David Garrity Discusses the Impact of the Trade War with China

Follow the links and read more below:

1) Bloomberg: https://www.bloomberg.com/news/audio/2019-05-28/we-are-in-a-technology-cold-war-laidlaw-s-garrity-radio

2) LinkedIn: https://www.linkedin.com/feed/update/urn:li:activity:6539488934144073729/

3) Twitter: https://twitter.com/GVAResearch/status/1133724593385029632

1) Tech – Whoever Builds The 5G Platform First Sets The Standards And Thus The Rules Of The Game: Published in 2015, the same year the PRC State Council laid out the “Made in China 2025” Plan (MIC2025) under which China would become a global powerhouse in ten high-tech fields from artificial intelligence (AI) to aviation, the novel “Ghost Fleet” depicts a possible global conflict scenario in which the United States (and by extension its allies) are defeated in large part due to the use of PRC-made components in its weapons systems that render them subject to enemy control and thus useless in wartime. While the novel depicted an update to the time-honored theme of the Trojan Horse in making the reader wary of accepting gifts from strangers, it did not anticipate the challenge now presented by the technology shift from 4G to 5G communications networks. In April 2019, the Defense Innovation Board, an advisory board of tech sector leaders to the U.S. Department of Defense, issued a report warning that the PRC is on track to pull off a “first-mover advantage” in the competition to dominate 5G mobile telecommunications. Note that 5G promises to revolutionize existing industries and invent entire new industries with data speeds of approximately 20x those of 4G. In the state-controlled economy that is the PRC, the primary competitor here is Huawei, the company that has become a focal point in the current U.S.-China trade war as the current U.S. administration is lobbying allies aggressively to keep Huawei equipment from being installed in their countries’ telecommunications infrastructure. However, “In public and private statements, American intelligence officials and telecommunications executives and experts have begun to concede that the United States will be operating in a world where Huawei and other Chinese telecom companies most likely control 40 to 60 percent of the networks over which businesses, diplomats, spies and citizens do business.” With the prospect of a PRC 5G “first-mover” advantage, the U.S. will be operating in a world where it is not setting the standards, a world where networks are possibly subject to PRC state control and thus compromised, or “dirty networks.”

2) Tech – China Needs To Push Hard To Establish Regional Hegemony As Demographics Work Against It: While the rapacious nature of PRC-led misappropriation of technology intellectual property is well-known as the country seeks to attain its MIC2025 goals, one perhaps under-appreciated factor prompting the PRC’s need for speed is that fact that its demographic profile is in many ways reminiscent of that Japan faced in the 1980s in which the country was clearly seen to face a rapid increase in its elderly population, something that has clearly occurred. According to researcher China Power, the percentage of Chinese above the retirement age is expected to reach 39 percent of the population by 2050. At that time, China’s dependency ratio (the number of people below 15 and above 65 divided by the total working population) is projected to increase to 69.7 percent, up from 36.6 percent in 2015. Add to this negative development the PRC’s gender imbalance in which the country has 70mm more men than women and we are left with the sense that the PRC has internal pressures to establish dominance regionally while it has a demographic “window of opportunity,” something that raises the odds of conflict intensifying over the next 5-10 years.

3) Tech – A War By Any Other Name Is Still Conflict All The Same As PRC Conducts An Unchecked Cyber War: Apologies to Shakespeare, but one may say that all is fair in love and war and so it is in the ongoing and unceasing cyberwar that the PRC is waging against the US and its allies. Granted the PRC is far from alone in this new front of global conflict, but it is among the most persistent and the most pernicious of state actors seeking to penetrate critical infrastructure and to steal intellectual property so as to further its ambitions under MIC2025. While cyberwar is a silent war, it is war nonetheless and there should be no illusions otherwise.

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