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July, 2018

Trump vs. the tech community

Original article: Wired

Silicon Valley is distraught at President Trump's assault on Sino-US trade ties. Tariffs will disrupt global tech supply chains, while greater scrutiny of Chinese investment in U.S. technology companies could reduce funding sources for U.S. startups. Ties between the Valley and China run deep, with numerous venture-capital firms operating both in California and Beijing or Shenzhen. 

Analysis:

The global technology industry is a world apart from Donald Trump and his nationalist worldview. Cross-border collaboration is integral to the ethos of the industry, with its global supply chains and concentration in a handful of cosmopolitan cities. Trump's tariffs have tech oligarchs and the startup community alike shaking their heads in dismay. 

 

In their relentless search for growth, U.S. tech firms remain fixated on China. Whether it's IC makers or Facebook and Google, they all want a piece of the biggest market pie in existence. Despite its GDP growth halving since 2007, China still looks like a better bet than many emerging markets. It's the only BRICS country that has consistently met or exceeded investor expectations. And while US tech firms who already have successful China businesses would like better IPR protection and fairer treatment, they have tacitly accepted lack thereof as the cost of doing business in the Middle Kingdom. 

 

As the U.S. and China enter an era of direct competition, President Trump and U.S. lawmakers' challenge is to pressure U.S. tech companies to prioritize national interests just as China's own tech companies do. For U.S. firms, that means exercising prudence when national-security interests are at stake, rather than blithely entering partnerships with Huawei and ZTE. We wouldn't be surprised if Intel's tie-up with state-backed Tsinghua Unigroup and Spreadtrum Communications comes under closer scrutiny in the future. 

 

Trump skeptics dismiss his trade sanctions on China as ineffective and doomed to failure. And they emphasize his lack of a long-term strategy. We aren't so sure about that. To be sure, Trump has been inconsistent about the ZTE ban, which may have put his "great friendship" with Chinese President Xi Jinping in jeopardy. And The Donald often seems too eager to cut a deal with Beijing that he could hail a victory. 


But Trump has been advocating an "America first" economic strategy for decades. Protecting cutting-edge American technology fits into that. Restricting Chinese investment in America technology and tariffs on Chinese goods are two ways to safeguard the U.S. "crown jewels" of technology. A third way is to directly pressure U.S. tech firms to reduce their exposure to China. So far, that hasn't happened, but it could if the trade war heats up. 

 

Trump isn't the only one questioning U.S. tech firms' ties to China. Senator Marco Rubio, whom The Donald once mocked as "Little Marco," recently took to Twitter to publish a Trump-esque tweet criticizing the ties of Google's Jeff Dean to a Chinese artificial-intelligence project. "Example of hypocrisy of many U.S. tech companies," Rubio said. "Refuse to work with U.S. military on #ProjectMaven but work with partners tied to China military."

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