Technology in the midst of a US-China trade war

Posted on Monday, July 9, 2018 by User Not Found

US workers continue to brace for an all-out trade war between the United States and China. While many products have already become more expensive and several reports are focusing on US farmers, automakers and oil producers, there still hasn’t been a fervent look at the supposed issue at the root of all this: protecting American intellectual property (IP).

The trade war strategy may not pan out, though, for a number of reasons. A big one being that China isn’t very concerned about entering or even winning a trade war with the US, or about stealing American IP. The country’s main concern, according to the South China Morning Post, is fighting for the next technological revolution.

Before the words “trade war” were ever splashed across every major news outlet’s 6:00 news, Wired Magazine reported that often western companies were imitating ideas from China, rather than the other way around. In fact, this warning from Paul Triolo, head of the Geotechnology Group at research firm Eurasia Group, now seems even more ominous: “The evolving technology dynamic between China and the west will probably involve a mix of envy, competition – and perhaps confrontation.”

Consider the innovators of yesteryear and the tech giants of today. IBM, GE, Intel, Microsoft, Apple, Google. What do these all have in common? Yes – they’re all American (and not by accident), but they also seemed to have all the ingredients needed for an award-winning innovation recipe.

Via the Harvard Business Review:

"Our research finds that innovation flourished in densely populated areas where people could interact with one another, where capital markets to finance innovation were strong, and where inventors had access to well-connected markets. States with a legacy of slavery were considerably less innovative, and religion had a negative effect, too, though to a lesser degree. Places that were economically and socially open to disruptive new ideas tended to be more innovative, and they subsequently grew faster."

Similarly, China’s business and political leaders made an intentional decision to "be known for a new kind of electronics – not only ‘Made in China’, but ‘Designed in China’," according to Wired. For years, the country’s fought to attain each component needed for innovation that is mentioned above, including capital, disruption and a well-connected market.

So, the question may not be whether this trade war will have an impact on international markets, but whether China’s plans to launch a technology revolution will have an equally large or even larger impact on international markets. The implications of a China-led tech revolution are obviously yet to be seen, but I have no doubt they will materialize at some point soon. In the meantime, the US can keep posting up its soybean farmers, apple growers and auto workers as the ones most affected by its trade war.

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