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Wen Yang: Trade war, technological war, where will tensions end?

2018-12-26

By Wen Yang Source: Global Times    Published: 2018-12-24


The US-China technology war hype started after the ZTE case came to surface. There has been no doubt that US intention of starting trade war is beyond trade frictions. It means China has to prepare for more US hostilities.



If the US has a consistent strategy against China, striking Huawei this time has exposed its strategic goal. US does not hide its true intentions anymore. China has to deal with it using its own battle strategy.


The worst case scenario would be Trump is playing some political tricks with China. He already has a strategy planned out, and acknowledged all the information on Huawei's CFO Meng Wanzhou's arrest and timed every step. If things fall into this category, it means that the US is ready for battle with fully loaded ammo. China, on the other hand, lacks of backup plan.


Follow this line of thinking, picking on Huawei will be a key part of the whole plan - a meticulous and well thought out attack. The aim is not simply banning Huawei or arresting one of its executives.


Through a protracted legal procedure, to uncover and expose Huawei's business secrets, try to destroy the Huawei brand, and to remove it from the market is what the US really wants to do.


Huawei is the forerunner of the Chinese high-tech companies, symbolizing the cutting-edge technology during the new 5G era. If the plan of the US succeeds, it will deal a blow to China's technology sector.


The Chinese government so far is still keeping its calm, without drawing too much connection between Meng's arrest and the possible US plan to sabotage Huawei.


The current world structure is mixed with globalization and major power competition.


There has to be a country leading the globalization, maintaining order in this process. The country has previously been US.


Competition among powers is rivalries based on nations' strengths, with the United Nations trying to support peaceful dispute settlement and resolution.


The two trends contradict each other and generate problems, which reflect on the China-US relations.


The 40 year of reform and opening-up is also a period of time new liberalism swept the world. China fitted in the world economic system through mutual beneficial cooperation between China and US. As one of the beneficiaries of globalization, China has achieved high-speed growth.


The rise of China's economy is also the result of the hardworking Chinese people. Outside environment and the internal driven power together made the economy to take off. The current international order has been favorable to China. China has no intention to challenge it.


Looking into the case of ZTE, Chinese companies did not challenge "this long arm statute." In 2017, ZTE agreed to a $890 million fine to settle with the US. In another words, the case ended with ZTE obeying the long arm statute and accepting the binding of US law.


After Meng's arrest, US has applied the same legal procedure to Huawei. But the difference of Huawei and the timing, is that not only the Chinese, but also the world believe this is the beginning of technological war or the upgrade of trade war. Chinese people cannot accept Huawei as a second ZTE, calling on the company to fight back.


But, it is unlikely for China to make this move. US has imagined China trying to subvert the world order. So as leader and defender of the world order, US will move to discipline China. If China fights back, instead of a competition between two rivals, it will be seen as the second largest country is challenging the leader of world system.


If successful, the result will break the balance of country's competition system, and overthrow current world order and globalization pattern.


Therefore, unless China is ready to form a new set of world order by not letting the US be the sole world leader, China will continue to be self-restrained, fighting back with low intensity, and never giving up seeking to resolve conflict in a professional manner.


But it does not mean being weak and conceding unconditionally. It is because China is a responsible stakeholder of the global system, and will keep promising not change the current world order. After all, globalization involves all the countries in the world. China has been supporting multilateralism and pushing for free trade, which are the essence of global system.


Once the trade war upgrades, both countries are likely to slide into all-around confrontation. Then China has to think thoroughly and make plans for the future.


China is not passive and US does not have advantage in the current situation. In fact, trade war or technological war, China and US have become inseparable economically.


When US attacks China, hits landed on itself as well. Considering the divided politics and society within the US, it is hard to say who will shoulder more liability in the end.


Counterattack is a must, but skill is needed. China will have to find an accurate target between the globalization system and power competition. Historically speaking, China's rising and US falling will be an unstoppable trend. China should have confidence in that.


The author is a senior fellow of the Chongyang Institute for Financial Studies at Renmin University of China.

Key Words: trade war   technology war   end   Wen Yang  

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