US Social Tech Distancing with China

United States Administration and China Technology Companies

President Trump has tied national security to advancement in technologies like wireless networks, and has made protection of the domestic tech industry a part of his agenda. In March 2018, President Trump blocked a $117 billion bid by Broadcom, a Singapore-based chip maker, for the American chip maker Qualcomm, citing national security concerns and how it might allow China — specifically citing Huawei — to leap ahead in next-generation 5G wireless networks.

A month later, the Commerce Department banned ZTE, China’s second-largest maker of telecommunications equipment, from using components made in the United States. Federal authorities said ZTE had violated American sanctions against Iran and North Korea, in a move that caused the Chinese company to $7.5 million bail for a time.

In April 2018, the Commerce Department banned American companies from exporting essential components to ZTE, which the agency said had violated an earlier deal punishing the company for evading sanctions on Iran and North Korea. The US government said it posed “a significant risk of becoming involved in activities that are contrary to the national security interests of the United States.” In October, the Commerce Department issued a similar export ban for state-owned Chinese chipmaker Fujian Jinhua.

The high-profile move forced ZTE to halt almost all of its operations for months. ZTE collapsed within weeks, Trump later walked back on the ZTE ban, allowing the company back into the US market after it agreed to pay a fine totaling US$1.4 billion, replace its board and senior leadership and the placement of a handpicked US compliance oversight team to inspect its operations.

At the same time, Chinese President Xi Jinping has been pushing for China’s tech sector to become more self-sufficient by cutting reliance on foreign suppliers. Xi Jinping says that he wants China to dominate the 5G market globally,

Huawei in the Periscope of the U.S. Administration

The United States and China have also been locked in a struggle for high-tech supremacy, in a race that has increasingly taken on political undertones this year. While the United States has long claimed an advantage in the tech industry, China’s internet companies, semiconductor makers and telecom equipment makers have all been growing rapidly, with many benefiting from government investment.

The US government has been investigating Huawei for at least a decade. In 2005, a congressional report said that “industrial espionage is an active tool of China’s strategy for technological development”. The report singled out Huawei as a key Chinese company supporting the country’s development of 3G.

Huawei aiming to be biggest smartphone brand by 2020

Huawei was the third largest smartphone brand globally in 2018, slightly behind Apple in overall shipments while lagging notably behind Samsung, agency data showed.

Richard Yu, Huawei’s mobile business head, said the United States’ ban against Huawei has acted as an advertisement for the brand as more global consumers are aware of the brand nowadays.

Yu spoke with media after the company launched its P30 smartphone models for the Chinese market on Thursday. The starting price for the P30 is 3,988 yuan ($594) for the Chinese market, which is about 35% cheaper than the €799 ($900) price point for the European market.

Huawei has invested about $6 billion on smartphone R&D every year, far exceeding other Chinese brands, according to Yu. Earlier reports have said Huawei’s consumer business is eyeing $100 billion in smartphone sales in three years’ time, and $150 billion in five years’ time.

Updated 10/10/2022: Huawei’s revenue for 2020 totaled 891.4 billion yuan ($136.7 billion), a 3.8% year-on-year rise in yuan terms. That was slower than the more than 19% revenue growth Huawei saw in 2019.

China’s Huawei Technologies reported modest annual profit growth for 2020 as overseas revenues declined due to disruption caused by the pandemic and the company’s placement on a U.S. export blacklist.

More to read on the United States authorities and Huawei can be found at this article:

What Is Huawei Global Way?

US and Huawei: Huawei hit with racketeering

As justification and reinforcement of the accusations and the reasons for the dismissal of Huawei from participating in the US telecom and technology marketplaces , the Department of Justice and the FBI announced today that it has brought 16 charges against Huawei in a sprawling case with major geopolitical implications (you can read the full 56-page indictment here)…. Continue Reading

Fourteen years later, Washington’s moves included Huwaie and ZTE, the two giants telecommunications makers that were shut down of the U.S. market.

