1 big thing: U.S. reaches for the tech jugular
Ahead of a high-stakes meeting Saturday with Chinese President Xi Jinping, President Trump has expanded a new battlefront with Beijing and other leading U.S. foes: a technology war.
What's happening: With the hope of extending its tenure as the world's sole superpower, the U.S. is reaching for its rivals' economic jugular, squeezing them using American technological superiority, and in China's case demanding that it suppress its own aspirations.
The big picture: For the last half-dozen or so years, Beijing has more publicly flaunted its global ambitions, stretching a grand infrastructure network called Belt and Road across the globe, and stating its intent to dominate the technologies of the future.
It is the latter aim that worries the West most given the geostrategic link of a strong technological base and global power. Hence, alongside his trade war against Beijing, Trump has:
- Essentially banned U.S. companies from doing business with Huawei and pressured American allies to follow suit.
- Locked a stranglehold on five strategically vital Chinese supercomputer makers, preventing them from buying the U.S. chips on which they rely.
- Insisted in trade talks that Xi amend or halt his Made in China 2025 program, through which Beijing hopes to finally restore the geopolitical stature it held until the 19th century.
Taken as a whole, Trump has made technology a distinct new dimension of his global war footing. "Just like the trade war, like the South China Sea, technology is part of the larger conflict with China," James Lewis, of the Center for Strategic and International Studies, tells Axios.
Last Friday's move by the administration blacklisting five Chinese supercomputer makers was especially demonstrative.
- In kind, it is similar to China's threat last month to cut off or restrict its exports of rare earth metals, which are crucial in high tech and to the U.S. military.
- Just like the U.S. needs China's rare earths, China needs U.S. computer chips: China imports most of its memory chips, 70% of those in smart phones, and 95% of its most advanced chips for computer processors, the FT reports.
- "The U.S. is going after sectors where China aspires to compete head-to-head with the U.S./West — 5G and supercomputing," said Ian Bremmer, president of the Eurasia Group.
What they're saying: Richard McGregor, a fellow with the Lowy Institute, said he does not expect the bans to endure. He thinks that Trump may trade them away as a bargaining chip with Xi.
Experts generally don't like to call this a technology war.
- Nicholas Wright, a U.K. expert, called it a foray "into the grey zone between peace and war."
- Elizabeth Economy, of the Council on Foreign Relations, suggests that the only reason to play this kind of hardball is to get China to the negotiating table.
- Nicholas Lardy, of the Peterson Institute for International Economics, said the U.S. risks confirming a view "that the U.S. is not interested in a settlement on trade issues but seeks rather to slow China’s growth, particularly in high tech industries."
Be smart: The U.S. is working feverishly and on a bipartisan basis to tamp down China's technological surge. Look for continued firing along the technological line of control.