The technology trade war between China and the US is only just beginning

The Federal Communications Commission (FCC) has joined the no less than six heads of intelligence, congressional agencies and the government of the United States — which has vetoed agreements between the country’s telecommunications operators and Chinese terminal manufacturers, distribution agreements with large chains and even corporate acquisitions — and issued a proposal to prohibit subsidies of terminals manufactured in China. The FCC note escalates the possibility of an all-out trade war by also alerting about possible threats to national security from the possible existence of backdoors in routers, switches and other telecommunications equipment that could be used to install viruses, launch denial of service attacks, steal data, etc. The US position is now influencing some of its allies, such as Australia, when it comes to evaluating Chinese investments.

The problem with these supposed threats is that there is no evidence to justify their existence. Only one ZTE smartphone does have a back door that can be used for remote updating and could remotely pose a security problem, but the issue seems more an oversight or an error than part of some kind of planetary conspiracy. And in the case of Huawei, the other leading Chinese brand targeted by the US, no evidence of a conspiracy has yet been presented. The only thing the US authorities seem to fear about China’s largest technology company is its enormous global success.

The FCC statement underscores the existence of a mounting war for the control of standards and the latest generation of technology networks. The United States says 5G is a strategic priority, and according to the GSMA, it is set to pioneer its deployment, aiming at 49% of total mobile connections through 5G in 2025, a total of 191 million connections. This percentage would be lower in Europe, with 31%, or China with 25%, but the greater population of both economies would allow a greater number of total connections, 217 million and 396 million respectively.

While the United States fights for 5G supremacy, China is not far behind: its companies aim to dominate the artificial intelligence environment and so provide its population with a range of services, from entertainment to health, while according to the Future Today Institute, China will assume the undisputed hegemony over artificial intelligence this year. According to Kai-Fu Lee, venture capitalist and former director of Google in China, only those two countries are well positioned for a future in which artificial intelligence will set the rules of business. Companies in both countries have stopped asking what artificial intelligence can do for them and are simply committing themselves to integrating it as soon as possible so as to start obtaining experience and use it as soon as possible and avoid falling behind. Google, Apple and other big companies are fighting over promising startups in the field of artificial intelligence and machine learning and Chinese companies are not far behind, both in terms of acquisitions and their own developments.

We are in the midst of a conflict over control of the next great technological revolution between two giants, the United States and China, who are both determined to dominate communications infrastructure. In the case of China, the concept of total control is not new: the Communist Party has exercised it for more than 70 years, making it hard for foreign companies to enter its markets. In contrast, the United States has avoided imposing such restrictions, but the Trump administration insists that the time has come to end what it sees as decades of unfair competitive practices.

Both sides have set out their positions, and we can only expect them to become more entrenched, imposing further restrictions, while seeking to form alliances with other countries as time goes on. This is just the beginning.

(En español, aquí)