US-China Tech War: The US government has adopted a series of measures and penalties on Chinese technology businesses in recent years as part of its attempt to curb or hinder China’s rise.
According to a study by the China Development Institute, the United States Congress, the government, and key think tanks released 209 bills, policies, and reports concerning science and technology policies toward China between January 2017, when the Trump administration took office, and June 2021, when the Biden administration passed the United States Innovation and Competition Act of 2021 (USICA).
Sanctions on Chinese high-tech firms, regulations over critical cutting-edge technology, and curbs on STEM talent training are examples of such measures.
Huawei, as one of China’s most well-known communications equipment makers, takes the brunt of the criticism. It’s one of the most prominent targets of US trade penalties aimed at influencing technology competition.
The term “Huawei” appears in those documents, along with concepts like “artificial intelligence,” “innovation,” “technology,” and “Cold War.”
The Trump Administration Conducted a Technology War Against China
Because of the disparities in political principles and geopolitical objectives between China and the United States, as well as their rivalry on regional and global levels, the Trump administration has conducted a technology war against China.
In order to retain its global dominance, the US considers itself to be on the moral high ground in the existing international order and seeks to push China to forsake its policies in high-tech industries and knowledge transfer from foreign firms.
The Trump administration is attempting to harness modern science and technology to maximize gains for the United States in trade with China, using a zero-sum attitude. Trade penalties, investment controls, export controls, and limits on the interchange of technology people are all part of the US’s tech war against China.
These actions will exacerbate tensions between China and the United States in terms of security and scientific and technology collaboration, as well as weaken regional stability and global science and technology governance.
Both sides must make more effective efforts to manage their strategic competition, build a more balanced and mutually beneficial relationship in high-tech industries, and expand the space for cooperation in the field of global science and technology governance in order to promote sustainable global development and strategic stability.
The New Venture, New strategy, Promising Future
What is Huawei’s current situation in light of the sanctions and other restrictions imposed on its operations?
Huawei reported sales revenue of 636.8 billion renminbi in 2021, down over 30% from 2020 (891.4 billion RMB), but profits of 113.7 billion RMB, up more than 70% from 2020 (64.6 billion RMB), with a net profit margin of 17.9%, according to Huawei’s 2021 Annual Report, released on March 28.
Huawei also had enough cash on hand, with operating cash flow increasing by 69.4%. Meanwhile, its gearing ratio fell from 62.3 percent to 57.8 percent, indicating that its capital structure is improving.
As indicated by the drop in revenue, decades of US restrictions and penalties have had a negative impact on Huawei to some extent. The constant increase in profits, on the other hand, reveals that the US has not been able to entirely stop Huawei’s rapid global expansion, which is intimately tied to Huawei’s enormous investment in R&D.
In 2021, Huawei invested 142.7 billion RMB in R&D, accounting for 22.4 percent of its sales income, a record high in both rate and ratio over the previous decade. And Huawei has risen from fifth place in 2018 to second place in 2021 in global R&D investment, with notably significant results in 5G applications and Huawei Cloud.
Huawei had signed more than 3,000 commercial contracts for 5G industry applications in manufacturing, mining, steel, ports, healthcare, and other areas by the end of 2021.
In the third quarter of 2021, Huawei accounted for 28.7% of the worldwide market share, the highest in the world, according to all Telecommunications Infrastructure programs monitored by Dell’Oro Group.
In the first half of 2021, the China Academy of Information and Communications Technology (CAICT) reported that Huawei placed first with a market share of 35.2 percent for 5G equipment. Huawei Cloud is also starting to take off as a result of Huawei’s recent focus on development.
Huawei Cloud has approximately 220 cloud services and 210 solutions, and runs 61 availability zones with partners in 27 geographic regions around the world, serving more than 170 nations and territories, as of September 2021.
Huawei Cloud was named the top Chinese seller by Media Universe in 2021. Huawei Cloud has risen to the top five in the global Infrastructure as a Service (IaaS) market, becoming one of the five global clouds, according to Gartner’s “Market Share: I.T. Services, Worldwide 2020” report.
In other business categories, Huawei was chosen to manage the digital transformation of over 700 cities and 267 Fortune 500 businesses throughout the world.
Huawei’s service and operating partners increased to more than 6,000, and the company generated a global sales income of 243.4 billion RMB. More than 8 million developers have used Huawei’s open-source software and development tools, including as openEuler, MindSpore, and HarmonyOS, to test out new business scenarios and models.
HarmonyOS is now the fastest growing mobile terminal operating system in the world, with 220 million Huawei devices running it.
Furthermore, Huawei is aggressively expanding its business categories, such as inverters and vehicles, where it can build or acquire processors on its own, reducing Huawei’s reliance on high-end chip constraints.
In response to the government’s request for a carbon peak, Huawei, the world’s biggest inverter supplier, aims to deploy additional photovoltaic inverters. The company’s inverter sales have been gradually increasing.
In order to grow its automobile business, Huawei is shifting engineers from other business divisions to its self-driving car sensors and electric vehicle power units. Apart from its focused ICT infrastructure business, Huawei has created cloud computing, digital energy, terminals, and vehicle industries to better bypass the existing US technological sanctions against China.
As a result, despite US penalties, Huawei continues to make money. The diversity of this business environment reflects the economic and trade connection between China and the United States, which is both complex and resilient.
On the one hand, China and the US are interdependent and cannot entirely decouple in numerous industries, and economic and trade restrictions will result in significant losses for both parties. On the other hand, the United States has classified China as an economic competitor, and decoupling in specific industries will almost certainly occur as a result of this perspective.