How the U.S.-China trade war became a conflict over the future of tech

By David J. Lynch David J. Lynch Financial writer covering trade and globalization Email Bio Follow May 22 at 7:13 PM It may have begun as a trade war, but the U.S. conflict with China is increasingly becoming a technology war.

“The trade war really is more about technology than about trade,” said Paul Triolo, who heads Eurasia Group’s global technology policy practice. “Our sense is that the gloves are off.”On Wednesday, two British telecommunications companies, Vodafone and a unit of BT Group, said they would halt the use of Huawei smartphones on their newest networks. And Arm Holdings, a major designer of mobile-phone computer chips, said it was “complying with all of the latest restrictions set forth by the U.S.

Other Chinese companies involved in supplying cameras and computers for the “Big Brother” surveillance system that China uses to control the Muslim inhabitants of Xinjiang, known as Uighurs, also may be hit with a range of U.S. punishments, according to Triolo and other industry executives tracking the administration debate.

A Treasury Department-led panel now scrutinizes more closely proposed Chinese investments in U.S. technology companies, and the Commerce Department is drafting new regulations to limit exports to China of 14 categories of advanced technologies, including quantum computing, robotics and artificial intelligence.

“The meltdown of the trade talks gave license to the national security hawks to really run with the ball. It seems like this is just the beginning,” said David Hanke, a partner at Arent Fox and a former Senate Intelligence Committee staffer. “China has been waging a tech war against us, but until now the U.S. government was barely pushing back.”

Chinese companies are heavily dependent on U.S. suppliers for many critical components, including semiconductors. When the Commerce Department last year barred U.S. companies from supplying ZTE, another Chinese telecom company, it was widely seen as a death sentence for the company.

How to negotiate. China we have this and that to offer you. What do you have in exchange ?

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