The Tech Cold War has Begun

The Huawei ban is really the beginning of a twenty year conflict between the U.S. and China

In May, 2019 there’s a new global scenario playing out involving actors such as Google, Huawei, Apple, and Trump.

Far from being the end of a trade war, it’s the very start of a battle for supremacy in technology and economy between the U.S. and China.

Last week’s move by the Commerce Department to blacklist Huawei Technologies from doing business with the U.S. has been joined by an increasing number of companies around the world, including Japan’s Panasonic Corp and Toshiba Corp. and British chipmaker ARM earlier today, further isolating the China-backed networking giant and raising the risk of reprisals from Beijing.

Will China Retaliate for Huawei?

How will China push back? Not just now but in the decades to come. The U.S. is treading on dangerous ground.

This is because China doesn’t play by the rules of democracy or human rights, but is a regime of a whole different order. We are talking about the rise of a New China empire.

From tariffs and levies to the Huawei ban, the global tech industry is at the center of an escalating cold war between the US and China. This is as much about Chinese intellectual property theft as it is about trade and trade deficits.

China has an arsenal of technology companies that will soon rival those of the United States. Huawei making its own mobile operating system is a case in point where Google and Apple have monopolies on the mobile system of the internet.

While Huawei had a bad week, this will spur China to adapt with ever better strategies and more growth. China realistically has many state-supported companies capable of incredible futures such as Alibaba, Tencent, Xiaomi, China Mobile, ByteDance, Meituan, JD.com and dozens of others.

Technology Cold Wars began in 2019

As a futurist I feel as if the ban isn’t just the latest volley in an ongoing trade dispute between the US and China but the beginning of a technology cold war era where aggressive tactics will be used in order to dominate the world. I believe May, 2019 is the beginning of it all.

Make no mistake, this is about the U.S. trying to curtail the rise of China as it breaks through to becoming the economic superpower and technology giant of the 21st century.

Huawei’s Plan B operating system means Huawei is serious about competing against Apple and Google. It means China is thinking long term for its preferred state-backed firm. Huawei is growing at an incredible pace and is likely able to do so with funds from the Chinese Government. Little is known about Huawei’s home-grown OS, but Huawei reportedly calls it “Project Z,” internally.

The truth is Huawei likely has inventory to ‘weather’ the US blacklist for months. Germany, the U.K. and other countries have not banned Huawei as their future 5G provider. Many nations must try to remain as neutral as possible in this dispute as it’s a power game among bigger more powerful partners. China is a serious threat to disrupt Silicon Valley in innovation and scaling startups in the 2020s and 2030s.

Will Huawei Survive?

As the ban took effect last week, major tech companies all over the world cut ties with Huawei. This is likely to anger China and cost them millions of dollars. The ripples from the ban are massive and affect millions of people all over the world but also could have long-term repercussions for how China “hacks” the rest of the world by fair means or foul. This is because China has an agenda to displace America as the leader of the post-modern world in the 4th industrial revolution.

Business Insider has an entire series of articles relating to last week’s events. China denounced U.S. Secretary of State Mike Pompeo for fabricating rumors after he said the CEO of China’s Huawei Technologies was lying about his company’s ties to the Beijing government. Huawei won’t just survive, I think it will continue to thrive.

China is unlikely not to retaliate against U.S. firms in China, in my opinion. Trump is essentially trying to strong arm a black hat regime like China. It’s like trying execute a mafia boss with a drone strike. Something could go seriously wrong. Apple in particular could be very vulnerable in China that could send the stock market down. Meanwhile Chinese tech companies have been down on the U.S. stock market system in the last month.

Google’s Android smartphone operating system is the backbone of Huawei’s massive smartphone business — but in the next three months, it will stop getting updates on Huawei’s devices. This will give time for Huawei to prepare its own OS.

The same could be said for Huawei’s computer business, which relies on Windows 10 from Microsoft and hardware from a variety of US companies. Ironically this will actually accelerate how the Chinese internet matures, that will likely dominate the South East Asian and perhaps even the South Indian internet in the future.

The Trade War Could Usher in a Global Recession

China’s Commerce Ministry said Thursday U.S. actions have increased the risk of a trade war, as well as a global economic recession and cautioned that Beijing will take any steps needed in order to protect the interest of Chinese firms. So when you educate yourself don’t just read American outlets, but read Asian outlets as well, such as the South China Morning Post (SCMP). Try to see the issue from both sides.

Richard Yu, CEO of Huawei’s consumer business says an international version of the operating system could then be ready for international markets by the first or second quarter of 2020. Huawei could have its own operating system for smartphones and laptops ready for use in China by fall this year, which means China will only increase in power as Huawei’s incredible reach continues.

Anti-American Sentiment in Mainland China will Increase

China’s state media is saying that America is trying to invade China’s economic sovereignty. Anti-American rhetoric is heating up and consumer sentiment in China is likely to be more vulnerable with the tariffs. This means it could hurt China in the next five years. But about the the next twenty? By then China will have its own army of AI talent, a stronger economy and an even stronger presence globally and in Asia in particular.

Huawei Is Bigger than you think

This is as if China attacked Google. In reality, there’s no Western equivalent to Huawei. Huawei is one of the biggest tech companies in the world — the company’s 2018 revenue exceeded $100 billion, and it employs nearly 200,000 people. Huawei will overtake Apple and eventually Samsung in smartphone sales, but it does so much more.

The Chinese tech giant is most well known for its consumer products: smartphones, laptops, and networking devices. Huawei aggressively advertises in places like Canada, Africa, Europe and Asia, as Huawei smartphones are common consumer devices outside the U.S. The Chinese Government seems to take the ban on Huawei very personally.

China’s a Long Term Threat to Disrupt the U.S.

China is also expected to explore the ‘Belt and Road’ market to export its 5G infrastructure technology and related equipment. China’s technological, economic and artificial intelligence plan is very rigorous.

It is arguably a lot more sophisticated than how free-market capitalism can possibly evolve firms. The problem is with Silicon Valley. It’s an age of monopolies where there isn’t even much competition except among the familiar giants. As Silicon Valley is on the decline, China is just getting started.

The U.S. insists that its opposition to Huawei technology being used in key information systems stems entirely from security concerns, the fear of “back doors” in the software, or the relationship between the Chinese State and its major high-tech companies.

However as companies like Huawei and Alibaba mature, new ones will be born in China, like ByteDance, that demonstrate an entirely different level of innovation from what American companies can do. Even without IP theft, China would naturally overtake the U.S. sometime in the mid 21st century or before.

All Rights Reserved for Michael K. Spencer

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