China’s technology industry is ‘holding its breath’ waiting for the US election

On November 5, the presidential election will take place in the US. In recent polls, the support rate for Mr. Donald Trump and Ms. Kamala Harris is currently very close.

Chinese technology business leaders say Trump’s unpredictable style could lead to increased sanctions on the industry, but could also be eased.

The Republican candidate initiated the US-China trade war during the 2017-2021 presidential term, banning high-tech exports to China. His reason is that Chinese businesses compete unfairly and threaten national security.

Meanwhile, Harris’s policies are more predictable. Chinese technology business leaders believe that she will continue President Joe Biden’s policy of gradually controlling exports, taking advantage of international alliances to slow down China’s technological development.

Outlook is difficult to predict

Surveys of technology business organizations in China show that Ms. Harris’s predictable policy has become a better choice for businesses. Meanwhile, more than half of analysts believe that in the short term, Trump’s victory will have a negative impact. He is likely to increase export controls and introduce more sanctions on China’s semiconductor industry. During his term, Trump imposed tariffs on billions of dollars of Chinese technology goods, and punished the country’s technology giants such as chip company SMIC and telecommunications company Huawei.

“Trump has upgraded the process of comprehensively restraining the development of Chinese science and technology. If he comes to power again, the domestic semiconductor industry may come under further pressure,” the securities brokerage company said. Topsperity Securities (Shanghai) said.

However, sheets Material Energy Times said that “Trump’s unilateral policies may also encounter opposition and non-cooperation from the international community”. In contrast, the policies Harris will inherit from President Biden “are long-term, coordinated and predictable.”

Trump’s unpredictability is demonstrated through his statements and social media posts. During the election campaign, he showed a willingness to reverse the measures against Huawei and ZTE that he introduced while in office. Trump also opposed the ban on the short video app TikTok that he previously proposed.

In July, a post on EETop – an information platform and forum for Chinese electronics companies – said Trump criticized US trade relations with allies such as Europe, Japan, South Korea could damage bilateral cooperation. These countries have business interests in China. “This means that in the global semiconductor industry, US unilateral measures are ineffective,” the post said.

“Therefore, Europe and the Netherlands can create favorable conditions for China to bypass restrictions to import EUV photolithography machines,” EETop said. China currently depends on foreign EUV photolithography machines, but is being denied access to the most powerful ones.

Self-sufficient

However, analysts say that no matter who wins the election, the Chinese technology industry will focus on the domestic market and increase its independence compared to the previous Trump and Biden terms. China retaliated when the US initiated a trade war, such as restricting rare earth exports. However, the trade war also prompted the country’s technology industry to find ways to protect itself from sanctions.

In 2016, China had four government procurement projects, worth more than 10 million yuan (1.4 million USD), to replace foreign hardware and software with domestic products, Reuters said. This year, the country has 169 such projects. Among them, 75 projects need more than 50 million yuan from the budget.

Therefore, even if Trump or Harris tightens exports, Chinese businesses will still be less dependent on foreign technology. They are also better prepared to deal with changes in the commercial environment.

“The US has slowed down China’s development in the semiconductor sector, but other areas (like robotics) have not. Now China can get everything it needs from home,” Robert D. Atkinson, President President of the Information Technology and Innovation Foundation (USA), said.

The Biden administration has also banned China from accessing advanced AI chips from Nvidia. And this has not stopped Chinese companies from investing heavily in AI. As of July, China contributed 36% of the 1,328 language models (LLMs) globally, just behind the US with 44%, according to data from the China Academy of Information and Communications Technology.

Biden’s increase in technology restrictions has dashed Chinese businesses’ hopes that he would be more lenient than his predecessor. So this time, tech companies have decided not to predict.

“We are in a new normal period. When we don’t know what happens next, we just try to keep moving forward, at the fastest speed possible,” leader of a large technology company in China. Quoc said.