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Donald Trump is Losing His Tech War with China and Doesn’t Even Know It

Dilip Hiro

For the Trump administration’s senior officials, it’s been open season on bashing China. If you need an example, think of the president’s blame game about “the invisible Chinese virus” as it spreads wildly across the U.S.

When it comes to China, in fact, the ever more virulent criticism never seems to stop.

Between the end of June and the end of July, four members of his cabinet vied with each other in spewing anti-Chinese rhetoric. That particular spate of China bashing started when FBI Director Christopher Wray describedChinese President Xi Jinping as the successor to Soviet dictator Joseph Stalin. It was capped by Secretary of State Mike Pompeo’s clarion call to U.S. allies to note the “bankrupt” Marxist-Leninist ideology of China’s leader and the urge to “global hegemony” that goes with it, insisting that they would have to choose “between freedom and tyranny.” (Forget which country on this planet actually claims global hegemony as its right.)

At the same time, the Pentagon deployed its aircraft carriers and other weaponry ever more threateningly in the South China Sea and elsewhere in the Pacific. The question is: What lies behind this upsurge in Trump administration China baiting? A likely answer can be found in the president’s blunt statement in a July interview with Chris Wallace of Fox News that “I’m not a good loser. I don’t like to lose.”

The reality is that, under Donald Trump, the United States is indeed losing to China in two important spheres. As the FBI’s Wray put it, “In economic and technical terms [China] is already a peer competitor of the United States… in a very different kind of [globalized] world.” In other words, China is rising and the U.S. is falling. Don’t just blame Trump and his cronies for that, however, as this moment has been a long time coming.

Facts speak for themselves. Nearly unscathed by the 2008-2009 global recession, China displaced Japan as the world’s second largest economy in August 2010. In 2012, with $3.87 trillion worth of imports and exports, it overtook the U.S. total of $3.82 trillion, elbowing it out of a position it had held for 60 years as the number one cross-border trading nation worldwide. By the end of 2014, China’s gross domestic product, as measured by purchasing power parity, was $17.6 trillion, slightly exceeding the $17.4 trillion of the United States, which had been the globe’s largest economy since 1872.

In May 2015, the Chinese government released a Made in China 2025 plan aimed at rapidly developing 10 high-tech industries, including electric cars, next-generation information technology, telecommunications, advanced robotics, and artificial intelligence. Other major sectors covered in the plan included agricultural technology, aerospace engineering, the development of new synthetic materials, the emerging field of biomedicine, and high-speed rail infrastructure. The plan was aimed at achieving 70% self-sufficiency in high-tech industries and a dominant position in such global markets by 2049, a century after the founding of the People’s Republic of China

Semiconductors are crucial to all electronic products and, in 2014, the government’s national integrated circuit industry development guidelines set a target: China was to become a global leader in semiconductors by 2030. In 2018, the local chip industry moved up from basic silicon packing and testing to higher value chip design and manufacturing. The following year, the U.S. Semiconductor Industry Association noted that, while America led the world with nearly half of global market share, China was the main threat to its position because of huge state investments in commercial manufacturing and scientific research.

By then, the U.S. had already fallen behind China in just such scientific and technological research. A study by Nanjing University’s Qingnan Xie and Harvard University’s Richard Freeman noted that between 2000 and 2016, China’s share of global publications in the physical sciences, engineering, and math quadrupled, exceeding that of the U.S.

In 2019, for the first time since figures for patents were compiled in 1978, the U.S. failed to file for the largest number of them. According to the World Intellectual Property Organization, China filed applications for 58,990 patents and the United States 57,840. In addition, for the third year in a row, the Chinese high-tech corporation Huawei Technologies Company, with 4,144 patents, was well ahead of U.S.-based Qualcomm (2,127). Among educational institutions, the University of California maintained its top rank with 470 published applications, but Tsinghua University ranked second with 265. Of the top five universities in the world, three were Chinese.

The Neck-and-Neck Race in Consumer Electronics

By 2019, the leaders in consumer technology in America included Google, Apple, Amazon, and Microsoft; in China, the leaders were Alibaba (founded by Jack Ma), Tencent (Tengxun in Chinese), Xiaomi, and Baidu. All had been launched by private citizens. Among the US companies, Microsoft was established in 1975, Apple in 1976, Amazon in 1994, and Google in September 1998. The earliest Chinese tech giant, Tencent, was established two months after Google, followed by Alibaba in 1999, Baidu in 2000, and Xiaomi, a hardware producer, in 2010. When China first entered cyberspace in 1994, its government left intact its policy of controlling information through censorship by the Ministry of Public Security.

