It’s no secret that China has long played fast and loose with patent, trade secret and copyright laws in violation of international norms. When called on the carpet, China makes vague concessions, and U.S. companies live with the infractions as the cost of doing business.
But the current trade dispute is different and the stakes higher. Look behind the tariffs and retaliations and you will find an ideological and economic struggle for leading-edge technology that promises to reshape global competition for decades. And, this time, the United States can’t back down.
The difference is the emergence of advanced super-fast 5G telecommunications networks, whose impact is predicted to be as significant as the shift from typewriters to computers.
Experts consider 5G the start of the Fourth Industrial Revolution, and that companies and countries with control of these networks will have a running start toward being dominant in everything from smartphones to advanced warfare systems.
That is why this trade conflict is more consequential to U.S. economic competitiveness and national security than any other, and why the Trump administration has targeted Chinese tech giant Huawei Technologies, a major player in high-speed networks and an early entrant in the 5G era.
Huawei, whose U.S. headquarters is in Plano, Texas, has been at the center of accusations from U.S. companies of intellectual property theft, and the U.S. intelligence community has alleged the firm has ties to China’s Communist Party and military. Based on this and China’s history, the Trump administration has banned U.S. companies from supplying Huawei with computer chips, software and other components that it needs without government approval, citing national security concerns.
Huawei vehemently denies that it is cozy with China’s Communist Party and military, or that its equipment poses a national security risk. The company has gone into federal court in the eastern district of Texas to refute the claims and contest the ban.
We will leave those determinations to the federal court. This much is certain: The battle for dominance in next-generation technology is a conflict worth waging. The outcome will determine whether advanced technologies that will drive future prosperity are in China, a nation that fails to recognize intellectual property rights, or in the United States and other nations that respect the rule of law. We opt for the latter.
Blacklisting Huawei is a clear warning to China, which unfortunately shows no signs of changing.
Long term, the U.S. needs a more comprehensive plan to leverage our nation’s competitive strengths to keep pace with 5G development, establish cyber defenses and create allies to pressure China to conform to global norms. A prime opportunity to leverage alliances disappeared when the Trump administration nixed the Trans-Pacific Partnership, a trade alliance designed to promote U.S. exports and isolate China for bad behavior.
Winning a trade war is not easy, but drawing a line in the sand over intellectual property is long overdue.