Global Tech Has a Hard Time Decoding China-US Relations from qocsuing's blog

Global Tech Has a Hard Time Decoding China-US Relations

Over the past few weeks, I’ve been traveling in Asia, cracking open salt ‘n pepper crab in Singapore, eating roast duck and fried turnip cake in Hong Kong and trying the exotic sushi in Tokyo. Along the way, I talked to as many tech CEOs and investors as possible, and one thing was clear: All are walking a razor’s edge, trying to navigate a new era of economic warfare in the heated competition between the US and China.To get more china technology news, you can visit shine news official website.

While I’ve been on the road, the Chinese government has questioned staff at the Shanghai office of the consulting firm Bain & Co., raided the offices of due diligence firm Mintz Group and interrogated employees and seized computers at Capvision Pro Corp., a Shanghai- and New York-based global expert network. State-sponsored broadcasters in China have dubbed this an “anti-espionage campaign” and suggested that Western companies might be ferrying state secrets to foreign governments and their intelligence agencies.

In the old days, superpowers simply levied tariffs and coerced allies to achieve their geopolitical ends. But now many countries are waving olive branches, trying to defuse tensions. The Biden administration is seeking a flurry of meetings and phone calls with its Chinese counterparts. Australia is also trying to repair its relationship and thaw economic ties with China.

In large part, companies, and not countries, are the focus of China’s campaign to regain leverage over the West. China has “paused its economic coercion of countries and commenced coercion of companies. New tactic, same objective: economic coercion,” Rahm Emanuel, the US ambassador to Japan, told my colleagues and me in an interview.

Old tools like trade restrictions and product boycotts didn’t work, Emanuel said. So now China resorts to almost arbitrarily pressuring companies in symbolically important industries, using economic means to achieve longtime political goals such as building domestic technological capabilities or the acceptance of its “one China” principle.

In one of the latest illustrations of this, the Chinese government has initiated a cybersecurity review of imports from the Boise, Idaho-based memory chip maker Micron Technology Inc. to ensure the “integrity of the information infrastructure supply chain.”

The US is putting pressure on companies, too. President Joe Biden plans to sign an executive order that would limit investments by US companies in key parts of the Chinese economy, including tech. The policy is known as “reverse CFIUS” — because the Committee on Foreign Investment in the US reviews the national security implications of foreign investments and acquisitions of American businesses.

I spoke to several venture capitalists about the situation they suddenly find themselves in, most of whom did not want to be named describing such a sensitive issue. All were gloomy about the evolving risks of doing business in China.

One VC marveled at how shareholders in Western technology companies with the largest revenues in the country have yet to accept the new reality. Shareholders do not seem particularly troubled at Apple Inc. (which gets 19% of revenue from China while its stock is up 33% this year), Micron (10% revenue, up 22%), Broadcom Inc. (35% revenue, up 13%) or Qualcomm (64% revenue, down 6%).

They’re either overconfident that China can’t block such popular products and important supply chain components or simply naïve about worsening prospects for American tech companies in China, this VC said.

The investors all pine for a return to the era of globalization from a decade ago. Failing that, they really just want clarity on where everyone stands.

“Nowadays with all these geopolitical risks, we will be extra cautious,” another VC said in an interview. “We just hope there are clear rules and procedures to follow if we do invest in sensitive sectors. If there are, we will follow them.”