U.S.-China tech tensions won’t go away even if Biden wins elections, analyst says

FAN Editor

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Tensions around technology will remain between the U.S. and China, even if Democratic presidential nominee Joe Biden wins the U.S. elections in November, according to an analyst.

Ties between the two economic giants have steadily worsened this year, as Washington increasingly targets Chinese tech giants from phone maker Huawei to video-sharing app TikTok. The Trump administration says Huawei and other Chinese technology companies could collect American user data and hand them over to Beijing, a claim both Huawei and TikTok have denied. 

“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,” said Taimur Baig, chief economist and managing director at DBS Group Research. “It may be less volatile, it may be more rules based, but the tensions will remain.”

In early August, President Donald Trump banned any U.S. transactions with Chinese tech firms Tencent and ByteDance. Tencent owns popular Chinese messaging app WeChat and Bytedance is the parent company of TikTok.

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.

Taimur Baig

chief economist and managing director, DBS Group Research

The U.S. last week reportedly imposed restrictions on exports to China’s biggest chip maker SMIC, citing risks that equipment supplied to the firm could be used for military purposes, 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 reiterated, speaking to CNBC on Monday.

Relations between Washington and Beijing took a turn for the worse in 2018, when the Trump administration imposed billions of dollars worth of tariffs on Chinese goods and Beijing retaliated with the same punitive measures, drawing both sides into a protracted trade war.

While Republicans have embraced Trump’s “American First” agenda, abandoning traditional party goals such as unfettered trade, Biden has slammed the trade war with China — saying that tariffs have hurt American businesses and consumers. Still, he called for the U.S. to “get tough on China.” 

Trade experts have said that Biden could be under pressure to continue the tough stance on China — and keep those tariffs in place.

Baig said: “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 becomes “very problematic” in the near term for SMIC and some of the tech companies — “if they have absolutely no chips,”  Baig said.

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

“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 added.

— CNBC’s Jacob Pramuk contributed to this report.

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