$7.5 million bail – It’s through that lens that some in the Chinese government view the arrest of Huawei’s chief financial officer, Meng Wanzhou. Meng was detained on December 1 in Canada, at the request of US authorities seeking her extradition.

This happen in the same night that President Trump and President Xi Jinping of China dined together in Buenos Aires and agreed to a 90-day trade truce. The two countries are set to begin tense negotiations in hopes of ending a trade war that has been pummeling both economies.

US – China: Tech Fight for Global Supremacy

Chinese tech companies are fighting the United States for global supremacy, but they still lag where it matters most. China is home to nearly a third of the world’s 326 unicorns – startups worth more than $ 1 billion, according to a new report released this week by Credit Suisse. But American companies have a major advantage when it comes to cutting edge fields like artificial intelligence, software, and robotics.

Only 14% of Chinese unicorns focus on these high-tech industries, compared to 40% of their US counterparts, the report says. The United States and China together represent three out of four unicorns in the world, with 156 and 93 respectively. China’s main obstacle is its relative lack of investment in research.

Artificial intelligence and robotics are widely seen as gateways to the future of technology – and a central part of the ongoing struggle between Washington and Beijing for world domination.

Last week, the Trump administration underscored their importance by appointing former venture capitalist Michael Kratsios as US technical director.

Kratsios, who focuses on areas such as 5G, AI, quantum computing and autonomous vehicles, told the Washington Examiner that his team will continue to promote these initiatives.

“Our main objective is to ensure American leadership,” he said.

But China has made rapid progress in some areas and is already leading the development of 5G technology. Chinese tech giant Huawei is one of the largest patent holders for next-generation wireless networks, which will help fuel other emerging technologies like self-driving cars and smart city services. Huawei quickly became a global leader in 5G, despite a campaign by the United States to ban its equipment in countries around the world.

The Chinese government also announced its intention to become a dominant force in artificial intelligence by 2030, targeting an investment of nearly $ 150 billion in the industry.

Trump issues executive orders against TikTok and WeChat citing national security concerns – The order comes after a week of political posture and market research.

The Trump administration is seeking to stop TikTok – and Tencent’s messaging app WeChat – from doing business with U.S. companies. Along with TikTok, officials fear that the app will allow China to spy on US government employees and be used for “disinformation campaigns.”

The US is banning TikTok and WeChat because they have already become weapons for global surveillance purposes. We can be tracked all over the world through WeChat. American efforts are therefore rightly focused on the CCP, whose intentions are to keep all who communicate with their citizens under surveillance.

WeChat has been downloaded 19 million times relatively few in the United States, data from Sensor Tower showed. In China, however, the app is ubiquitous as a medium for services as diverse as games and payment. It is also a common platform for communicating with individuals and businesses outside of China.

But TikTok has denied such claims. And today the company said it was “shocked” by the executive order, saying there had been “no due process and no respect for the law” on the part of the Trump administration. .

TikTok fought back in the United States over an executive order that would effectively ban popular social app, saying “It sets a dangerous precedent for the concept of free expression and open markets. We will use all remedies available to us to ensure that the that the rule of law is not sidelined and that our business and our users are treated fairly – if not by the Administration, then by the US courts. “

Chinese WeChat and TikTok Banned in US

WASHINGTON (Reuters) – U.S. President Donald Trump has unveiled sweeping bans on U.S. transactions with the Chinese owners of messaging app WeChat and video-sharing app TikTok, escalating a high-stakes confrontation with Beijing over the future of the global tech industry.

TikTok has come under fire from U.S. lawmakers over national security concerns surrounding data collection as distrust between Washington and Beijing grows. Reuters on Sunday reported that Trump has given Microsoft Corp (MSFT.O) 45 days to complete the purchase of TikTok’s U.S. operations.

The executive orders announced Thursday and effective in 45 days come after the Trump administration this week flagged increased effort to purge “untrusted” Chinese apps from U.S. digital networks, calling Tencent Holdings Ltd’s (0700.HK) WeChat and Bytedance’s popular TikTok “significant threats.”

