Why tariff war threatens Beijing's ambitions

Published on Sunday, 12 May 2019 20:01
Written by The Associated Press

BEIJING (AP) - China’s intensified tariff war with the Trump administration is threatening Beijing’s ambition to transform itself into the dominant player in global technology.

The United States is a vital customer and source of technology for Chinese makers of electronics, medical equipment and other high-tech exports - industries that the ruling Communist Party sees as the heart of its economic future.

Yet to the Trump administration, they’re a threat to America’s industrial leadership.

Beijing managed to keep Chinese economic growth steady in the most recent quarter despite a drop in exports to the United States. It did so by boosting government spending and bank lending. But China’s technology exporters suffered huge sales drops of up to 40 percent, which ate into profits that pay for technology research.

The tariff war is compounding the pain felt by many Chinese companies. They are already enduring stiffened resistance in the United States and Europe to Chinese acquisitions of technology through joint ventures with foreign companies or, with financing by state-run banks, outright purchases.

China might now have to take the “tougher route” of developing more of its own technology, with less access to foreign partners and know-how, said Rajiv Biswas, chief Asia economist for IHS Markit.

“It may be a slower path,” Biswas said.

The government and companies are pouring billions of dollars into research. Huawei, the telecom equipment giant and China’s first global tech brand, spent $15 billion last year - more than Apple Inc.

All of this has helped make China an emerging heavyweight in telecoms, artificial intelligence and other fields. Yet the United States, Europe, Japan and other governments complain that Beijing has done so in part by stealing technology or pressuring foreign companies to hand over trade secrets.

Washington is pushing Beijing to roll back plans for a government-led creation of global competitors in robotics, electric cars, artificial intelligence and an array of emerging technologies. Beijing’s trading partners argue that such plans violate its commitments to further open its vast consumer and business markets.

Posted in The Bristol Press, on Sunday, 12 May 2019 20:01. Updated: Sunday, 12 May 2019 20:03.