As the technology industry continues to grapple with tariffs and the potential for more tariffs, CompTIA’s Executive Vice President of Advocacy Elizabeth Hyman and I joined other technology leaders in China, for meetings organized by the U.S. Information Technology Office. (CompTIA is a parent association of USITO and a member of its Executive Committee.)
In Beijing, USITO facilitated meetings with government officials and key stakeholders. In Shanghai, we met with CompTIA member companies. The meetings were informative and we returned home with a better understanding of the work in front of us to create a more equitable trade environment for U.S. tech companies.
Here are some of the key take-aways:
Tight Control, International Impact
The political and economic leaders in China want to create a truly self-sufficient global power. While China is clearly an international player, leaders there want to keep a firm grip on business practices inside their borders. Bottom line is that China remains a country run by a strong communist party and that shows no signs of changing even as they expand their influence wider and deeper internationally.
A key part of China’s international reach relies on supporting and promoting their homegrown technology innovations. Leaders there want to produce their own innovative tech companies that compete on the global economic stage much like the U.S. companies do now.
While that translates into greater global competition it also means that U.S. investments in China won’t be easy because of policies that restrict foreign investments. (This reality was reinforced by Silicon Valley investor J.C. Raby at CompTIA’s Tech Summit in Washington, D.C. earlier this year.)
Now They Get It
At first, according to the people we talked to in China, leaders there did not understand the fundamental rethinking or shift in how the Trump Administration viewed China. Now they do thanks in no small part to a speech delivered by U.S. Vice President Mike Pence on Oct. 4. Chinese leaders now understand that this is a big issue and that it’s going to take more time and effort from both sides. So where do things stand?
China needs to figure out what they are willing to do that would satisfy the Trump Administration. However, if there are changes that can be made, they want to know if those changes will work in negotiations. As always, China is keeping their cards close to the vest in the weeks leading up to the meeting between President Trump and Chinese President Xi Jinping during the G20 Summit in Argentina.
All eyes will be on this meeting. In fact, if it doesn’t go well, some media outlets are reporting that Trump will impose more duties on more imports from China. And that would mean that nearly everything imported from China would be taxed – from computers to toys to clothes. And come Jan. 1, the 10 percent tariffs the U.S. levied on $200 billion worth of products from China will escalate to 25 percent.
The good news – relatively speaking – is that China most likely won’t take action soon so that they can better assess the long-term impact any actions will have on their economy.
What Do We Want?
CompTIA, on behalf of our member companies and the entire technology sector, is asking trade officials from the U.S. and from China to work together in order to make the most out of the ongoing negotiations leading up to the G20 meeting between the two Presidents.
Our primary issues that we would like to see addressed as part of an agreement to end the trade dispute include the following issues:
Market Access: China should allow U.S. service providers (telecom, cloud, etc.) to fully operate in China.
Cross Border Data Flows and Market Access: China needs to allow cross border data transfers for business purposes (including personal data) so U.S.-based service providers are treated fairly.
Cybersecurity: China and the U.S. should review the implementation of China’s current laws and regulations relating to cybersecurity to ensure that market access is not impeded.
Industrial Policy and Subsidies: We want to make sure that China follows the rules put in place by the World Trade Organization, and this specially includes government subsidies that are in clear non-compliance with the WTO.
Intellectual Property Protection: China needs to stop state-owned enterprises from infringing on U.S.-owned intellectual property and trade secrets.
As you can see, these are no small issues. But these are longstanding concerns of the technology sector, and we think the potential meeting between President Trump and President Xi presents an opportunity to de-escalate trade tensions so that the U.S. technology industry can continue to lead and thrive in the global market.
Stefanie Holland is Director, International Government & Regulatory Affairs.
