As calls to decouple U.S. industries from dependency on manufacturing in China are growing, President Donald Trump has helped prepare the ground for a shift from China by taking a more skeptical approach to relations with the regime in Beijing than his predecessors.
Opposing Views
The argument for protecting the deeply intertwined U.S.–China economic relationship is widely supported in some circles.Last December, former World Bank President Robert Zoellick, who served the George W. Bush administration as U.S. trade representative, asked a gathering of the U.S.–China Business Council, “Are you ready for this?”
“The 20th century painted a shocking picture of industrial age destruction; do not assume that the cyber era of the 21st century is immune to crack-ups or catastrophes of equal or even greater scale,” Zoellick said.
“You need to decide whether you think the United States can still cooperate with China to mutual benefit while managing differences, and if so, how.”
The Financial Times said that Zoellick’s words “captured the fears—particularly within parts of Washington’s economic and foreign policy establishment—that U.S. President Donald Trump’s trade war against Beijing has paved the way for an irreversible ‘decoupling’ of the world’s two largest economies.”
Zoellick was responsible for completing the negotiations that brought China into the World Trade Organization.
Zoellick’s views are echoed by other trade and China specialists.
Harry G. Broadman, an economist who has worked in key U.S. government, international organization, private sector, and academic roles during his 30-plus-year career, wrote in Forbes in September 2019 that decoupling from China potentially presents “worldwide negative spillover impacts.”
Of those consequences, Broadman suggests, “technological bifurcation, which could fundamentally jeopardize harnessing global benefits from advances in science and technology,” is one of the riskiest aspects of taking the United States out of China.
5G Domination the Danger
“He’s mistaken,” Robert Spalding said, referring to Broadman’s views on technological bifurcation. Spalding is a retired Air Force brigadier general and architect of the U.S. National Security Strategy, which named China as an adversary. He is now a senior fellow at the Hudson Institute in Washington, and author of the recent book “Stealth War: How China Took Over While America’s Elite Slept.”The real danger, Spalding told The Epoch Times in an extensive interview, is in the ongoing struggle for dominance in fifth-generation—5G—mobile technology and standards that are already beginning to change how data is collected and used around the world.
“The U.S. was the first to develop the smartphone in 4G,” Spalding said. As a result, “we dominate the information market.”
But as the world moves into 5G, the risks are greater if the “concept of open data” and “open data markets” of those 4G networks are maintained. In Europe, the open data concept has already “created concern for privacy protection.”
In China, however, open data markets create a global opportunity.
“In the hands of China,” Spalding said, open data “lets the state take hold of power that Google and Amazon have.”
The “state” in China is led and run by the Chinese Communist Party (CCP).
“The ability of these companies to pinpoint your location and the things you’re doing and buying is incredibly powerful and counter to privacy concerns and counter to the principles of our liberal democracies,” Spalding said.
Spalding pointed out that “as Android and Apple become less of dominant players in 5G, now Tencent and Alibaba and DJI and Hikvision can begin to dominate that data space. So we move from a world centered on the U.S. to one centralized on Baidu and Tencent.”
All five companies are Chinese technology companies with ties to the CCP. Alibaba and Tencent generally rank in the top 10 internet companies in the world by market capitalization.
“That's why he’s mistaken [about the problem of technological bifurcation]. It’s positive if we move to a data system that is focused on privacy and security and sovereignty and deploying secure 5G,” Spalding said.
China Sets Standards
Already, Spalding said, 3GPP, the umbrella body under which the key telecommunications standards organizations in the world operate and coordinate, is heavily dominated by China.Since American network equipment manufacturers “are not expected to survive,” that leaves only four companies in the world that will make the networking equipment for the 5G future.
Those companies are Ericsson, Nokia, Samsung, and China’s Huawei—all subject to the standards that are being so heavily influenced by Chinese technical specifications.
Functionally, therefore, Spalding points out that even though Ericsson and Nokia are Swedish and Finnish respectively, and Samsung is South Korean, they end up building the same system as Huawei.
“Essentially,” Spalding said, “everybody is building a Chinese network based on open data, not on a secure network. That’s why he’s incorrect. His theory promotes China,” Spalding said.
This means, Spalding said, that China’s “acquisition of intelligence” and “ability to influence societies” is greatly enhanced both in China and abroad, including in the United States.
Statistics from the Institute of Electronics and Electronic Engineers support Spalding’s claim.
In a March 17 post titled “Strategy Analytics: Huawei 1st among top 5 contributors to 3GPP 5G specs,” Alan Weissberger reports that “even though there are more than 600 member companies participating in 3GPP, their 5G specification process is actually led by only a few leading telecom companies. ... New research from Strategy Analytics ... finds that 13 companies contributed more than 78% 5G related papers and led 77% of the 5G related Work Items and Study Items.”
Free Versus Centrally Resourced Trade
“By allowing China to be in the global trading system, you’re actually undermining the foundational premises” of that system, Spalding said. That global trading system has “a market-based approach to both capital allocation and trade.”“China is not a market-based economy,” Spalding said. China, Spalding has said earlier, is not “a centrally planned economy, but it is centrally resourced.”
“When the state is providing resources and capital to a company, that's not a market-based solution,” he said.
“Prices are set by China, not by the market.
“If you really want to have a free trading system ... then China can’t be a part of it because they don’t believe in it.”
