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New U.S. fear: Chinese tech war will get worse

Illustration: Lazaro Gamio / Axios

The U.S. is considering using emergency powers to curb Chinese tech investments, and a new report by the U.S.-China Economic and Security Review Commission shows the government "is dangerously vulnerable to Chinese espionage or cyberattack because of its dependence on electronics and software made in China."

Why it matters: Tensions with China over technology are only going to deepen. If you rely on China for your supply chain, have you finished your contingency plans in the event of massive disruption?

The big picture: These trade wars can have unintended consequences, as Axios' Dan Primack writes in his Pro Rata newsletter this morning. He points out the current format of the CFIUS bill "could prevent U.S. investment funds from investing in sensitive U.S. tech companies (think semiconductors, cybersecurity, etc.), so long as those funds have Chinese limited partners."

  • And, from the other side, the NYT says if China boycott's U.S. goods, it could backfire on them.

Meanwhile, Axios' Steve LeVine writes that the U.S. is experiencing a revival of Japan syndrome, circa late 1970s. That's when "Made in Japan" abruptly stopped being a source of mirth, Americans began to snap up Toyotas and Nissans in big numbers, and Detroit sank into a profit-and-jobs bloodbath.

  • Similarly, 5 years ago, American technologists sneered at China's Baidu and its new search engine. But "they aren't laughing anymore," says Gregory Allen, an AI expert at the Center for a New American Security. "Now they are marveling at Baidu's advances in artificial intelligence."