How Is This Tech Cold War with China Supposed to Work, Exactly?

 

Let’s assume the Trump White House blacklisting of Huawei in effect marks the beginning of a full-fledged Tech Cold War between America and China, complete with a Digital Iron Curtain. The full metaphor. How then does the conflict end in an American victory? And what does that even look like? Have the tech cold warriors, both within the White House and externally, given serious thought to any of this?

We know how the more comprehensive Cold War 1.0 concluded, with the dissolution of the Soviet Empire in 1991. It was a collapse that some predicted was inevitable. But at the time many others thought the scenario so unlikely as to be unworthy of speculation. The whole idea of 1970s detente was based on the perceived durability of the USSR. And this view held nearly to the very end. For example: The 1984 film “2010: The Year We Make Contact” was a sequel to the 1968 Stanley Kubrick-directed film “2001: A Space Odyssey” and concerns a joint US-USSR deep space mission.

As it turned out, of course, Hollywood was wildly optimistic about the sustainability of the Soviet enterprise, although hardly alone in that view. The Soviet Union didn’t have a decade left, much less a generation or more. The USSR’s centrally planned industrial economy, which benefited for decades as workers moved from field to factory, had hit a wall. It was an economy without a second act. The lack of competition removed the “invisible foot” of failure, so crucial to innovation. And the planners made plans that made no sense, choosing to double-down on heavy industry. While stagnation may not have been the prime cause of the collapse, it hardly conveyed a message that the Soviets were running the superior model.

“Capitalism with Chinese characteristics” — more open, more entrepreneurial — seems to work better. So much so that some American policymakers worry about China replacing the US at the frontier of some key advanced technologies such as AI, robotics, and quantum computing. (I mean, Huawei does make a pretty good smartphone.) And somewhat quarantining China’s tech ecosystem might well slow its progress as China seeks to become tech independent from American components.

But then what? It’s unclear that the rest of the world is nearly as gung-ho about this tech containment strategy. Nor have the downsides — whether heightened risk of war or economic damage from reworking supply chains and Chinese retaliation — been explained to the American people. This, for instance, from The Wall Street Journal:

The US has sharply slowed approvals for the nation’s semiconductor companies to hire Chinese nationals for advanced engineering jobs, according to industry insiders, who say the delays are limiting access to vital talent. … It is significant in part because Chinese nationals account for a large share of non-US citizens hired for such technical roles, where the talent supply domestically is often scarce. The slowdown in approvals also shows the conundrum US companies face in navigating the US stance toward China on technology: Decisions aimed at protecting US competitiveness in one way could hamper it in another.

Published in Economics, Technology
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There are 11 comments.

  1. EJHill Podcaster

    James Pethokoukis: How then does the conflict end in an American victory? And what does that even look like? Have the tech cold warriors, both within the White House and externally, given serious thought to any of this?

    Strange. When people outside the Beltway ask these very same questions about real shooting wars, the people inside the Beltway look at us like we’re nuts and proceed to lecture us about projecting American power, how important it is to be the world’s policeman, etc., etc.. Which goes to show you where their priorities are. They don’t give a rat’s patoot how many of our sons and daughters come home in a box, but don’t you dare endanger my cheap Chinese labor!

    Disgusting.

    • #1
    • May 21, 2019, at 3:20 PM PDT
    • 7 likes
  2. Kevin Schulte Member

    Obviously you don’t mind China chips spying in all areas of US vital interests. From Gov to industries to utilities to your phone. No worries here. China would never act nefariously.

    • #2
    • May 21, 2019, at 3:31 PM PDT
    • 6 likes
  3. Duane Oyen Member

    James, you need to go talk to others at AEI, particularly those following the 5G issues, plus Derek Scissors. We should not only be blacklisting Huawei, we should ban several others.

    You have spent too much time with Mark Perry and not enough with Ms. Pletka. 

    • #3
    • May 21, 2019, at 5:14 PM PDT
    • 1 like
  4. Fake John/Jane Galt Thatcher

    This is funny. China has been in a cold tech war for decades. We finally get some political types that understand it and are willing to fight as opposed to selling their allegiance to China for their thirty pieces of silver and all the belt way types are a Twitter because the silver may go away.

