U.S. Already 0-1 in Tech War with China

By Stew Magnuson

iStock illustration

Chinese President Xi Jinping told the United Nations General Assembly recently that his nation has “no intention to fight either a cold war or a hot one with any country.” 

That may be. But what is really happening is a “technology war.” There is little awareness among the American public about this undeclared war, but it’s well understood in Beijing. The term “Tech War” may one day describe the age we are living in as “the Cold War” did after World War II.

The U.S. record in this rivalry stands at 0-1, or possibly 0-2. The United States lost a major battle that it didn’t even realize it was fighting when China over the past decades established monopolies on several critical rare earth elements and a few other strategic minerals — a topic that this magazine has touched upon several times over the years.

This will prove to be a major strategic defeat as these elements are the building blocks for many of this century’s emerging technologies. Smartphones — and even some U.S. weapon systems — don’t work without them.

Then there is the battle for 5G dominance.

“Despite the growing importance of high-speed connectivity, the United States — which paced the world in developing and deploying so many other transformative technologies — is falling behind in the 5G race, while China is sprinting ahead,” says a report, “America’s 5G Moment of Truth,” released by The New Center think tank.

Exactly how did the country of Alexander Graham Bell, the iPhone and a handful of telecom companies that rake in billions of dollars from consumers each year allow China to eat its lunch in this crucial technology? Why weren’t the crucial research-and-development investments made in the United States when they needed to be last decade?

This nine-page report gives us non-telecom professionals a primer on how we got in this mess. Note: those TV commercials touting 5G are mostly hype. Most Americans are not getting those crazy high data rates advertised anytime soon.

If U.S. companies don’t want to buy Chinese-made 5G tech, the alternative isn’t “Buy American,” but to go to higher-priced European companies instead.

Is the Tech War record already 0-2, factoring in 5G? Some experts say “no,” but they would also say it’s pretty late in the game and we have a lot of catching up to do.

The report offers a suggestion on how the United States can gain a 5G edge. Namely, have the federal government invest $100 billion in R&D. It sounds like a lot until one reads the projections of 5G contributing $2.2 trillion to the global economy over the next 15 years.

Another report by the Wilson Center — “5G and Security: There is More to Worry About than Huawei” — explains the importance of coming out on top of the 5G battle.

“5G is a core foundation upon which modern societies — their economies and their militaries alike — will rest,” it said. “It will be essential to how industries compete and generate value, how people communicate and interact, and how militaries pursue security for their citizenry.”

The Wilson Center report spells out why the U.S. government and military are so concerned about the security of Huawei’s technology. For one, its products are allegedly full of cybersecurity vulnerabilities. The company claims this is just a ploy to thwart competition and crush a successful company. But it doesn’t matter who deploys and sells 5G technology — the United States, China, Japan, Finland — it won’t work without the aforementioned rare earth elements that are currently all processed in China.

The Tech War has several battlefronts other than 5G. Among them are: aviation, space technology, biotech, quantum sciences, robotics, military technology and artificial intelligence.

The 5G situation the United States finds itself in should serve as a case study as it takes on its great power rival in these other 21st century technologies.
China saw the future and invested heavily in 5G technology early. In 2009, Huawei was a little-known company that nabbed a major contract to completely replace Norway’s wireless network.

Through tax breaks, loans from state banks and other ties to the government — including allegations of the state conducting industrial espionage to benefit the company — Huawei took its riches and had the foresight to invest in 5G. The company currently holds the most 5G standard essential patents in the world, according to the Wilson Center report.

It has inherent advantages in that it can roll out and test the technology in China, benefitting from its large population and lack of regulations. For example, the placement of new towers and spectrum allocation will be hindrances to deploying 5G in the United States, where both are costly and competitive. Not so in China where regulators could care less about private property rights.

5G and rare earth processing are just two battles in a longer war, and ground that was lost during battles can be seized back. The United States — if it had the will to compete — for example, could end China’s rare earth and strategic minerals monopolies.

The United States could end up 2-0, but victory is not assured.

More on the Tech War and how America can prevail in next month’s column. 

Topics: Global Defense Market

Comments (1)

Re: U.S. Already 0-1 in Tech War with China

The Giant has awakened....

BoPi at 9:17 AM
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