U.S.-China Competition Over 5G Likely to Increase, Even Without Trade War

In the long term, friction between the United States and China over advanced technologies will likely increase, and grabbing market share of fifth-generation wireless tech is seen as a key flashpoint, according to panelists speaking this week in Washington at a conference on intellectual property and innovation policy.

“There is a 5G competition between the United States and China,” Gordon Chang, one of the panelists and author of “The Coming Collapse of China,” said in an interview following Tuesday’s event at the Newseum. “China has been using its anti-monopoly laws to attack American 5G companies like Qualcomm, which affects the ability of U.S. companies to compete effectively on 5G.”

Last month, President Donald Trump blocked the acquisition of Qualcomm Inc., a sponsor of Tuesday’s event, by Singapore-based Broadcom Ltd. amid concerns that a foreign takeover of the U.S. chipmaker, currently in a race with China’s Huawei Technologies Co. to dominate 5G wireless communications, would jeopardize national security. In September, Trump stopped a Chinese private-equity firm backed by a state-owned asset manager from taking over chipmaker Lattice Semiconductor Corp.

The U.S-China tech competition is expected to outlast a potential trade war over tariffs, according to Chang, who said that while the United States is addressing the importance of developing 5G technology, a larger group of officials in China is doing the same.

Trump's concerns about China's growing technology development added pressure to U.S. telecommunications operators. Verizon Communications Inc., AT&T Inc., T-Mobile US Inc. and Sprint Corp. have all pushed for the development of next-generation wireless service that could be up to 100 times faster than 4G, according to the Federal Communications Commission, which voted last month to ease regulatory requirements for deployment of small cell technology required for 5G service.

"Countries who are able to prioritize 5G application layers faster than others love the economic activity movement in those countries,” Chetan Sharma, a consultant in the mobile industry and founder of Chetan Sharma Consulting, said during the panel discussion.

That means competition is fierce for 5G, which fellow panelist David Teece, a professor at the University of California, Berkeley’s Hass School of Business, characterized as the most innovative technology in the global economy.

The Trump administration launched an investigation in August under Section 301 of the 1974 Trade Act to probe alleged Chinese violations of U.S. intellectual property rights.

Intellectual property theft costs the United States at least $225 billion annually, or 1.25 percent of the U.S. economy, and may be as high as $600 billion, according to 2017 estimates from the National Bureau of Asian Research. Chang said China is responsible for much, but not all, of that theft.

China’s embassy in Washington did not respond to a request for comment.

Washington has suggested that Beijing’s industrial policies, such as Made in China 2025, reflect a top-down, state-directed approach to seize global leadership in advanced technology by acquiring foreign technologies. As part of the U.S. response to China’s trade practices related to the forced transfer of U.S. technology and intellectual property, the Office of the U.S. Trade Representative published a proposed tariff list April 3 targeting Chinese aerospace, information and communication technology, robotics and machinery sectors, including 5G technology.