Today, an editorial from Financial Times shows some of the realities that the global technology sector is now dealing with. Protectionism has apparently raised its head in the tech sector, and new policies and procedures on the part of world superpowers have the capacity to significantly derail the global economy.
Here’s how Financial Times opens this introduction to changes that are going to have dramatic effects on world enterprise technology:
“The latest strike in the trade battle between the US and China has landed, literally, on the desks of Chinese government offices and public bodies.”
The substance of the editorial is predicated on Beijing’s new rule that Chinese buyers will remove all foreign computer equipment and software from supply chains within three years.
As far as China’s new move seems retaliatory, Financial Times analysts are tying it to the American move to blacklist Chinese telecom firm Huawei and its products from American supply cycles.
We’ve been reporting on America’s efforts to remove Huawei from American business relationships for a while. We saw how in the wake of this blanket edict, American companies actually consulted their lawyers to see if they could do an end run around prohibitions, in order to keep relationships with Huawei for semiconductor business. In the end, though, the U.S. was able to expel Huawei to a significant extent, as the Chinese telecom giant cited losses in the billions of dollars.
As for Beijing’s move, Financial Times shows the ‘decoupling’ agenda has been going on for many years, noting that now up to 20 million pieces of hardware will need to be swapped out as part of China’s policy shift.
Some of China’s domestication of technology has even been somewhat covert under other ostensible motives: analysts cite the lack of Chinese participation in Google and Facebook projects, noting that Chinese firms like Tencent profit from the disconnect.
The tension will have other types of fallout as well. Just look at how U.S./China conflict threatens the development of oceanic Internet cabling.
“The threat of a failed approval process (for an undersea cable project) reflects growing distrust of Chinese ambitions and comes amid escalating tensions between China and the U.S., part of a broad rivalry between the world’s two largest economic powers,” wrote a trio of authors at WSJ in August.
“The technology trade is different from others. It is a truly global sector, with highly integrated supply chains. …There are no winners from a technology cold war.”
This breaking editorial seems prescient in that we’ve seen companies struggle with government protectionism in a number of different ways. The nature of capital is to seek these global markets because of their potential. If government is seeking to curtail those activities, that’s going to set up a tension between the public and private sectors that’s not easily resolved.
