US-China spat to shift to tech sector

By Jonathan Chin  /  Staff reporter

Sun, Jan 27, 2019 - Page 3

The US-China trade row is escalating into a “cold war over technologies,” the Mainland Affairs Council’s advisory committee said in a summary of committee proceedings released on Friday.

The committee — consisting of academics — convened to evaluate the effect of US-China tariffs on Taiwan after US President Donald Trump and Chinese President Xi Jinping (習近平) called a truce at the G20 summit in Argentina last month, the report said.

Although the tariff dispute showed signs of easing, Washington and Beijing remain in a race to global economic leadership, a contest that is likely to become protracted, it said.

The US seems committed to blocking China’s channels for technology acquisition via its leadership of the Five Eyes, an intelligence consortium comprised of Australia, the UK, Canada, New Zealand and the US, it said.

The possibility of protracted US-China economic conflict will lead to adjustments in global supply chains and Taiwan should boost domestic demand to fill the gap that falling US-bound exports is expected to create, it said.

Taiwan should also continue efforts to join free-trade pacts and reposition the economy by leveraging technological synergy, it said.

The government should utilize the nation’s manufacturing experience to facilitate Internet of Things development, push for “forward-looking” academic research, develop expert knowledge in manufacturing fields, especially systems integration, it said.

These measures would play a crucial role in a comprehensive economic strategy to the transition and upgrade industries, the report said.

Trump is likely to face mounting political pressure, with experts predicting that the US economy would cool, stock prices would fall and challenges would arise from within the Republican Party ahead of his re-election bid next year, it said.

China is showing the effects of the tariff dispute, with its economic performance falling to record lows, it said.

Political and economic pressure could compel Washington and Beijing to seek a partial compromise, but compromises would be unlikely to address the causes of the trade dispute — intellectual property, technology transfers, state subsidies and the Made in China 2025 initiative — which are structural and persistent factors, the report said.

Therefore, the economic conflict is spreading from the realm of trade to technology, and the US is likely to press its attack on Chinese technology firms and business leaders, it said.

China’s spending on welfare and the tariff issue are increasing risk to Taiwanese entrepreneurs investing in China, who should minimize exposure by adjusting production and supply chains, it said.

Taipei should step up policies to attract overseas Taiwanese enterprises to return, rethink its trade strategy and find new roles for Taiwanese businesses engaged in the cross-strait trade, it said.

Additional reporting by Chung Li-hua