As US-China technology tensions increase, the future of Huawei and TikTok in the US raises a question mark.
Technology sector tensions between the US and China have been deepening due to increasing security concerns and data protection issues in recent years. This tension brings new challenges to the trade in technology products between the two countries and the global technology market.
Especially after the last elections, mutual strategic blocking and restriction moves started to put the technology sector in a difficult position. The tension between the USA and China over the technology sector is escalating further with the USA’s blocking decisions against Chinese technology giants. Large Chinese companies such as Huawei and TikTok face serious difficulties in their operations due to restrictions imposed by the United States. These obstacles negatively affect trade and technology relations between the two countries.
SECURITY AND DATA PROTECTION CONCERNS
The US imposes strict regulations on technology companies in China due to security concerns and data security issues. This situation makes it difficult for Chinese technology companies to enter the US market and prevents some companies from operating in the US. Especially large Chinese technology companies such as Huawei and ZTE are experiencing difficulties due to the restrictions imposed by the USA.
CHINA’S RETALIATION POLICIES
China has also imposed similar restrictions on US technology products. This situation led to a decrease in the trade volume between the two countries and a strained economic relations. These retaliatory policies of China make it difficult for American technology companies to operate in the Chinese market and cause these companies to turn to alternative markets.
This tension is causing companies in the technology sector to re-evaluate their strategies. Companies are developing new strategies and having to turn to alternative markets due to security and data protection concerns. In addition, effects such as increased competition in the global technology market and the slowdown of new technological developments are also observed.
TECHNOLOGY GIANTS LIKE HUAWEI AND TIKTOK ARE TARGETED
Due to security concerns and data security, Huawei’s hardware and software products were limited from entering the US market. Additionally, some suppliers are prohibited from collaborating with Huawei. In addition, Huawei’s 5G networks are also blocked from use in the United States. These decisions make it greatly difficult for Huawei to operate in the US market. In a recent statement, the US House of Representatives announced that it plans to allocate $3 billion to remove equipment from Chinese telecom companies Huawei and ZTE from US wireless networks as part of the annual defense bill (National Defense Authorization Act). It was stated that this bill aims to address the national security concerns of the USA and secure the connection of consumers in rural areas. FCC Chairman Jessica Rosenworcel warned that underfunding this program could endanger national security and cause shutdowns in rural networks.
TIKTOK PLANS TO GO TO THE SUPREME COURT
However, the USA decided to stop the sale and operation of TikTok in the USA, on the grounds that it threatens the security and privacy of user data. This decision was made because TikTok sends user data in the USA to the servers of its parent company ByteDance in China. This situation threatens TikTok’s presence in the US market and leads the company to reconsider its policies to protect user data.
A new law approved by the US Senate last month and signed by former President Joe Biden requires the Chinese firm ByteDance, which owns TikTok, to sell its operations in the US or be banned. This law aims to prevent American users’ personal data from being passed on to the Chinese government.
TikTok applied to the appeals court to annul this law, arguing that it was against the freedom of expression in Article 1 of the American Constitution and the “open internet” policy of the United States. However, the court rejected TikTok’s application.
It was recently announced that TikTok and ByteDance will take the case to the Supreme Court. However, it is unclear whether the court will take up the case.
In its statement, the company stated that the two companies were preparing to take the case to the Supreme Court, adding that the Court “has a long history of protecting Americans’ right to freedom of expression.”
NVIDIA RETALIATION IN TECHNOLOGY THRILLER!
China’s State Market Regulatory Authority (SAMR) has launched an investigation into Nvidia’s antitrust law violations. The move is seen as a response to recent US restrictions on Chinese tech giants, further escalating technology tensions between the two countries. China has launched an investigation against technology giant Nvidia, headquartered in Santa Clara, USA, for antitrust law violations. This investigation is considered as a reaction to China’s recent restrictions on the United States. The investigation focuses on Nvidia’s 2019 acquisition of Israeli hardware designer Mellanox Technologies.
TECHnalysis Research principal analyst Bob O’Donnell stated that this investigation will not have a major impact on Nvidia in the short term. According to O’Donnell, Nvidia’s most advanced hardware products in the Chinese market are already restricted. However, it is emphasized that Nvidia’s sales in China constitute 17% of its total revenue and this may have significant effects in the long term.
This move by China against Nvidia is seen as a response to the harsh blocking decisions taken by the USA against Chinese technology giants such as Huawei and TikTok.
LONG-TERM EFFECTS
Technology tensions between the US and China have the potential to create long-term economic and technological impacts. This could slow down the pace of technological innovation and lead to uncertainties in the global technology market. In the face of these uncertainties, technology companies began to reconsider their strategic planning and look for new solutions.
Although it remains unclear how the technology tension between the USA and China will end, it seems that as long as this tension continues, it will continue to have significant effects on innovations in the technology sector and global market dynamics. Although how the two countries manage this tension will play an important role in shaping future technological developments and economic relations, it seems likely that it will create long-term, permanent economic and technological effects.
THE WORLD’S TAXATION ON CHINESE TECHNOLOGY
In the 1970s, China became the world’s factory when it began allowing international manufacturers to set up shop within its borders and produce cheap goods. Initially, Chinese factories produced low-quality products such as plastic toys, then they began producing more sophisticated products such as personal computers, smartphones and automobiles for tech giants such as Apple, Tesla and Volkswagen.
Chinese industries have matured since then: They produce big-ticket tech products at lower costs than their Western rivals. Billions of dollars in government subsidies have steered China’s economy toward self-sufficiency in advanced manufacturing. The Chinese government’s industrial spending totaled an estimated $406 billion, or 2 percent of its GDP, in 2019, nearly five times what the United States spent on its industries that year.
Economies that benefit from China’s cheap manufacturing fear that imports could flood their markets, widen trade deficits and sideline their own manufacturers. Before 2018, there were virtually no global tariffs affecting China’s tech industry goods. That year, the United States launched a trade war against China, with President Donald Trump criticizing China for “unfair” trade practices.
Now, Trump is preparing to make new tariffs on foreign goods a central part of his economic plan during his second term. He proposed imposing a “universal” tariff of 10-20 percent on most imported products, a 25% tariff on imports from Mexico and Canada, and additional duties on Chinese goods.
THE USA IS NOT THE ONLY COUNTRY THAT IMPOSES HARD TAXES
However, the USA is not the only country trying to defend its own technologies and production in different ways against China’s technological development.
The EU and the US have long said Beijing’s subsidies to their industries create a glut of cheap products on the global market and distort trade. China argues that its industries are only becoming more competitive and that governments should not stand in the way of affordable products for consumers. China has imposed some retaliatory duties on imports from countries that impose tariffs on their products.
Especially recently, taxation on products imported from the Far East has begun to become harsher in many countries. Many countries, including Turkey, have started to impose different taxation on products coming from China. Countries are increasingly cracking down on China’s technology industry to protect their industries against what they see as unfair trade practices, particularly in areas such as electric vehicles (EVs), electric bicycles, semiconductor chips, solar cells, automobiles, consumer electronics and lithium-ion batteries. They impose increasing customs duties…
“The United States started this ball, got the ball rolling, but it’s unfairly criticizing China’s trade practices,” Stewart Paterson, a senior research fellow at the trade think tank Hinrich Foundation and author of “China, Trade and Power,” told Rest of World. “They are not the only country that sees this and uses tariffs to protect and encourage alternative suppliers.”