In 1996, the country established a high-tech industrial development zone in Shenzhen, just across the Pearl River from Hong Kong, the first of what would be a number of special economic zones. From 2002 on, they would begin attracting Western multinational corporations keen to take advantage of their tax-free provisions and low-wage skilled workers. By 2008, such foreign companies accounted for 85% of China’s high-tech exports.

Shaken by an official 2005 report that found serious flaws in the country’s innovation system, the government issued a policy paper the following year listing 20 mega-projects in nanotechnology, high-end generic microchips, aircraft, biotechnology, and new drugs. It then focused on a bottom-up approach to innovation, involving small start-ups, venture capital, and cooperation between industry and universities, a strategy that would take a few years to yield positive results.

In January 2000, less than 2% of Chinese used the Internet. To cater to that market, Robin Li and Eric Xu set up Baidu in Beijing as a Chinese search engine. By 2009, in its competition with Google China, a subsidiary of Google operating under government censorship, Baidu garnered twice the market share of its American rival as Internet penetration leapt to 29%.

In the aftermath of the 2008-2009 global financial meltdown, significant numbers of Chinese engineers and entrepreneurs returned from Silicon Valley to play an important role in the mushrooming of high-tech firms in a vast Chinese market increasingly walled off from U.S. and other Western corporations because of their unwillingness to operate under government censorship.

Soon after Xi Jinping became president in March 2013, his government launched a campaign to promote “mass entrepreneurship and mass innovation” using state-backed venture capital. That was when Tencent came up with its super app WeChat, a multi-purpose platform for socializing, playing games, paying bills, booking train tickets, and so on.

Jack Ma’s e-commerce behemoth Alibaba went public on the New York Stock Exchange in September 2014, raising a record $25 billion with its initial public offering. By the end of the decade, Baidu had diversified into the field of artificial intelligence, while expanding its multiple Internet-related services and products. As the search engine of choice for 90% of Chinese Internet users, more than 700 million people, the company became the fifth most visited website in cyberspace, its mobile users exceeding 1.1 billion.

Xiaomi Corporation would release its first smartphone in August 2011. By 2014, it had forged ahead of its Chinese rivals in the domestic market and developed its own mobile phone chip capabilities. In 2019, it sold 125 million mobile phones, ranking fourth globally. By the middle of 2019, China had 206 privately held start-ups valued at more than $1 billion, besting the U.S. with 203.

Among the country’s many successful entrepreneurs, the one who particularly stood out was Jack Ma, born Ma Yun in 1964. Though he failed to get a job at a newly opened Kentucky Fried Chicken outlet in his home city of Hangzhou, he did finally gain entry to a local college after his third attempt, buying his first computer at the age of 31. In 1999, he founded Alibaba with a group of friends. It would become one of the most valuable tech companies in the world. On his 55th birthday, he was the second richest man in China with a net worth of $42.1 billion.

Born in the same year as Ma, his American counterpart, Jeff Bezos, gained a degree in electrical engineering and computer science from Princeton University. He would found Amazon.com in 1994 to sell books online, before entering e-commerce and other fields. Amazon Web Services, a cloud computing company, would become the globe’s largest. In 2007, Amazon released a handheld reading device called the Kindle. Three years later, it ventured into making its own television shows and movies. In 2014, it launched Amazon Echo, a smart speaker with a voice assistant named Alexa that let its owner instantly play music, control a Smart home, get information, news, weather, and more. With a net worth of $145.4 billion in 2019, Bezos became the richest person on the planet.

Deploying an artificial intelligence inference chip to power features on its e-commerce sites, Alibaba categorized a billion product images uploaded by vendors to its e-commerce platform daily and prepared them for search and personalized recommendations to its customer base of 500 million. By allowing outside vendors to use its platform for a fee, Amazon increased its items for sale to 350 million — with 197 million people accessing Amazon.com each month.

China also led the world in mobile payments with America in sixth place. In 2019, such transactions in China amounted to $80.5 trillion. Because of the Covid-19 pandemic, the authorities encouraged customers to use mobile payment, online payment, and barcode payment to avoid the risk of infection. The projected total for mobile payments: $111.1 trillion. The corresponding figures for the United States at $130 billion look puny by comparison.

In August 2012, the founder of the Beijing-based ByteDance, 29-year-old Zhang Yiming, broke new ground in aggregating news for its users. His product, Toutiao (Today’s Headlines) tracked users’ behavior across thousands of sites to form an opinion of what would interest them most, and then recommended stories.

