by SPENGLER
China has already won the critical engagement in the conflict between Washington and Beijing
As the United States and China escalate the past year’s trade dispute into full-scale economic war, the decisive fact in the conflict has gone entirely unmentioned: China has already won the critical engagement in the conflict.
It did so when Washington cajoled and threatened its allies to boycott Huawei’s rollout of 5G broadband, and suffered the most humiliating rebuff in this writer’s memory.
China has triggered a global network effect that begins with the domination of ultra-fast wireless broadband and extends to e-commerce, finance, logistics and transportation – the means to commercialize the labor of billions of people in the Global South. China’s lead in 5G also gives it a head start in a vast array of industrial and consumer applications.
Of these applications, the one that most unnerves the American security establishment is quantum cryptography, a technology pioneered by China that is theoretically unhackable.
Intelligence agencies
On July 7 I revealed in this publication that the new 5G systems would embed quantum cryptography, preventing US intelligence agencies from eavesdropping on the world’s communications and destroying a key American advantage.
That is why the intelligence community prevailed on the Trump administration to derail Huawei’s 5G rollout at all costs.
Control of game-changing technologies like 5G broadband – the sort of technology that transforms the lives of billions of people and generates trillions of dollars in wealth – is passing to China for the first time.
China has a disturbing record of technology theft, to be sure, but China’s past misbehavior is of minor importance compared to its homegrown innovations.
The United States didn’t bring the proverbial knife to a gunfight. It brought nothing to the gunfight, because no American company produces 5G equipment, and the European alternatives to Huawei, Ericsson and Nokia, offer an inferior and more expensive product.
The Trump administration might have tried to persuade US companies to enter the field, but it showed no interest in creating an American national champion to compete with Huawei.
Skills lacking
America’s trade deficit with China is a minor issue next to the tech war the United States is losing. China’s biggest exports to the United States are low-value-added consumer electronics, products that the United States lacks the skills and supply chain to make, and doesn’t want to make, because the labor is paid below American standards.
The US has lost the first decisive engagement of the economic war with China. To my knowledge, Washington has no plans to revive American production of key technologies, nor any plans to put the resources into R&D that would enable the US to counter China’s advantage in some key technologies.
Washington’s military and national security establishments are now in a collective tantrum over the hitherto unimaginable fact that the Chinese have gotten the better of them.
American rancor against China arises from the belated realization that sloth, complacency and fecklessness have allowed a country that two generations ago starved 50 million of its people to death to rise and challenge American dominance.
Hope of victory lost?
It recalls Kaiser Wilhelm II’s urgent advice to his cousin Nicholas II of Russia in 1904 to go to war against Japan as the “savior of the white race.” In consequence, Russia lost its entire fleet to Japan and brought on the 1905 Revolution and, ultimately, the fall of the Romanov dynasty.
For the past year I have warned that America’s confrontation with China would terminate in the economic equivalent of Port Arthur.
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