Tencent is the biggest target yet. It is Asia’s second most-valuable company after Alibaba Group Holding Ltd (BABA.N) with a market capitalization of $686 billion, and is among the world’s largest social media and video game companies. It opened a California gaming studio this summer and owns minority stakes in numerous gaming and internet firms around the world, including U.S. messaging app operator Snap Inc (SNAP.N).

The ban on U.S. transactions with Tencent, one of the world’s biggest internet companies, portends further fracturing of the global internet and severing of long-standing ties between the tech industries in the United States and China.

Already such relation is stained by the US standing on several telecom and network Chinese companies with the high profile case of Huawai. While in China, U.S. social media and messaging services such Facebook Inc’s (FB.O) WhatsApp and Messenger are blocked in China, where a “great firewall” prevents citizens from freely accessing the worldwide web, and where online communication is routinely monitored and censored.

China said on Friday the companies comply with U.S. laws and regulations and warned that the United States would have to “bear the consequences” of its action.

“The U.S. is using national security as an excuse and using state power to oppress non-American businesses. That’s just a hegemonic practice,” foreign ministry spokesman Wang Wenbin told a media briefing.

on Friday [August 7, 2020], TikTok said in a statement “We are shocked by the recent Executive Order, which was issued without any due process,” adding that it would “pursue all remedies available to us in order to ensure that the rule of law is not discarded”.

While Tencent spokesperson said: “We are reviewing the executive order to get a full understanding,”

Building Clean US Network of Social Media

The United States expelled China from its Houston consulate a little over two weeks ago and U.S. Secretary of State Mike Pompeo expanded [on Wednesday August 5, 2020] a program dubbed “Clean Network” to prevent various Chinese apps and telecoms firms from accessing sensitive information on U.S. citizens and businesses.

Trump issued the orders under the International Emergency Economic Powers Act, a law that grants the administration sweeping power to bar U.S. firms or citizens from trading or conducting financial transactions with sanctioned parties.

Commerce Secretary Wilbur Ross will identify transactions covered after the orders take effect in mid-September.

Tech Protectionism with Social Media

The United States is not alone in its concern about Chinese internet apps: WeChat and TikTok were among 59 mostly Chinese apps that India outlawed in June for threatening its “sovereignty and integrity”.

U.S. concerns about China’s tech industry had until recently focused on telecom equipment vendor Huawei Technologies Co Ltd [HWT.UL]. As relations soured over a host of economic and human rights issues, it has sanctioned numerous other Chinese tech firms.

Tension has been simmering between the two powers for months, with the United States taking issue with China’s handling of the novel coronavirus outbreak and moves to curb freedoms in Hong Kong. The increasingly aggressive posture towards China comes as Trump bids for re-election in November.

Trump said this week he would support Microsoft’s efforts to buy TikTok’s U.S. operations if the U.S. government got a “substantial portion” of the proceeds. He nevertheless said he will ban the popular app on Sept. 15, though some Republicans have raised concerns about potential political fallout.

The app may be used for disinformation campaigns that benefit the Chinese Communist Party, and the United States “must take aggressive action against the owners of TikTok to protect our national security,” Trump said in one order.

In the other, Trump said WeChat “automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.”

The WeChat order would effectively ban the app in the United States by barring “to the extent permitted under applicable law, any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd.”

It was not clear whether the sanction would effect Tencent’s other holdings in the country.

Trump’s order sent Asian stock markets lower on Friday, with Tencent shares falling as far as 10.1% before recouping some of its losses in afternoon trade. [MKTS/GLOB]

Meanwhile, the yuan CNH=, a barometer of Sino-U.S. relations, posted its steepest drop since the United States expelled China from its Houston consulate a little over two weeks ago. [CNY/]

Compiled from Several sources including Reuters

Said El Mansour Cherkaoui Research, Publications, Consulting and Teaching on China

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