China ponders tech strategy

▶ Cautious approach urged in handling Huawei, US firms

China should prepare a set of savvy longterm measures to counter US blackmailing tactics aimed at containing China’s rapid technological rise and avoid knee-jerk responses involving companies like Huawei, Apple or Qualcomm, Chinese analysts warned on Tuesday.

China needs to adopt a comprehensive long-term strategy, rather than just heed emotional calls to win the race for dominance in key technologies of the future, they noted.

Huawei Chief Financial Officer Meng Wanzhou was arrested by Canadian authorities on December 1 at the request of their US counterparts for allegedly violating US sanctions against Iran, sparking widespread outrage in China.

Many on Chinese social media have called for a boycott of popular iPhones and Canada Goose winter jackets.

The Canadian company’s shares have slumped 18 percent since Wednesday. Apple’s shares have also seen volatility,

losing 2 percent on Monday before surging back.

Some Chinese companies offered incentives for their employees to buy Huawei devices in support of the Chinese telecom giant, according to media reports.

The case has also sent chilling waves through business communities in China and the US, with some US companies reportedly suspending executive trips to China. Chinese business leaders are also reportedly reconsidering foreign trips.

In a separate move on Monday, a court in East China’s Fujian Province ruled that Apple had infringed Qualcomm’s patents and ordered the company to stop selling older iPhone models in China, Qualcomm said in a Monday statement.

The ruling was widely interpreted as a signal that China could target US companies for retaliation. Apple filed a request for the court to reconsider its ruling.

But Chinese officials need to come up with a comprehensive set of countermeasures to respond to actions from the US, while avoiding irrational moves that could dampen domestic interests and damage the global supply chain, analysts noted.

Targeting Apple or other US companies could backfire, they warned, as Chinese domestic interests are intertwined with their supply chains.

Apple said it has directly and indirectly created more than 5 million Chinese jobs in China.

But China also accounts for nearly 20 percent of Apple’s global revenue, according to media reports.

Qualcomm has invested heavily in China and is closely involved in chip development and the rollout of China’s 5G network, expected in early 2019. But Qualcomm also generated 65 percent of its global revenue of $2.23 billion in China in 2017.

“Targeting a specific company like Apple or Qualcomm would put ourselves and our global partners – who are also involved in the supply chain – at risk,” said Sun Lijian, an economics professor at Fudan University.

“What we need is a comprehensive strategy that could push back at the US actions but also protect Chinese industries.”

Chinese officials are continuing to call for the release of Meng. A bail hearing is set to continue by a Canadian court on Tuesday.

Meng’s arrest has been widely interpreted by Chinese experts as the latest sign of all-out efforts by the US to contain China’s technological rise.

“The US has a clear strategy to rein in China that employs diplomatic, legal and political means,” said Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations in Beijing.

An effective counterstrategy would include diplomatic efforts that aim to exert pressure and seek peaceful resolutions, but above all, legal and regulatory measures to protect domestic companies, Chen said.

“We don’t need to target any specific company, but we can enhance the legal and regulatory protection of Chinese companies, which would also send a signal to the US.”