by PRABIR PURKAYASTHA
The U.S. tech war on China continues, banning Chinese equipment from its network, and asking its 5-Eyes partners and North Atlantic Treaty Organization [NATO] allies to follow suit. It is a market and a technology denial regime that seeks to win back the market that the U.S. and European countries have lost to China.
International trade assumed that goods and equipment could be sourced from any part of the world. The first breach in this scheme was the earlier round of U.S. sanctions on Huawei last year, that any company that used 25% or more of U.S. content had to obey U.S. sanction rules. This meant U.S. software, and chips based on U.S. designs, could not be exported to Huawei. The latest round of U.S. sanctions in May this year, stretched the reach of U.S. sanctions to cover any goods produced with U.S. equipment, extending its sovereignty well beyond its borders.
In the last three decades of trade globalization, the U.S. has increasingly outsourced manufacturing to other countries, but still retained control over the global economy through its control over global finance — banks, payment systems, insurance, investment funds. With the fresh slew of sanctions, another layer of U.S. control over the global economy has been revealed: its control over technology, both in terms of intellectual property and critical manufacturing equipment in chip making.
The new trade sanction that the U.S. has imposed is in violation of the World Trade Organization’s rules. It invokes national security, the nuclear option in WTO, on matters that are clearly trade-related. Why the U.S. has gutted the WTO refusing to agree to any new nominations to the Dispute Settlement Tribunal now becomes clear. China cannot bring the illegal U.S. sanctions to WTO for a dispute settlement, as the dispute settlement body itself has been made virtually defunct by the U.S.
The battle over 5G and Huawei has become the ground on which the U.S. -China tech war is being fought. The 5G network market itself is expected to reach 48 billion dollars by 2027, but it will drive trillions of dollars of economic output over the installed 5G networks. Any company or country that controls the 5G technology will then have an advantage over others in this economic and technology space.
The internet is the foundation on which almost all future digital technologies will be deployed. 5G networks will boost wireless internet speeds by a factor of 10 to 40. For the consumers, slow internet speed is the bottleneck for applications, such as video conferencing, multiplayer online gaming, where both upload and download speeds need to be high. This is unlike consuming videos over the internet, like Netflix, where only download speeds are important. 5G networks will also allow such high-speed internet to be deployed over a much larger area, and on our mobile devices.
The two other areas that would benefit from 5G are driverless cars and the Internet of Things (IoT), in which all our gadgets will talk to each other over the wireless internet. While driverless cars are still some distance away, IoT could be much more important, e.g, in improving efficiency and maintaining the physical infrastructure of electricity, traffic lights, water and sewage systems in future ‘smart cities’.
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