By 2016, it had already acquired 78 million users, 90% of them under 30.

In September 2016, ByteDance launched a short-video app in China called Douyin that gained 100 million users within a year. It would soon enter a few Asian markets as TikTok. In November 2017, for $1 billion, ByteDance would purchase Musical.ly, a Shanghai-based Chinese social network app for video creation, messaging, and live broadcasting, and set up an office in California.

Zhang merged it into TikTok in August 2018 to give his company a larger footprint in the U.S. and then spent nearly $1 billion to promote TikTok as the platform for sharing short-dance, lip-sync, comedy, and talent videos. It has been downloaded by 165 million Americans and driven the Trump administration to distraction. A Generation Z craze, in April 2020 it surpassed two billion downloads globally, eclipsing U.S. tech giants. That led President Trump (no loser he!) and his top officials to attack it and he would sign executive orders attempting to ban both TikTok and WeChat from operating in the U.S. or being used by Americans (unless sold to a U.S. tech giant). Stay tuned.

Huawei’s Octane-Powered Rise

But the biggest Chinese winner in consumer electronics and telecommunications has been Shenzhen-based Huawei Technologies Company, the country’s first global multinational. It has become a pivot point in the geopolitical battle between Beijing and Washington.

Huawei (in Chinese, it means “splendid achievement”) makes phones and the routers that facilitate communications around the world. Established in 1987, its current workforce of 194,000 operates in 170 countries. In 2019, its annual turn-over was $122.5 billion. In 2012, it outstripped its nearest rival, the 136-year-old Ericsson Telephone Corporation of Sweden, to become the world’s largest supplier of telecommunications equipment with 28% of market share globally. In 2019, it forged ahead of Apple to become the second largest phone maker after Samsung.

Several factors have contributed to Huawei’s stratospheric rise: its business model, the personality and decision-making mode of its founder Ren Zhengfei, state policies on high-tech industry, and the firm’s exclusive ownership by its employees.

Born in 1944 in Guizhou Province, Ren Zhengfei went to Chongqing University and then joined a military research institute during Mao Zedong’s chaotic Cultural Revolution (1966-1976). He was demobilized in 1983 when China cut back on its engineering corps. But the army’s slogan, “fight and survive,” stayed with him. He moved to the city of Shenzhen and worked in the country’s infant electronics sector for four years, saving enough to co-found what would become the tech giant Huawei. He focused on research and development, adapting technologies from Western firms, while his new company received small orders from the military and later substantial R&D (research and development) grants from the state to develop GSM (Global System for Mobile Communication) phones and other products. Over the years, the company produced telecommunications infrastructure and commercial products for third generation (3G) and fourth generation (4G) smartphones.

As China’s high-tech industry surged, Huawei’s fortunes rose. In 2010, it hired IBM and Accenture PLC to design the means of managing networks for telecom providers. In 2011, the company hired the Boston Consulting Group to advise it on foreign acquisitions and investments.

Like many successful American entrepreneurs, Ren has given top priority to the customer and, in the absence of the usual near-term pressure to raise income and profits, his management team has invested $15 to 20 billion annually in research and development work. That helps explain how Huawei became one of the globe’s five companies in the fifth generation (5G) smartphone business, topping the list by shipping out 6.9 million phones in 2019 and capturing 36.9% of the market. On the eve of the release of 5G phones, Ren revealed that Huawei had a staggering 2,570 5G patents.

So it was unsurprising that in the global race for 5G, Huawei was the first to roll out commercial products in February 2019. One hundred times faster than its 4G predecessors, 5G tops out at 10 gigabits per second and future 5G networks are expected to link a huge array of devices from cars to washing machines to door bells.

Huawei’s exponential success has increasingly alarmed a Trump administration edging ever closer to conflict with China. Last month, Secretary of State Pompeo described Huawei as “an arm of the Chinese Communist Party’s surveillance state that censors political dissidents and enables mass internment camps in Xinjiang.”

In May 2019, the U.S. Commerce Department banned American firms from supplying components and software to Huawei on national security grounds. A year later, it imposed a ban on Huawei buying microchips from American companies or using U.S.-designed software. The White House also launched a global campaign against the installation of the company’s 5G systems in allied nations, with mixed success.

Ren continued to deny such charges and to oppose Washington’s moves, which have so far failed to slow his company’s commercial advance. Its revenue for the first half of 2020, $65 billion, was up by 13.1% over the previous year.

From tariffs on Chinese products and that recent TikTok ban to slurs about the “kung flu” as the Covid-19 pandemic swept America, President Trump and his team have been expressing their mounting frustration over China and ramping up attacks on an inexorably rising power on the global stage. Whether they know it or not, the American century is over, which doesn’t mean that nothing can be done to improve the U.S. position in the years to come.

