of press time.

Increasingly alert

Wang Yanhui, head of the Shanghaibased Mobile China Alliance, told the Global Times that China’s semi-conductor technologies still lag significantly behind those of the US.

“I don’t think China is a threat to the US in the semi-conductor area,” he said, pointing out that the communications sector is where the US is really threatened by Chinese companies. “Particularly, the US is on guard against Huawei,” he stressed.

“Huawei is very proactive in setting technical standards for 5G networks, an area which has long been dominated by US telecommunications company Qualcomm. The US government feels threatened by this. They don’t want to lose their competitive edge over China in this area,” Wang said.

In February, Huawei announced its first 5G chip at the Mobile World Congress, which will allow the company’s mobile devices to access the next generation of cellular networks.

Trump on March 12 blocked a merger between Qualcomm and Singaporebased chip maker Broadcom. “The US government is worried that Qualcomm might reduce its investment in the 5G sector after the acquisition, giving Huawei an opportunity to catch up,” Wang said.

According to media reports, the US government is also pushing US wireless carrier AT&T to cut commercial ties with Huawei. AT&T pulled out of a deal to sell Huawei’s new Mate 10 Pro smartphone in January.

But Wang stressed that apart from the technology sector, the US government would not be too hostile toward investment from China in other areas.

More independent

Such hostility toward Chinese investment is not only restricted to the US. According to a report on EUobserver.com in September 2017, the EU had already been preparing to screen foreign investments, particularly from China, to avoid takeovers in certain sensitive sectors.

Liu Xingliang, head of the Data Center of China Internet, said the restrictions would not scare Chinese companies away.

“Domestic companies that target globalization can’t neglect important markets like the US. That’s why many Chinese companies have tried repeatedly amid external blocks to break into those markets, whether it’s for patents, for market or for technologies,” he told the Global Times on Thursday.

“But overall, I think Chinese companies must be more independent and develop their own technologies, as it is evident it will be increasingly difficult for them to get key technologies just through buying,” Wang from the Shanghai-based Mobile China Alliance said.

“Chinese companies must be more independent and develop their own technologies, as it is evident it will be increasingly difficult for them to get key technologies just through buying.” Wang Yanhui Head of the Shanghai-based Mobile China Alliance