Is It A Trade Spat Or The Start Of Another Cold War?

By on February 12, 2019

February 12, 2019

It could well be the latter, according to Peter Hartcher, journalist and visiting fellow at the Lowy Institute, a Sydney-based foreign policy think tank. Writing in the Sydney Morning Herald, he quotes former U.S. Treasury Secretary Hank Paulson, who has warned about an “Economic Iron Curtain” that is descending between the U.S. and China. If this happens, Hartcher writes, it would be a much bigger deal than Brexit, and would cut “deep into the world’s biggest bilateral economic relationship, disrupt global supply chains, strand massive offshore investments, harm companies and workforces around the world and threaten a new political and economic crisis on a scale unmatched since the last Cold War.” How much this would bleed into a wider military rivalry, with the bloated economies, sapping of resources, self-fulfilling prophecies and dangerous brinkmanship that characterized the first Cold War is an open question, but according to Hartcher a faction of Trump Republicans are pushing the notion that the two systems are irreconcilable and this is a “civilizational clash.” This all comes at a time when competition in the world telecommunications market is rapidly heating up and many analysts and policy makers are ready to blur the line between economic and military competition. A recent New York Times article describes how the U.S. is pressuring countries that are potential customers for the 5G technology of the Chinese company Huawei to back off, on the grounds this relationship would constitute a grave security risk. One of the reporters who wrote that article, David Sanger, details what he considers the threat during an interview with Terry Gross on National Public Radio’s Fresh Air program. Sanger maintains it’s a mistake to think of 5G technology as a hardware product, something that in theory could be reverse engineered and analyzed. It’s more accurate, he says, to think of it as software, which like most such products will be continually updated, thus making analysis and defense an intractable project. In theory, according to Sanger – on the assumption that a private company in China would be under the thumb of the government – the technology could be appropriated for strategic purposes and used for monitoring U.S. networks, subverting them by manipulating data, or shutting them down. He notes the founder of Huawei is a former officer of the Chinese People’s Liberation Army, and that it is his daughter who was arrested in Canada and whom the U.S. wants to extradict. But Sanger also acknowledges there is no real evidence that the PLA controls Huawei, and he reminds listeners of a startling piece of history: A National Security Agency operation called Shotgiant was mounted circa 2010, becoming publically known only because some of the details were leaked in the Snowden documents. Shotgiant “was an effort by the NSA to do to Huawei exactly what we have accused Huawei of doing to us,” Sanger says, “which is breaking into networks, figuring out how they operate and setting ourselves up to either steal information from those networks or cripple them in the future.” Meanwhile, according to Jeffrey M. Klink, President and CEO of risk advisory firm Klink & Co., companies trying to do business in China have a more immediate concern: the theft of their IP, and in this post he offers some suggestions on how to prevent it.

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