Setting aside Washington’s belief in the inherent superiority of America, a future administration could stop hurling insults or trying to ban enviably successful Chinese tech firms and instead emulate the Chinese example by formulating and implementing a well-planned, long-term high-tech strategy. But as the Covid-19 pandemic has made abundantly clear, the very idea of planning is not a concept available to the “very stable genius” presently in the White House.

(Dilip Hiro has written 34 books, including After Empire: The Birth of a Multipolar World.)

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Huawei, Tik Tok, WeChat & Other Handy Targets

Patrick Lawrence

The Trump regime is taking Huawei, Tik Tok and WeChat, three accomplished Chinese technology and social media companies, straight to the wall now, either banning them from the U.S. market or, in the TikTok case, forcing its owner to sell its U.S. assets to an American company. On Saturday President Donald Trump announced that there’s more of this coming.

“We’re looking at other things. Yes, we are,” he said during a White House encounter with reporters. These other things reportedly may include Alibaba, China’s top-performing e-commerce company.

There is always more coming as we follow the exploits of Mad Mike Pompeo, our faux–Christian secretary of state, who is full tilt these days in his persecutory campaigns against the various Beelzebubs that obsess him, China, Iran, Russia, and Venezuela highest among them.

Why is the regime so busy these days on the foreign policy side? The president, being a man of business, prefers to escalate economic and trade tensions as best he can. Pompeo, whose understanding of anything other than “end times” warfare is limited, can manage no more than his inhumane efforts to starve and threaten those on his list of Satanic evildoers. What is the running theme?

It is time to connect various dots. In the connections we find our answer.

Look at the list: China, Iran, and Russia are all emergent non–Western nations whose steady rise to prominence is already altering the U.S.–led global order, if order is our word; in time they will inevitably play leading roles as it is replaced with what can be properly named a new order. Venezuela is not so far along as these others developmentally, but it belongs on the list nonetheless.

Justifications Abound

We are treated to all sorts of justifications for American policy against these nations. The Chinese technology companies are threats to national security. The Iranians are state sponsors of terrorism. The Russians are aggressors. The Venezuelans repress their people and the leadership deals in drugs.

Nonsense straight across the board. There is no evidence whatsoever of the Chinese tech companies colluding with Beijing to compromise the U.S. The U.S., not Iran, has sponsored more terrorist groups in the Middle East than you’ve had hot dinners. The U.S. presses hard against Russia’s western flank and calls the Russians aggressive for defending it. The Venezuelan government offers its people a benignly mild iteration of socialism and they welcome it. Utter contempt for the American press, the government-supervised New York Times in the lead per usual, for sustaining these disgraceful, damaging cases of disinformation.

My conclusion: We are entering upon an era when the U.S. (supported in many cases by the more spineless of its Western allies) is actively attempting to suppress non–Western nations that do not bow to U.S. primacy in any field wherein they make themselves genuinely competitive.

If we accept that parity between West and non–West is the No. 1 imperative of our century, as your columnist has severally asserted, confining these nations to the lower rungs on the development ladder has to be judged a losing proposition. It is also dangerous. We can also conclude that the policy cliques in Washington either (1) do not understand the historic turn that is upon us, or (2) they understand this perfectly well but are determined to preserve Western hegemony for a final few decades before a more equitable world order sends it into the history books.

Is it too much to view this as a world war of another kind? I don’t think so. And the implications of this term, if one accepts it, bear serious consideration.

After 2001

In the interim immediately following the 2001 attacks in New York and Washington, the U.S. had a choice and a chance to accept, imaginatively and creatively, the emergence of a new global order and the West’s relative decline in it after a period of exploitative superiority extending back half a millennium. But our leaders swiftly decided no, we’ll do this as messily and violently as we can.

In other words, the war we wage against China is the same war we wage against Iran and against Russia and against Venezuela. They may look different, but they are of a piece. There is no indication that this war will prove anything other than protracted and vicious.

All of these nations are self-consciously non–Western but in no way anti–Western. Their sins are the same, too: they all stand for self-determination, against anti-democratic Western hegemony, and for a global order in effect based on the five principles Zhou Enlai articulated at the 1955 Bandung Conference of non-aligned nations.

