A look at the US-China tech cold war

The US China trade relationship has long been tense but the war on Chinese tech been taken to new heights with the TikTok-ban.

Armita Satari

April 29, 2024

14 Min Read

The advent of the Trump administration brought about a series of sanctions on China on the basis of national security, especially cyber-espionage. At the time, a special focus on 5G security excluded Chinese vendors (e.g. Huawei and ZTE) from 5G networks and the US campaigned for its allies such as the UK to follow suit.

But despite a change of government in the White House, tensions did not ease. Instead, more trade restrictions were imposed on Chinese firms’ access to semiconductors, the computer chips in our smartphones and other intelligent devices. Also, several attempts to restrict Chinese social media platform TikTok finally ended in an executive order for its sale.

Amid this tech cold war, here are some of the major developments between China and the US in telecoms and tech and what this has meant for wider global trade, business, and democratic values.

Tennis court politics

While the Trump administration brought about major restrictions on telecom’s latest mobile network, 5G, some of the key restrictions since the onset of the Biden administration have revolved into a broader war on Chinese-owned tech firms and access to computing chips, the latter leaving many Chinese companies only with access to lower grade chips.

This could well be driven by the fact that semiconductors are thought of as our century’s most valuable technology. Especially in the wake of AI and the accelerated development and adoption of Gen AI, it appears the US isn’t enjoying the competition from the giant APAC market.

In May 2020, the US introduced a new policy which saw any company around the world that desires to work with American technology banned from designing or producing chips for Huawei (some special exemptions were eventually introduced). The ramifications were of course hugely impactful.

For instance, the largest semiconductor manufacturer in the world, Taiwan Semiconductor Manufacturing Company (TSMC), was forced to stop accepting any new orders from Huawei, which at the time was its second largest client behind Apple.

Events such as these initiated a series of tit-for-tats between the two nations.

The US continued to lobby other nations to join in its anti-China stance. Last April it pressured South Korea over memory chip sales, asking it not to increase its supplies to China, that is if the latter was to decide to take action against American company Micron. This had come on the back of a Chinese “cybersecurity review” of Micron products, an American semiconductor firm, selling in the country.

Another development dragged Japan into the debate as the country announced a series of export restrictions to China but insisted they had nothing to do with US pressures. Amid the wider dynamics, this seemed hard to believe.

Around the same time, the US also passed a law used as a tactic to name and shame any ally that won’t play nice. The ‘Countering Untrusted Telecommunications Abroad Act’ aims to protect national security and interests as well as “help” allies to take vital measures for their own security.

Meanwhile, as the US and other allies continued to chip away at the Chinese tech sector, a Chinese retaliation became increasingly inevitable and Micron was finally banned in May 2023, intensifying the game of sanctions further.

Talk about double standards

Next, the Chinese government reportedly was taking steps to ban the use of Apple iPhones for government officials at work in its agencies which the US viewed as inappropriate retaliation. Pretty ironic considering the vague security grounds used for many of the sanctions and campaigns by the US against Chinese companies.

While this potential ban came from ‘people familiar with the matter’, it was officially denied by the Chinese government, though government officials did also raise concerns over “security issues related to iPhone”. It is unclear where this particular story stemmed from, theories include a US pretext to further retaliation, a Chinese wind up, or a true story that was simply denied.

Further underpinning the US double standards, shortly after this event the North American country was reportedly undermining international trade through its export controls which by now had spanned into the Netherlands. In this development, the Dutch semiconductor supplier ASML’s license was revoked which only impacted its customers in China.

Competition and innovation disguised as security threats

In October 2023 the Five Eyes alliance, which consists of the security services from US, UK, Canada, Australia, and New Zealand, issued a warning during a conference against an ‘unprecedented threat’ from China. FBI Director, Christopher Wray, suggested “there is no greater threat to innovation than the Chinese government”.

Of course, history has shown us that security threats can act as a great incentive to innovate and advance a nation’s technologies, it only takes one to look at the technology advancements made during the Second World War.

But in this case it is increasingly evident that the anti-China stance is as much about competition as a real security threat, with the aim of retaining a competitive advantage over a key geopolitical rival. This was something that was also openly admitted by the UK’s MI5 Director General, Ken McCallum, during said Five Eyes get-together.

And that is no surprise either, China has been heavily investing in research and development (R&D) and its domestic semiconductor sector and is now considered to be miles ahead in many areas of telecoms and tech research.

