{"id":38550,"date":"2025-01-17T14:15:00","date_gmt":"2025-01-17T14:15:00","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=38550"},"modified":"2025-01-18T06:38:42","modified_gmt":"2025-01-18T06:38:42","slug":"china-tech-shrugged-off-trumps-trade-war-%e2%88%92-theres-no-reason-it-wont-do-the-same-with-new-tariffs","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/china-tech-shrugged-off-trumps-trade-war-%e2%88%92-theres-no-reason-it-wont-do-the-same-with-new-tariffs\/","title":{"rendered":"China tech shrugged off Trump\u2019s \u2018trade war\u2019 \u2212 there\u2019s no reason it won\u2019t do the same with new tariffs"},"content":{"rendered":"\n

Yu Zhou<\/a>, Vassar College<\/a><\/em><\/p>\n\n\n\n

When Donald Trump returns to the White House, he\u2019ll be accompanied by a coterie of China hawks<\/a>, all vowing to use tariffs and export bans to stop Beijing from challenging the United States\u2019 supremacy<\/a> in technology.<\/p>\n\n\n\n

This isn\u2019t entirely new; China has faced such trade pressure since Trump first became president in 2017<\/a>, and it has continued through the Biden administration<\/a>.<\/p>\n\n\n\n

But the scale of what Trump now proposes \u2013 he has mentioned tariffs of up to 60%<\/a> on goods from China \u2013 has some commentators suggesting that it could, in the words<\/a> of one analyst, \u201ckeep Beijing on the defensive and permanently transform the rivalry in America\u2019s favor.\u201d<\/p>\n\n\n\n

Such a view is premised on the belief that China\u2019s outdated, state-subsidized, manufacturing-for-export model is ripe for disruption by U.S. tariffs.<\/p>\n\n\n\n

But as someone who has studied China\u2019s technology since the early 2000s and written and edited two books<\/a> on China and innovation<\/a>, I believe this portrayal of China\u2019s economy is at least two decades out of date. China\u2019s technological sectors have grown rapidly after 2016<\/a> by adapting to the imposition of American tariffs. Indeed, since the \u201ctrade war\u201d launched by Trump<\/a> in 2017, Chinese technology has actually emerged as a world leader.<\/p>\n\n\n\n

China\u2019s tech ascent<\/h2>\n\n\n\n

Thirty years ago, China barely had internet access<\/a>, and its best technology company was yet to produce a competitive personal computer domestically. Fifteen years ago, it was the world\u2019s factory<\/a> \u2013 stuck at the low end of the value chain assembling iPhones and other tech gadgets, but not able to make any high-tech parts itself.<\/p>\n\n\n\n

Even with the best crystal ball in the mid-2000s, no Chinese planners could have predicted the pathways to China\u2019s technological standing today.<\/p>\n\n\n\n

Fast-forward to today: China is now ahead of rival economies across broad technological fields. The think tank Information Technology and Innovation Foundation<\/a> found in a 2024 report that China is leading or globally competitive in five out of nine high-tech sectors \u2013 robotics, nuclear power, electric vehicles, artificial intelligence and quantum computing \u2013 and rapidly catching up in four others: chemicals, machine tools, biopharmaceuticals and semiconductors. A Bloomberg analysis<\/a> similarly identified China as leading or globally competitive in 12 out of 13 technology-intensive industries. And the Australian Strategic Policy Institute<\/a> found China leading in 37 of 44 critical technologies it tracked.<\/p>\n\n\n\n

Why has the Chinese tech industry advanced so quickly? Many in Washington believe it\u2019s the result of decades of careful government planning<\/a> to dominate global high-tech industries. But this, I believe, vastly overestimates Beijing\u2019s foresight and control. The Chinese government has indeed maintained the lofty goal of catching up with the West since the 1980s, but having goals isn\u2019t the same as being able to execute them.<\/p>\n\n\n\n

\"A
An employee produces semiconductor chips at a factory in China\u2019s Shandong province on Jan. 15, 2025. STR\/AFP via Getty Images<\/a><\/figcaption><\/figure>\n\n\n\n

Many in the West also point at Chinese state subsidies propping up domestic tech firms. While subsidies have played a role in some tech successes, the Chinese government has also funded plenty of failures. Take semiconductors, for example: Despite enormous Chinese government investments since the 1990s, China still lags<\/a> in producing cutting-edge chips and is reliant on imports.<\/p>\n\n\n\n

Dare to D.R.E.A.M.<\/h2>\n\n\n\n

In my view, China\u2019s technological dynamism didn\u2019t come from the magic of central planning, but through five key elements I call D.R.E.A.M.<\/a>.<\/p>\n\n\n\n

D<\/strong> denotes the dialogue<\/strong> between state and market.<\/p>\n\n\n\n

While China\u2019s government wields significant power, the country\u2019s private sector is neither submissive nor powerless. In 2022, firms not owned by the state \u2013 mostly private firms but also offshore firms in which Beijing does not have a controlling share \u2013 accounted for 95% of enterprise R&D<\/a> spending and 88% of urban employment.<\/p>\n\n\n\n

While Beijing has cracked down on tech giants \u2013 it banned Alibaba\u2019s Ant Group<\/a> from listing on the New York Stock Exchange in 2020, and its COVID-19 lockdown hurt its private sector<\/a> \u2013 the government is not, contrary to how it is seen by many in the West, bound by strict ideology. It has recently started to voice more support for the private sector, even drafting laws to protect private companies<\/a>.<\/p>\n\n\n\n

Indeed, it\u2019s more accurate to describe state-market relations in China as dynamic, adaptive interaction \u2013 more dialogue than dictatorship.<\/p>\n\n\n\n