Think about these famous principles: mutual respect for territorial integrity and sovereignty, non-aggression, non-interference in others’ internal affairs, equality, and peaceful co-existence. Name one of these the U.S. observes. Name one that any of the nations on our list violates, and spare us the rubbish about Russia’s re-annexation of Crimea after the U.S. recklessly lunged for the Black Sea naval base at Sevastopol via the coup it cultivated in Ukraine six years ago.

The nations on our list all display strengths, we must also note. These strengths translate into power of one or another magnitude. In this, these nations stand for the emergent power of the non–West. I am happy to call this the power of self-possession.

Variant of Postwar Japan

It is obvious by now that China has achieved a level of technological advancement that will propel it into global leadership in various significant fields. It is a variant of the postwar Japan story: they started out making ceramic ashtrays and transistor radios and went on to dominate in industries such as cars, shipbuilding, steel, robotics, high-end medical gear and so on. For the sake of proportion, Japan had a population of 92 million in 1960; China’s now is 1.4 billion.

Iran is destined to play a leading role in its region in the political and security dimensions regardless of anyone else’s preferences — a positive role given its objective to bring stability to a region the U.S. has set ablaze. It has the world’s fourth-largest petroleum reserves and is a locus of various emergent alliances with other powers, China and Russia notable among them.

Venezuela has the world’s largest oil reserves, of course, and with the election of Hugo Chávez in 1999 it began to make itself that most dreaded of entities from Washington’s perspective, a working social democracy in Latin America that serves its people. These are sources of power. It is because of both that the U.S. is so intent on bringing down the government of Nicolás Maduro, who succeeded Chávez on the latter’s death in 2013.

Vladimir Putin’s great transgression was insisting on nothing more nor less than parity after the U.S. brought the Russian Federation to its knees during the tragic presidency of the supine, ever-inebriated Boris Yeltsin. Since his noted speech at the Munich security conference in 2007, the Russian president has been consistently clear he welcomes extensive, cooperative relations with the West, but only if these are based on an equal partnership.

One need not change a syllable of Putin’s often-stated position to recognize this as precisely the position of all of America’s designated adversaries. But the coming of equality among nations is the single most fundamental reason the U.S. now wages the world war I describe.

It is always an excellent thing for U.S. foreign policy to fail when directed against non–Western powers with minds of their own, especially if it is crafted by the inimitable (thank goodness) Pompeo. Last Friday gave us two back-to-back flops. Wunderbar on both counts.

At the United Nations, the Security Council voted down Pompeo’s long-running effort to extend an arms embargo against Iran as provided for in the 2015 accord governing the Islamic Republic’s nuclear programs. This was embarrassment No.1 for the irrational Pompeo.

And you have to love this: Pompeo now proposes to invoke a “snapback” clause that provides for sanctions to be restored if Iran violates the agreement’s terms —never mind, he says, that the Trump administration repudiated the pact two years ago. When this is rejected, as it is certain to be, it will be embarrassment No. 2.

The Trump regime concurrently announced that it had seized more than a million barrels of Iranian fuels en route to Venezuela. This was supposed to be a bold, chest-out assertion of American power and control of the high seas and its fearless stance against Iran.

Here’s the thing: Iran sold the oil, freight-on-board, well before four Greek-owned tankers set sail with it. Tehran thenceforth had nothing to do with the transaction. It now emerges that the Greek ship owner, George Gialozoglou, had been in talks with Washington for weeks to organize the seizure. I suspect he purchased the fuel precisely to provide the occasion for the U.S. to commandeer it.

When a first cargo of Iranian fuels sailed in late May, Iranian vessels carried it and the U.S. left it alone. The incident last Friday was almost certainly staged for appearances; in sum — embarrassment No. 3 by my count. Mohammad Javad Zarif, Iran’s foreign minister, confirmed this judgment on social media numerous times over the weekend.

I believe Trump when he says there is more coming in his wars without weapons against China. The U.S. is now committed to preventing non–Western nations that do not conform to the neoliberal order from rising in any field wherein they threaten to best U.S. companies. If you can think of a clearer measure of American weakness, please let me know.

When Pompeo was defeated in the Security Council last Friday, Kelly Craft, the regime’s U.N. ambassador, used an interesting phrase. The U.S. will “stop at nothing” to re-impose the embargo against Iran, even if it does so unilaterally, as is likely to prove the case. I believe Craft, too. We should all find those three words fearful as we gaze into the future.

The ship seizure last week was sheer farce, but by way of it the U.S. effectively claims the right to piracy at sea. I do not use “world war” as a figure of speech.

(Patrick Lawrence, a correspondent abroad for many years, chiefly for the International Herald Tribune, is a columnist, essayist, author and lecturer. Article courtesy: Consortium News, a US news platform.)