Following our lead, China has issued an order that all foreign-made hardware and software, for both computers and wireless, be removed from government offices and public institutions within the next three years. That amounts to upward of 30 million pieces of hardware to change out.
Well, I guess we are now in a full-blown tech war. It really does not seem to matter to our leaders, since they a) do not have much of a clue about tech, and b) do not seem to care about the fallout for those that rely on Chinese markets.
China’s ban has already hit some segments hard. Even some out of the tech sector, like soybeans, are taking a hit from the tariffs. Another is the semiconductor industry, which was already in a slump and the bans and tariffs promise to keep them there. And, it is unlikely that the lost sales here will be made up by products made and distributed here (nearly all of these semiconductor companies have some, or all of their fabs in China).
Within the computer segment, companies such as Dell, HP and Microsoft will see a decline in sales, as well as have to replace complex and advanced AI components in their hardware. China is ahead of the United States in much of the advanced AI – I know, I was there recently and saw what they have firsthand.
The results of this are starting to show up little by little. Some economists, the latest being Harvard University professor and former treasury secretary Larry Summers, are warning of a recession in the next year or so, fueled by this trade war. Summers places the odds of a recession before 2021 at nearly 50 percent.
One of the interesting tangential ramifications is that it illustrates how important and integral, to everyone’s life, technology has become. It is now a political bargaining tool. That brings into focus just where this is headed.
Is this just another round of salvos in the ongoing tit-for-tat trade war? Or will this ban on Western hardware lead to a serious tech cold war – one that might not be resolved quickly, or, possibly, ever.
This is something that both governments need to seriously consider. If the political landscape changes next year, this may all be moot. However, if it does not, the long-term ramifications will alter the global balance of economic power – perhaps permanently. If this does stay the course for the next Presidential cycle, it might take a decade before the path gets altered. Fortunately, China is taking a reserved start to this (waiting for the 2020 election result). Perhaps they are hoping that Trump loses his bid for re-election or leaves office prior to November.
On the flip side, the negative aspects of all of this are not solely limited to America. When it comes to software, for example, China’s industry trails the United States. In a protracted tech war, China will have to develop its own operating systems and applications, which they have been getting from American firms, and develop related services to support them. However, most analysts agree that China can marshal a lot of resources if they need to and move very quickly. That has already been proven with their 5G platforms.
One of the more interesting prospects of something like this is that it has the potential of metastasizing, globally. What if a global trend develops where more countries take to blocking technology, apps or services from certain countries. The results would be very interesting and not likely beneficial to the worldwide technological ecosystem. For example, the Internet. If countries ban technology that makes the Internet what it is, the world could end up with a highly fragmented or Balkanized Internet.
There is some “WAG-ing” with this. While such a direction is not likely, the point is that we really do not know who might be doing what as the political environment morphs. Who would have thought we would be in a tug-of-war with China in 2019?
The bottom line – status quo is never a good bet. Leaders are fickle and Trump has shown us that the U.S. is just as capable of having a big baby in office as any other country. This administration, and much of the GOP, has, certainly, reminded us that our government is more concerned about its own interests than those of the people. And, the results may well change the global landscape in ways we thought could never happen.
Also, on another topic. My Tuesday missive discussed the issues around towers and esthetics and the tugs-of-war between carriers, municipalities, and residents around tower placement.
I just learned that the case in Jackson Mississippi, which I mentioned in that missive, has had a ruling. A federal judge ruled against Verizon and in favor of the municipality. It means they have, successfully, blocked the placement of the cell tower that Verizon wanted to deploy.
The ruling in favor of the municipality came because the judge noted that Verizon had failed to show sufficient cause for need. Verizon could not provide strong enough evidence that the tower was “critically” needed; little guys 1, Verizon, 0.