    • #4
    • May 21, 2019, at 5:22 PM PDT
    • 9 likes
  5. DonG Coolidge

    What is the trade war really about? Some possibilities:
    * intellectual property protection
    * mercantilism for US tech jobs
    * domestication of supply chain for US military/critical technology
    * North Korea
    * forced joint development for companies going into China
    * South China Sea agression
    * Fentanyl shipments into US (Opium War III)
    * backdoors in 5G (ours or theirs)
    * Chinese expansion into South America

    So many options. I choose “All of the Above”.

    Bonus option: an insurance policy against impeachment, which would seem petty during a potential economic cold war.

    • #5
    • May 21, 2019, at 6:35 PM PDT
    • 2 likes
  6. DonG Coolidge

    James Pethokoukis: US has sharply slowed approvals for the nation’s semiconductor companies to hire

    This is approvals of H1-B visas, right? Otherwise, I don’t know what “approvals” means.

    • #6
    • May 21, 2019, at 6:38 PM PDT
    • Like
  7. GFHandle Member

    But the question is still worth an answer, no?

    • #7
    • May 21, 2019, at 7:41 PM PDT
    • Like
  8. EJHill Podcaster

    DonG: This is approvals of H1-B visas, right? Otherwise, I don’t know what “approvals” means.

    Under George W. Bush the State Department issued 27,000 H1-B visas to ChiCom nationals. By the last fiscal year under Barack Obama that had climbed to 34,477. And that’s not including 135,000 student visas issued to the Chinese to place them inside our research universities. Anyone who doesn’t think a good number of these are engaged in espionage for the PLA is either naïve or simply being dishonest themselves. 

    But they don’t care. The Democrats welcome the rise of the new Communist superpower, the Republicans want to please their Chamber of Commerce masters with cheap labor. And they’ll defend it to the end with the cheap trinkets from Walmart argument. “You want to pay $1200 for that iPhone?” I don’t know. You want the Chinese Navy to rule the Pacific? Take your choice. 

    • #8
    • May 21, 2019, at 7:48 PM PDT
    • 2 likes
  9. I Walton Member

    We aren’t good at figuring out how to deal with China because they use our language and shadows of our approach and our biases against us and many US interests are deeply tied to China, but we have to figure it out before they are very much more powerful. Not just here but around the world. We can’t end up surrounded by Chinese and Chinese client states. They won’t change meaningfully for decades if ever. They don’t have to be an enemy but we must find a way to grow faster not necessarily militarily but creatively in a dynamic market economy and to strengthen strong market based relations with states that are also market based and growing along with us. China’s centralization may erode their system, but it will take time and we can’t count on it. Let me be clear, we have to have a more market based economy but China can’t be a direct part of it unless we can make them play the same way and we can’t, nor can we in the foreseeable future. Our own left will want to use the China challenge as a way to build state control of our economy and to guide markets. That simply can’t work because markets can’t be controlled that way and remain robust and rapidly growing and it would erode the necessary alliances we need. We must remain the most creative and robust market and continue to lead most of the dynamic world to move in the same direction. This probably means a completely new approach to building trading regimes. The global system WTO, (GATT in my age,) is too big and variable to be the primary forum. Moreover, NAFTA may be too varied to play that role. But whatever the vehicle and approach, we have to figure it out fairly soon.

    • #9
    • May 21, 2019, at 7:54 PM PDT
    • Like
  10. Front Seat Cat Member

    Comments #5 and #8 sum it up for me – at least Trump looks through a clear lens and is trying to do something – wishful thinking that communists will play by the rules? Not. It will be interesting to see where the Biden family fit into this – when he was VP to O – who increased the Chinese visas to the US by 7,500, according to the above comments.

    On another subject but related – has anyone heard of the Chinese immersion programs in our grade schools?? I hadn’t heard of this, but my sister who lives in a small mountain town in Maryland was visited by a co-worker’s small children who are in it!! She said they talked to her, and she said they sounded exactly like Chinese – they are even taught the dialect, how to pronounce certain words – was this part of Common Core???? Apparently the educational gurus think this is the direction the culture is going……and where the jobs will be.

    • #10
    • May 22, 2019, at 7:30 AM PDT
    • 1 like
  11. Hang On Member

    Hobbling Huawei: Inside the U.S. war on China’s tech giant

    • #11
    • May 22, 2019, at 11:41 AM PDT
    • Like