Nepal and Malaysia caught in the middle

As the battle to block and undermine each other continues, the next country to be caught in the middle has been Nepal and its 5G testing and rollout. In this spat the country’s state-owned incumbent Nepal Telecom has been blocked from importing 5G kit it requires from Huawei and ZTE, according to a company spokesperson.

The Nepalese regulator denies any blocking, but foreign policy expert Vijay Kant Karna has been reported to comment on 5G turning into a geopolitical affair and data security and systems competition between China versus US and India.

The latter is also in fierce competition with China, reportedly gunning for the top spot with ambitions of becoming a tech powerhouse as it currently benefits from the spat, for now at least and thus India maybe looking at its own future if one day it is deemed by the US as too powerful.

While Nepal remains in a 5G deadlock, Malaysia seems to be more resistant to US pressure.

In early May last year the US and the EU allegedly tried to pressure the Malaysian government over Chinese technology as they warned against the negative consequences of Huawei kit finding its way into the Malaysian 5G network. Malaysia, reluctant to give in, signed an R&D partnership deal with ZTE in June 2023 and got the nod from its Prime Minister for potentially using Huawei kit in its second national 5G network.

The TikTok saga

In March 2024 the US House of Representatives passed a law – often coined as anti-TikTok or the TikTok-ban – and it once passed Congress it was signed on April 24th, 2024 by the president as an executive order. The law, which is considered divisive, in its simplest form forces the Chinese social media company TikTok (owned by Beijing-based ByteDance) to divest its US operations or to face a ban in the US.

As part of the Protecting Americans from Foreign Adversary Controlled Applications Act, the law that “prohibits distributing, maintaining, or providing internet hosting services for a foreign adversary controlled application (e.g., TikTok)” got a major boost mid-April when US Congress linked it to a bill that will see the US military send aid to Ukraine, Israel, and Taiwan.

The TikTok-ban is viewed as an extraordinary move by commentators, seeing as both parties in the US are united against one company, an unprecedented move by lawmakers. However, the bill is not without opposition as it is viewed as unconstitutional by TikTok users and of course the company itself, which views the bill as a ban on freedom of speech and freedom of expression in the US.

In response to the president’s signing of the bill, TikTok CEO, Shou Chew, described it as unconstitutional and while addressing users he said “make no mistake, this is a ban on TikTok and a ban on you and your voice. Politicians may say otherwise, but don't get confused. Many who sponsored the bill admit a TikTok ban is the ultimate goal.…

“It's actually ironic because the freedom of expression on TikTok reflects the same American values that make the United States a beacon of freedom. TikTok gives everyday Americans a powerful way to be seen and heard.… The facts in the constitution are on our side and we expect to prevail.”

Chew went on to highlight the company’s past and future investments made to safeguard user data, “meanwhile, we will continue to invest and innovate to keep our community vibrant, exciting, and safe. Through our US data security efforts, we have built safeguards that no other pure company has made. We have invested billions of dollars to secure your data and keep our platform free from outside manipulation.”

The company took a number of steps towards securing user data and as of July 2022 it has been storing all US user data on Oracle’s cloud infrastructure. Oracle is an American multinational computer technology company which is headquartered in Austin, Texas. Further, access to US user data is exclusively managed by the TikTok US data security team.

So, it is unsurprising that TikTok is planning on fighting the bill in courts, something that prevented past restriction attempts from passing in the first place during the Trump administration. Then, the US Commerce Department had tried to impose restrictions on the platform but was faced on two occasions by US judges who issued preliminary injunctions blocking the Commerce Department.

The company feels it has taken all measures possible to safeguard user data and thus followed the letter of the law.

The platform now has some 170 million active users and 7 million businesses on its platform in the US and contributed $24.2 billion to the country’s GDP in 2023 alone, according to company data. TikTok also joined the mobile operators trade association group, GSMA, in 2022 as a member with the goal to contribute to the 5G innovation space, and improving content delivery and edge infrastructure.

The bottom line

A question that keeps arising in this tech war is how much of the US sanctions are actually having an impact on China and to what extent are they counterproductive.

So far, as mentioned, China has been pouring resources into its domestic semiconductor sector subsidising R&D. This has already been shown to benefit Chinese vendor Huawei to some extent, who as of more recently is further due to open a new R&D complex with focus on semiconductor technology.

