When will the US-China trade war end? No one has a crystal ball. But the trade war has certainly entered a new stage.
From imposing a ban on exports to ZTE Corp. to the arrest of Huawei chief financial officer Meng Wanzhou in Canada, US President Donald Trump is obviously stepping up the pressure on China.
Why would Washington bother to target one private firm when the trade conflict has already escalated to the national level?
Take a look at 5G development, and you might find some clues.
Though the United States owns the most advanced chip technology, its share in the 5G infrastructure market is almost zero.
And 5G will be the key battlefield for all nations next year. Huawei, ZTE, Nokia, Samsung, Ericsson and other major telecommunications players are all eyeing the 5G market.
As a backbone to the building of smart cities, 5G is so critical that the US would struggle to catch up once Huawei and ZTE secure over 50 percent share of the market. Waiting for the next major wireless network upgrade would take another 8-10 years at least.
That’s why the Trump administration is lobbying other nations not to buy telecoms equipment from Huawei or ZTE, which is an obvious move to contain China’s emerging telecom giants.
An escalation of the current trade war would undermine both the US and China.
Trump won’t let the trade war extend too long since that would upset the very US corporates that have been supporting him.
Meng’s arrest may actually be part of Trump’s strategy to gain more bargaining chips to close a favorable deal with Beijing quickly.
This article appeared in the Hong Kong Economic Journal on Dec 18
Translation by Julie Zhu
[Chinese version 中文版]
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