When China and America spar over technology, it is about far more
Nearly all high tech has military implications, and stirs national pride
May 3rd 2018
WHEN President Donald Trump threatened punitive tariffs in the spring on $150bn of Chinese goods, some Chinese observers thought this was a trade war that could be finished before it really began. To weaken America’s resolve（决心）, robust（强劲） retaliation（报复） was threatened against American goods, from soyabeans to bourbon. To overcome it entirely, barriers to certain Chinese markets, such as for cars and credit cards, could be dismantled. China could even offer to cut America’s $375bn bilateral trade deficit, over which Mr Trump obsesses, without too much loss of face.
Oh halcyon days! As The Economist went to press, Mr Trump’s senior economic officials, including Steven Mnuchin, the treasury secretary, Wilbur Ross, the commerce secretary, and Robert Lighthizer, the United States Trade Representative, were about to sit down in Beijing with their Chinese counterparts. The aim was to avert a trade war that now seems increasingly likely. The notion that Mr Trump will declare victory after a few polite Chinese concessions appears less plausible. His beef with China, shared by many American policymakers and business folk, goes deeper.
At issue, in American eyes, is a system of economic governance at odds with the West’s. It shuts off whole sectors to foreigners—or allows them in only after they hand over their proprietary know-how. It pumps money into favoured domestic firms to turn them into global champions. And, when it comes to acquiring Western technology, it encourages Chinese companies to beg, borrow—or steal. “Made in China 2025”, a state plan to upgrade industry in sectors from robotics to electric vehicles, seems to others like an underhand play for world domination.
The risks involved for China were driven home on April 16th when the Commerce Department punished ZTE, a Chinese telecoms giant, for shipping equipment to Iran and North Korea in breach of sanctions, and lying about the remedies it had promised when it pleaded guilty to this in 2017. The penalty is a seven-year ban from buying American components.
For ZTE this is a body blow. It relies upon American parts: four-fifths of its products contain them, including its smartphones, which use Qualcomm chips. As for China’s biggest telecoms firm, Huawei, it has long come under attack in America over how it has acquired know-how, and whether it helps China spy. Now comes the news that the Department of Justice is investigating it, also over possible sanctions-busting in Iran.
Back in China, a report by the regulator of state-owned assets castigated（严厉批评） ZTE after the American ban for its “short-sightedness and dishonesty” and for harming the country’s image. Yet the reaction was very different in other quarters. Netizens leapt to ZTE’s defence. The editor of the Global Times, a jingoistic state tabloid, tweeted that Chinese were “all ZTE people”.
More pertinently, Xi has redoubled calls for greater self-reliance in the quest for China’s “great rejuvenation”. On a recent visit to the Yangzi river town of Yichang, site of the giant Three Gorges dam, China’s autocrat declared that “in the past we tightened our belts, gritted our teeth, and built the two bombs and a satellite.” (Every Chinese patriot knows that the two bombs refer to China’s first atomic and hydrogen ones.) Pursuing advanced technologies, Chinese must “cast aside illusions and rely on ourselves,” Mr Xi said. In official pictures, it looked almost as if he were about to dive into the river and swim across, as Mao Zedong had done during a period of autarky 52 years earlier.
Given the way Mr Xi has been ratcheting up（不断推进） his tech-nationalist rhetoric（修辞）, it is hardly likely that he will back away from “Made in China 2025”, as Mr Trump’s negotiators want him to. At a seminar in Beijing over the weekend, reported by the New York Times and attended by senior Chinese economic policymakers, officials insisted that “Made in China 2025” was not up for negotiation. (They also stressed that a one-party state can take more pain from a prolonged trade war than can a democracy.)
When Chinese policymakers argue that the policy is misunderstood, as they did at the seminar, they have a point. During their industrialisation, Japan, South Korea and Germany all had industrial policies to protect domestic sectors—and arguably still do. “Made in China 2025” is as much aspiration as fixed programme. But, crucially, every advanced technology these days has a military dimension. Because China and America see each other as military as well as economic threats, an “undeclared cold war” over technology is under way, says Kevin Rudd, an Australian former prime minister.
Cold, getting hotter 更加激烈的冷战
The worry is that the tech war will only get hotter. Tech-nationalists on both sides argue that China and America, their economies intertwined for so long, must now cleave and go their own ways. In China the propaganda doesn’t favour common sense. “Amazing China”, currently smashing box-office records for a documentary, extols Chinese technological prowess. And the press likes to talk of high-speed rail, e-commerce, mobile payments and bike sharing as China’s “new four great inventions” (to rival the past accomplishments of papermaking, printing, gunpowder and the compass). They are not China’s at all. American tech-nationalists also harbour delusions. The Trump administration has flirted（挥动） with the idea of huge government support for the development of a 5G network. That would never fly politically.
Mr Trump insists that America and China will “always be friends, no matter what happens with our dispute on trade”. There is an echo in that of old-think—of a time when American and Chinese officials believed that no matter how much they disagreed, they would always find a way of getting on because the consequences of falling out would be so devastating for both. The two sides’ techno-sparring is evidence of how hard it is becoming to separate their economic and strategic rivalries. Safe spaces in the relationship are getting worryingly hard to find.