Why The United States' Commitment to Free Trade Should Not Be Intimidated By Chinese Tech

There is no disputing that China’s surveillance technologies pose a grave threat to individual liberties and is a matter of concern for U.S. interests. China seeks to create an omnipresent, fully networked, totally controllable digital surveillance system within its borders. These systems invade individual privacy by quantifying data from body temperatures to finances while incentivizing citizens to spy on one another.

Even more unsettling is that China exports these surveillance technologies abroad. Typically sold to countries with high Belt and Road involvement and spotty human rights records, China can penetrate underdeveloped markets with affordable prices supported by state subsidies. Behind the marketing-guise of a “safe-city”, these surveillance products promise drastic crime reduction.[1]

However, China’s safe-city capabilities fail to meet many expectations. After spending over 100 million on a Huawei safe-city system, Islamabad saw total crime rise 33% year-over-year. Similarly in Mombasa, crime skyrocketed over 50% in 2017 after comparable safe-city products were installed.[2]

Aggrandizing China’s technological capabilities is a common promotional practice conducted by Chinese firms involved in foreign business ventures. This strategy is ideologically and financially backed by the CCP because it heightens China’s perceived international influence.

For too long the United States has fallen prey to boastful Chinese claims by implementing rash economic policies. The United States has justified unprecedented trade barriers, not only against China but also against historic Western allies, due to fears over Chinese technological capabilities.

The Trump administration placed severe tariffs, ranging from 7% to 25% on over $370 billion of Chinese imports, after Section 301 investigations found unreasonable tech transfer and IPR-related actions conducted by Chinese firms. While evidence shows these unlawful practices were conducted, political interests to attack China’s growing tech capabilities are the real rationale for increasing barriers to trade. The Biden administration has yet to reverse this policy.[3]

The United States’ rejection of free trade, with both allies and China, signifies a distressed nation - one that has forgotten its own technological capabilities and competitive advantages.

Of all the international internet trace-routes routed for China, 63% enter Chinese networks through the U.S. with another 17% passing through Western Europe. With 80% of China’s international internet traffic flowing between the U.S. and our allies, intelligence agencies can closely monitor China’s foreign communications. China is incapable of detecting a comparable level of U.S. foreign communication because American international network traffic does not cross China’s Great Firewall. Furthermore, the United States remains ahead of China in cloud computing, satellite technology, and advanced semiconductors.[4]

Future tech battles will take place in emerging foreign markets. While it is true Chinese tech companies benefited from IP theft and state subsidies, providing services to overlooked markets is the key behind China’s challenge against the global network order. The U.S. must offer these developing economies competitive alternatives to avoid a Sino-network controlled future – rejecting free trade impedes this objective.

By hampering free trade due to overblown fears of Chinese tech capabilities, the U.S. dismisses international cooperation, multilateral frameworks and escalates global economic uncertainties. Utilizing defensive strategies to disrupt China’s illicit practices, such as prosecuting IP theft and license revocations, are useful, but a winning strategy requires the U.S. taking a proactive international role to spur innovation by sharing data, coordinating investments, and conducting joint R&D projects with allies. Revamping free trade with China on products unrelated to tech will alleviate China’s aggressive international tactics. Most importantly, the U.S. must extend the advantages of reduced trade barriers to rising markets by supporting, and investing in, emerging foreign tech hubs.

-Houston Scott

[1] Atha, Katherine. China's Smart Cities Development. [2] Rollet, Charles. "China Public Surveillance Video Guide: From Sky-net to Sharp Eyes." IPVM. [3] Amiti, Mary. "The Impact of the 2018 Trade War on U.S. Prices and Welfare." National Bureau of Economic Research. [4] Hass, Ryan. Stronger: Adapting America's China Strategy in and Age of Competitive Interdependence.