Chinese technology companies such as Huawei were among the main targets of the trade dispute with the US. The Trump government's desire to exclude them from the US is fueled by security and economic concerns and the hope of preserving America's technological dominance. In fact, a ban on Chinese companies could do more harm to the US.
A Fortress America approach that restricts access to the global market can only fuel Chinese innovation. In the worst case, this could lead to a sharing of the internet between the US and China. In the long term, the Trump administration could be hoisted with its own protectionist petarden.
The American restrictions on Chinese technology have been increasing since 2018. In August of last year, a US government defense law and its scholars prohibited the use of Huawei telecommunications equipment. The Chinese company was included in the US Entity List last month and requires US companies to obtain a state license to sell. President Donald Trump has also authorized Trade Minister Wilbur Ross to ban any technology company that poses a national security risk. Mr. Ross will make his decision in just over three months.
The desire to protect national security is understandable, not least given the close relationship between Chinese technology companies and the state. However, security in the digital age is permeable. By engaging with Chinese technology, Western intelligence can gain important information. According to Google, it can compromise security if Huawei is forced to switch to its own system. The US technology group, which last month restricted Huawei's access to parts of its Android operating system, warned that a Chinese version may be more susceptible to hacking.
The second conviction is that the US can stifle Huawei and other tech companies by separating China from global tech supply chains. In the short term, the US blacklist will limit Chinese companies' access to outside-country components. Huawei's problems with mobile phone chips, of which more than half are imported from the US, could reinforce the argument for this militant trade approach.
By putting Chinese technology companies in a corner, domestic innovation could be accelerated. These companies could source products from cheaper markets such as South Korea and produce their own software. In extreme cases, competing Chinese and US-led Internet could emerge – as former Google chairman Eric Schmidt warned. An industry association said this week that standards for 5G Internet are threatened by this kind of divergence. This could mean that devices manufactured in one market may not be compatible with those of the other market.
This would force countries and companies to opt for the war on technological trade. Recipients of Chinese funds through programs such as the Belt and Road Initiative will face diplomatic balancing act. Malaysia's prime minister has announced that the country will use Huawei's technology as much as possible. Powerful US allies, including Britain and Germany, have come under pressure to ban Huawei. It has been reported that at least two European telecommunications companies are building separate units for the eastern and western hemispheres.
Keeping supply chains global does not mean being naive. Suppliers should be carefully reviewed – especially if historical reasons give cause for concern. However, the isolation of China will neither improve national security nor eliminate the economic threat posed by Chinese technology groups. Despite its obvious appeal, protectionism is an ideology that defeats itself.