Tech stress with China will remain even if Biden wins

Tech tensions with China will stay even if Biden wins

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Tensions around innovation will stay in between the U.S. and China, even if Democratic governmental candidate Joe Biden wins the U.S. election in November, according to an expert.

Ties in between the 2 financial giants have actually progressively aggravated this year, as Washington significantly targets Chinese tech giants from phone maker Huawei to video-sharing app TikTok. The Trump administration states Huawei and other Chinese innovation business might gather American user information and hand them over to Beijing, a claim both Huawei and TikTok have actually rejected. 

“Imagine a scenario where Biden becomes president, I don’t think on the technology issues … (they) are going to go away in any meaningful manner,” stated Taimur Baig, primary financial expert and handling director at DBS Group Research. “It might be less unpredictable, it might be more guidelines based, however the stress will stay.”

In early August, President Donald Trump prohibited any U.S. deals with Chinese tech companies Tencent and ByteDance. Tencent owns popular Chinese messaging app WeChat and Bytedance is the moms and dad business of TikTok.

I do not believe the U.S. elections result per se makes things definitely much better for China. It most likely makes it a little bit less unpredictable.

Taimur Baig

primary financial expert and handling director, DBS Group Research

The U.S. recently apparently enforced limitations on exports to China’s greatest chip maker SMIC, mentioning dangers that devices provided to the company might be utilized for military functions, according to a letter from the U.S. Commerce Department dated last Friday.

“So I don’t think the U.S. elections outcome per se makes things infinitely better for China. It probably makes it a little less volatile,” Baig repeated, speaking with CNBC on Monday.

Relations in between Washington and Beijing deviated for the even worse in 2018, when the Trump administration enforced billions of dollars worth of tariffs on Chinese items and Beijing struck back with the exact same punitive procedures, drawing both sides into a lengthy trade war.

While Republicans have actually accepted Trump’s “American First” program, deserting conventional celebration objectives such as unconfined trade, Biden has actually knocked the trade war with China — stating that tariffs have actually injured American companies and customers. Still, he required the U.S. to “get tough on China.” 

Trade specialists have actually stated that Biden might be under pressure to continue the hard position on China — and keep those tariffs in location.

Baig stated: “On one hand, you could argue that the trade tensions forced China to increase investments in domestic homegrown technology, and it acts as a booster shot, if you will, inadvertently by Trump … by pushing China into a corner (and) forces China towards what they call self-sufficiency. So I don’t think that hurts China in the near term.”

But it ends up being “very problematic” in the near term for SMIC and a few of the tech business — “if they have absolutely no chips,”  Baig stated.

However, he questioned how sustainable it is for the U.S. to continue that course.

“Now, I think the U.S. can very legitimately, whether Biden or Trump, say they don’t want China’s military to have access to any U.S.-made tech hardware, but that still leaves out large swathes of consumer devices that also use chips, and for that, it will be very hard to make a national security argument,” he included.

— CNBC’s Jacob Pramuk added to this report.

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