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Written by : Britt Quastad |
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China has won stated goal in the tech industry get out from under the yokes of others they say that means innovation self-sufficiency R&D government financing the slogan is this made in China 2025 US companies say it actually means trouble the word protectionist comes up a lot US industry leaders in analysts say Chinese tech policy does a few things imposes a high cost of entry American companies are forced to turn over key technology just to enter the market they describe it as a kind of pay to play in the world's second-largest economy then matchmaking in some key industries like China is energy telecom and auto sectors US companies have to form joint ventures with domestic firms that means transferring valuable technology intellectual property to the local company allowing them local firms to create their own new products in their own new technology finally financing American companies have to compete with Chinese operators that get 300 billion dollars in government assistance cyber security rules ruled out by China in the past couple years they've only added to those concerns for instance when companies have to share valuable source code or possibly be excluded from a billion potential customers it's a catch-22 the Commission on the theft of American intellectual property says it comes down to this quote China is deeply committed to the industrial policies that include maximizing the acquisition of foreign technology and information policies that have contributed to greater IP theft but American tech companies aren't turning away from China for one basic reason they can't the market is just too big to ignore there are 1.4 billion people in China more than quadruple the population of the United States all of them with some buying power plus China's booming compared to other large nations it's accounted for as much as 43 percent of the world's projected tech growth in recent years so while the possible payoff is high for innovators so is the cost to their home country one estimate says the u.s. loses as much as six hundred billion dollars a year to IP theft and China's considered a major infringer China's response to international can it's simple the premier said last year we will fully implement our plan of developing strategic emerging industries and quote translation hand over the secrets or you can stay out
Thanks for your comment Chantel Willaert, have a nice day.
- Britt Quastad, Staff Member
us-china trade docks are set to resume next month but for a look at the impact of trade tensions on the tech sector let's welcome journalist Rebecca Fannin she's the author of the new book called tech titans of China which came out this week also we're joined by Wedbush Securities managing director Dan IDEs thank you both for being here Rebecca let's start with you because of the book your basic underlying premise is that if tensions don't reduce soon you think China is actually going to outpace the United States when it comes to technology development why is that we are seeing this us-china tech cold war is happening right now and the US has a major challenger in China a global Challenger China has come up so rapidly over the past decade innovating very fast working very hard going global these are all aspects of China's tech economy that could never have been imagined a decade ago no AI is where most people point they say in terms of artificial intelligence China is ahead in some aspects partly that's because they're spending a lot of government funding it's going through universities partly it's because they have big databases of lots of people that they can kind of work with and run those things too but there have been serious security issues that have been raised with Huawei and with other cooperative efforts do you think that those are policy fallacies do you think it's not a problem well there are a number of AI startups and many of them are unicorns already so we do see this incredible push that China's making an AI facial-recognition is part of AI so that is an issue that has become a very controversial issue and when you go to China you see cameras everywhere looking at you and recording everything you do and monitoring the citizens is it hyperbole overstating to say that the innovation you're talking about if I asked a question did they innovate or did they steal what we innovated is that some oversimplifying things or is there something to that I think it's oversimplifying it is if you look at these innovated themselves so we don't worry if you look at the history China came to the u.s. went to our finest schools went to our finest Panisse went back to China copied but now China's per to the level that they're innovating originated but is there a problem with with IT theft or not I think they're obviously is there is Bates overstated but I think it's overstated hey Dan let's just talk a little bit about what we've seen in the last few days as as it looks like maybe the talks will resume next month it certainly has been technology leading the way higher there up there on the forefront of any issues that we deal with trade right now what would you tell me investors when they start looking at the sector yeah it's the biggest black cloud across TaxACT earner down especially semies an apple front and center Apple continues to be the poster child for the us-china trade war and I think it comes down to worries about disruption the supply chain what that's gonna do to growth I can tell you so far I think barks worse than the bite but no doubt if I look at what's an Apple there's a 20 to 25 dollar overhang on the stock because of the us-china trade situation that's right from an attack investor perspective we continue to handhold through this focus on the long term but ultimately near-term it ultimately does ride on tariffs because if the tariffs kick in December 15th that could take about 200 bits off a tech growth Wow so again what would you tell people to do I mean right now we're buyers attack we've been pounding the table on Apple send me as we're buyers here we continue to think right now fundamentally and valuation wise these stocks move higher you know and to your point I think it comes down to you know right now this is really a game of high stakes poker between US and China what I continue to hear from my tech CEOs is you know kind of address it on IP because it really does come down to protection of IP and that's why right now everyone trying to see our is there gonna be teeth in what the I don't think that any it that what there's a possibility that we could ever reach a deal in which case US companies that are based in China now or manufacturing using their supply to in China are not going to still think about leaving because right now the issue is they're gonna still think about leaving because we're your respective of what deal gets done or no that's what I'm curious about well because if you're if you're for the Chinese government one of the things you want is things to remain the same and so what do they have to do on that end if a deal gets done that ultimately US companies feel comfortable second Apple for example best case a state can move five to seven percent of production out of China and eighteen months there kind of land lock right now in terms of in China but I do think when you look at other tech comings for them to move to China and have more operations it's gonna take more IP and more ultimately teeth in terms of you know what this deal could potentially be you
Thanks Hugh your participation is very much appreciated
- Britt Quastad
About the author
I've studied relativistic mechanics at Azusa Pacific University in Azusa and I am an expert in political culture. I usually feel quixotic. My previous job was resource teacher I held this position for 6 years, I love talking about archaeology and fly tying. Huge fan of Russell Wilson I practice ski jumping and collect first day covers.
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