R<\/strong> refers to the domestic research<\/strong> and development (R&D).<\/p>\n\n\n\n

Once reliant on imported technology, China has invested heavily in domestic research<\/a> capacity over the past 20 years. Geopolitical tensions accelerated a shift toward self-reliance, but Chinese scientists and engineers remain deeply engaged in global networks.<\/p>\n\n\n\n

Further, a nominally anti-espionage program brought in under Trump\u2019s first administration has swelled the number of highly skilled workers in China. The \u201cChina initiative<\/a>\u201d introduced by the U.S. Justice Department in 2018 promoted the suspicion \u2013 often without evidence \u2013 that Chinese and Chinese American scientists might be spying for Beijing, resulting in a flood of leading scientists heading back to China<\/a>. There they continued to undertake cutting-edge research and educate a new generation of Chinese scientists.<\/p>\n\n\n\n

E<\/strong> is for the industrial ecosystem<\/strong> China can exploit.<\/p>\n\n\n\n

China\u2019s vast manufacturing base enables rapid creation and scaling of new technologies. In 2023, China produced 35% of the global gross manufacturing output<\/a>, being the only country covering all major industrial sectors.<\/p>\n\n\n\n

China may not have the innovative ecosystem of Silicon Valley, which can draw on deep venture capital and a booming stock market. But it has built comprehensive supply chains over the years, and it\u2019s exceptionally good at repurposing them to rapidly bring new products to market.<\/p>\n\n\n\n

Take the example of robotics. China took the robotics industry seriously only when labor costs rose sharply. In 2010, China\u2019s manufacturing labor costs were about $2 per hour<\/a>, similar to the Philippines or Vietnam; by 2022, that figure rose to about $8 per hour<\/a> \u2013 more than double the average of Southeast Asian countries.<\/p>\n\n\n\n

China now installs more industrial robots<\/a> annually than the rest of the world combined, and the quality of its robots has grown by leaps and bounds.<\/p>\n\n\n\n

A<\/strong> stands for accumulative<\/strong> changes.<\/p>\n\n\n\n

Rather than aiming for novel breakthroughs, Chinese companies excel at incremental improvements \u2013 and this results in an accumulative transforming effect. The massive manufacturing networks create opportunities to improve upon existing products based on market feedback, rather than a few brilliant ideas from any leader\u2019s creative mind.<\/p>\n\n\n\n

Analysts in the U.S. have long expected China\u2019s rampant intellectual property violations<\/a> to doom its innovation drive, the thinking being that it takes away the impetus for individuals to innovate if they believe such innovations will be stolen. Instead, as Taiwanese tech expert and writer Kai-Fu Lee<\/a> has explained, Chinese enterprises can be dynamic and innovative in an environment with less IP protection. They often rapidly expand their market share and build business ecosystems to prevent followers from catching up.<\/p>\n\n\n\n

M<\/strong> means the middle market<\/strong>.<\/p>\n\n\n\n

Chinese firms tend to target middle-income consumers, both domestically and globally. By prioritizing affordability and functionality over cutting-edge innovation, they avoid head-to-head competition with Western giants such as Apple.<\/p>\n\n\n\n

Chinese smartphone brands such as Xiaomi and Oppo are a third to half the price of an iPhone, but with similar functionalities. Chinese electric vehicles are similarly far less expensive than Tesla but still incorporate leading features.<\/p>\n\n\n\n

Chinese firms tolerate lower profit margins, as they can rely on the expanded sales in the middle market, both domestically and, increasingly, overseas<\/a>.<\/p>\n\n\n\n

\"A
A JIDU 07 electric car draws attention at the 2024 China International Auto Show in Tianjin, China, on Oct. 3, 2024. CFOTO\/Future Publishing via Getty Images<\/a><\/figcaption><\/figure>\n\n\n\n

Tariffs as a counterproductive measure<\/h2>\n\n\n\n

The problem for the incoming Trump administration is that while tariffs might alter the global map of China\u2019s manufacturing and exports, they won\u2019t dismantle any of the D.R.E.A.M. elements. In fact, they could have the opposite effect of accelerating China\u2019s push for self-reliance and strengthening its foothold in global middle markets.<\/p>\n\n\n\n

Part of the problem is that American policymakers often see technological competition with China as a zero-sum contest. But technological competition isn\u2019t like a race with distinct lanes and a finish line. Rather, tech transformation is a complex process in which countries and companies compete, collaborate and build on each other\u2019s work.<\/p>\n\n\n\n

Ultimately, America\u2019s technological prowess won\u2019t be measured by how much it manages to stop China, but by how successfully American companies can address humanity\u2019s greatest challenges. Attempts to hobble the competition through tariffs and trade wars will do little toward that end.<\/p>\n\n\n\n

Yu Zhou<\/a>, Professor of Economic Geography, Vassar College<\/a><\/em><\/p>\n\n\n\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Yu Zhou, Vassar College When Donald Trump returns to the White House, he\u2019ll be accompanied by a coterie of China hawks, all vowing to use tariffs and export bans to stop Beijing from challenging the United States\u2019 supremacy in technology. This isn\u2019t entirely new; China has faced such trade pressure since Trump first became president […]<\/p>\n","protected":false},"author":56,"featured_media":38551,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[826,5,30,115,277,292,291,46,25,28,4,15533,8],"tags":[4348,479,885,891,886,860,467,2775,7102],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/38550"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/56"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=38550"}],"version-history":[{"count":1,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/38550\/revisions"}],"predecessor-version":[{"id":38552,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/38550\/revisions\/38552"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/38551"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=38550"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=38550"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=38550"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}