If you need any further evidence that American technology firms have played vital roles in China’s transformation into a major technology power capable of threatening U.S. national security as well as economic interests, check out Dan Strumpf’s article in The Wall Street Journal today. In the process, he inevitably exposes gaping holes in President Trump’s China strategy that need to be closed up pronto if the President is serious about checking China’s dangerous rise.
Here are just some of the highlights of Strumpf’s piece – which is limited to U.S. tech firms’ contributions to the emergence of Huawei, whose CFO (and founder’s daughter) was arrested in Canada a week ago on charges of helping the entity use fraud to evade U.S. sanctions on Iran. (As always, I refuse to use words like “company” or “business” in describing Chinese economic actors, since they have nothing in common with corporate organizations in free market economies.)
>”Silicon Valley giants from Intel Corp. to Broadcom Inc. and Qualcomm Inc. are top suppliers of Huawei, which buys their components to make equipment such as base stations and routers and Huawei mobile phones.”
>”Qualcomm and Intel are also working with Huawei on its development of next-generation 5G technologies, a field in which the Chinese company’s aim to be a global leader has alarmed some in Washington.”
>”Huawei still relies on imports from U.S. chip companies such as Broadcom, Xilinx Inc. and Analog Devices Inc. for components used in its telecom equipment…Huawei buys equipment from data-storage equipment maker Seagate Technology PLC for use in its enterprise business, and uses memory chips made by Micron Technology Inc. in its smartphones….”
>”Intel and Qualcomm, which draw huge revenue from China, are seen by Huawei as more than suppliers. In Huawei’s annual report, Intel is described as a ‘strategic partner,’ and the companies work together in a range of areas, including next-generation 5G technology.”
>”In 2015, Qualcomm, Huawei and China’s largest chip maker, Semiconductor Manufacturing International Corp., launched a joint venture in Shanghai to work on next-generation chip technology.”
Strumpf’s article also makes clear the flip side of these American companies’ operations: Chinese entities like Huawei have become major customers and sources of revenue for the U.S. tech sector.
Nonetheless, it’s inconceivable that any Trump administration policy to address the China tech threat can succeed if these sales and partnerships are allowed to continue. Silicon Valley will of course cite these earnings in its inevitable campaign to any attempted curbs on its China activities (while simultaneously urging Washington to “do something” about the Chinese intellectual property theft- and extortion-fueled tech ambitions that has these companies scared silly for their own selfish reasons). And that’s why the President urgently needs to get on TV from the Oval Office, explain comprehensively how the tech firms’ massive giveaway of critical knowhow has undermined their country’s future, how his globalist predecessors’ indulgence has enabled this risky business, why the course change he’s engineering in China policy is so essential, and what his end-game is.
Trade wars may not be easy to win, contrary to the President’s recent boast. But can anyone reasonably doubt that this message will be easy to sell?