April 23, 2019

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The Week in Tech: Bracing for the Year of the Pig in China

The Week in Tech: Bracing for the Year of the Pig in China
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Each week, technology reporters and columnists from The New York Times review the week’s news, offering analysis and maybe a joke or two about the most important developments in the tech industry. Want this newsletter in your inbox? Sign up here.

Greetings, I’m Li Yuan, your Asia tech columnist. I’m writing to you from balmy Hong Kong as the Chinese are getting ready to celebrate the Lunar New Year next week and China’s tech community is bracing for a very tough Year of the Pig amid a slowing economy and a persistent trade war between the United States and China.

I’m old enough to remember that the Chinese New Year’s Eve dinner was the meal of the year in the 1970s and 1980s because every family would try their best to put multiple meat dishes on the table. Almost every mainland resident of China was poor then and we had to use ration books to buy food, meat and cooking oil.

I’m also old enough to remember that the world was divided into the Eastern Bloc (the former Soviet Union and its satellite states) and the Western Bloc (the United States and its allies). China was close to the Eastern Bloc until it had a fallout with the Soviet Union. It was poor, isolated and ruled by a ruthless leader called Mao Zedong.

Things changed dramatically the year I was born, when Henry Kissinger secretly visited Beijing. In the following five decades, U.S.-China relations had its ups and downs but it should be fair to say that the two countries benefited tremendously from opening to each other: China from accessing the American technology, capital and market while the United States benefited from China’s cheap and hard-working labor and later its vast market.

Relations have soured since China has become increasingly authoritarian under President Xi Jinping and the United States increasingly isolationist under President Trump. The two countries have been engaged in a trade war since summer 2018. But Monday felt like a watershed moment as the Justice Department unveiled sweeping charges against the Chinese telecom giant Huawei and its chief financial officer, Meng Wanzhou. A tech Cold War seems irreversible, and much of the world has to choose a side: China or the United States?

“The Americans are not going to surrender global technological supremacy without a fight, and the indictment of Huawei is the opening shot in that struggle,” Michael Pillsbury, a China scholar at the Hudson Institute who advises the Trump administration, told my colleagues.

At the core of the fight is a technology called the fifth generation, or 5G, mobile network that is expected to remake the plumbing that controls the internet. Huawei is a global leader in the technology. For the U.S. government, that poses serious security risks.

As detailed in an excellent tale by my colleagues from the United States, Europe and China, over the past year the United States embarked on a global campaign to push its allies to bar Huawei’s 5G build-out.

One thing in the article that really struck me is that some countries have questioned whether America’s campaign is really about national security or if it is aimed at preventing China from gaining a competitive edge. “Administration officials see little distinction in those goals,” my colleagues wrote.

In the eyes of lawmakers and intelligence officials in the United States, the Chinese government’s tightening grip on its companies makes it impossible to distinguish whether a firm like Huawei is a business entity or an agent of the Chinese government because no company could choose whether to cooperate with Beijing or not.

This is what I call the Chinese curse for Chinese companies. Huawei may have done many wrong things, including stealing trade secrets and violating sanctions, but that won’t change the fact that its employees, scientists and executives had put a lot of blood and sweat to grow it from a tiny maker of telecom equipment to a global giant. Huawei exemplifies how the Chinese lifted themselves out of poverty and became a technological power through perseverance.

But because China has an authoritarian government that believes the Communist Party should control everything and everything in the country should serve the interest of the party, it is nearly unimaginable that any Chinese company can say no to government requests, especially if they are made repeatedly and in the name of national security.

Some readers must already be screaming that just like Huawei, China developed its technologies by stealing intellectual properties and forcing foreign companies to share their knowledge in exchange for market access. Yes, China has committed many wrongdoings and needs to admit and correct its mistakes in order to set forth on the right path in the future. And the world needs to become more alert to the threat of China’s techno-authoritarianism (see the link to the George Soros speech below). Still, I can’t help but reserve some sympathies for the Chinese who are caught in the middle of the fight.

The relationship between the United States and China can’t go back to what it had been in the last 40 years. Even if the trade war is resolved with China promising to buy a lot of American products, the Huawei problem and the tech war aren’t going away.

It’s the struggle for global supremacy. Neither side is going to back off easily. Some 170 nations will have to choose to either let go of Huawei, thus crossing Beijing, or lose the support of Washington by staying with Huawei.

Here are a few things worth reading if you haven’t:

■ This is a little dated, but very relevant to the whole Huawei saga. In a speech at the World Economic Forum in Davos, Switzerland, the billionaire investor George Soros labeled President Xi the world’s “most dangerous opponent of open societies,” warning of the “mortal danger” in China’s use of artificial intelligence to repress its people.

■ My colleague Jack Nicas used the story of a tiny screw to illustrate why Apple is unlikely to bring its manufacturing closer to home and why the economic decoupling of the United States and China will be tough and painful.

■ Even Foxconn, Apple’s biggest contract manufacturer in China, bowed to the difficult economics of manufacturing in the United States. The company said it was reassessing its plans to build a $10 billion Wisconsin plant to make flat-screen television and create 13,000 jobs. President Trump had called the project “the eighth wonder of the world.”

■ The residents of Tonga, a remote island nation 1,100 miles northeast of New Zealand, lost high-speed internet after an underwater fiber-optic cable was severed on Jan. 20. Daniel Victor talked to residents about how they survived the digital darkness.

■ Geoffrey A. Fowler of The Washington Post wrote an excellent column about the ethical questions we should be asking ourselves as video doorbells and connected security cameras have become the fastest-growing smart home tech. Here’s one piece of advice. “Facial recognition isn’t a product feature: It’s a superpower.”

Li Yuan is the Asia tech columnist for The Times. She previously reported on China technology for The Wall Street Journal. You can follow her on Twitter here: @LiYuan6.





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