As such, one may go as far as saying the piles of sanctions may well have inadvertently helped China to strengthen its tech self-sufficiency as well as facilitated it to pivot and innovate. And who would blame them, as the economic rising star of the East it was expected the country wouldn’t sit tight and watch in silence the sanctions and restrictions ruin its economy and the tech sector.

In fact, recent reports reveal Chinese officials instructing the country's largest operators to phase out foreign chips (e.g. those by Intel and AMD) from their networks by 2027, in favour of domestically made alternatives. But Chinese operator procurement behaviour has also shown that at least in part domestic alternatives are being chosen due to the quality of domestically made chips having improved and their performance becoming increasingly stable.

American firms have equally found ways around the US tech embargo to continue to work with their Chinese trade partners, thus both undermining and upsetting US politicians.

Many US companies consider their Chinese counterparts as vital trade partners and would, as a result, exercise some level of influence on law makers in the country. This did indeed lead the US government to allow for a series of exemptions and legal loopholes, some argue undermining the main premise to stop Chinese firms from accessing the most advanced technologies.

As a result, industry commentators have pointed out how counterproductive the US policy and strategy towards its tech trade with China can be. Chinese firms such as Huawei and ZTE have long led the way in 5G, AI, and quantum computing research and to cut them off from acting as the vital partners, as they are viewed to the US tech sector, makes the US increasingly seem naïve and self-harming.

According to Miles Evers, Assistant Professor at the University of Connecticut “[the US] is unlikely to win the tech war…The empirical record consistently shows that rising powers don’t sit idly by when dominant states disrupt their access to critical resources. Typically, they respond by subsidizing industrial development, pushing their businesses to upgrade into high-value positions to become self-sufficient.” Reflecting exactly what China has been doing.

Further, Evers describes that while global value chains (GVCs) are used as a weapon by dominant states (such as the US) to control exports, “the structure of GVCs makes it difficult for the dominant power to coerce the rising power without igniting business resistance at home and easier for the rising power to upgrade its industrial base in response.”

On the TikTok-ban, there has also been a significant shift in public opinion among US adults and teens over the past year. Support for the ban among the public declined between March 2023 and the year-end, for voters and young teens regardless of political affiliation (though a lesser percentage of those affiliated with the Democrats supported a ban when compared to Republicans, unsurprisingly).

In addition to this, there is also a wider trend which has seen the social media platform being used as a new way of consuming news, as opposed to traditional/mainstream media. This way content on much of defining topics in current political sphere (in the US and globally) is recorded and filmed by the public and civilians themselves.

It has also served to replace mainstream media where the public no longer has faith in the narratives served up by traditional channels often with links to one or the other political party. However, the US is not alone in the paradigm shift and this wave of distrust as it spans across the globe in both so-called democratic and undemocratic countries.

While the official storyline on the TikTok-ban is described as a means to protect user data and prevent a cyber-espionage threat and TikTok being beholden by the Chinese government, it is hard to know to what extent, if at all, that holds truth without evidence.

With increasingly polarized political views in the US and globally and polarizing topics in society, it seems plausible that the ban may be more about control over public opinion. This would be directly linked to freedom of expression, linked to political power in the run up to elections, and also linked to economic and innovation rivalry.

As such, further analysis on the differential treatment of Silicon Valley-based social media platforms, versus those based in Beijing, with regards to their data and privacy security guardrails, could provide further evidence on the true agenda behind the TikTok crackdown.

Similar analysis done on the security risks of Huawei kit versus its European peers done by the German government in late 2018 revealed there was no evidence to support a ban on Chinese kit and no difference in the level of threat posed by any telecoms vendors and that all vendors regardless of their country of origin should be vetted equally.

The then German chancellor, Angela Merkel, stated at the Global Policy Conference 2019 that Germany would not “exclude a company simply because it’s from a certain country”. But as the country’s leadership and political mood changed so did their views on Chinese kit being allowed into Germany’s 5G network.

While online platforms certainly do influence public opinion, shouldn’t improving technology, and specifically cybersecurity, be placed higher on the agenda than simply picking a handful of countries to ban in the name of national security? Indeed, can any government be trusted when the US itself has spied on its European allies in the past?

It is therefore worth noting that in a similar manner to the Huawei/ZTE ban on 5G kit, there is lack of evidence being presented by the US to show any Chinese espionage taking place through TikTok. As such (and once again), taking a ‘guilty-first’ approach is undermining the democratic values by which the US is ruled, and it seems that all it is achieving is alienating the public at home.

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