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December 16, 2019

Responding To: Final Insights from the U.S.-China Research Group on E-Commerce and Mobile Technology

How Interdependence Will Affect Development

Han-mei Tso

Through the conversation, we had opportunities to deeply look into changes of the relationship between the United States and China, review impacts on global value chains, innovation and industrial policy due to recent U.S.-China competition, find out the factors attributed to the dramatic changes and think possibilities to ease the tension as well as to form a balancing and healthy relationship between the two largest economies in the world.

Interestingly, some dramatic events happened during the course of our meetings. For instance, during the first meeting, we had a lively discussion of the ZTE sanction decision. During the second meeting, it was the time President Donald Trump and Chinese President Xi Jinping announced two different statements by each regarding the agreement to a 90-day tariff "cease-fire" at the G-20 summit in Argentina on Dec. 1, 2018. The group had the opportunity to promptly analyze the statements made by each side and discussed possible development of the trajectory of the bilateral relationship. In the third meeting, the group was able to look back at the track of the two countries’ trade negotiations and discussed the up-and-down treatment to Huawei. The timely conversation is useful and meaningful when we exam the fast-changing relationship between the United States and China at the present moment.

The dialogue is also useful to let our U.S. colleagues know what is really going on in China and what the Chinese people and government are thinking of the current tension between the two largest countries. Vice versa, Chinese colleagues from the group were able to listen to the true points of view from their U.S. colleagues in terms of various concerns about China’s policies on politics and international affairs. The open-minded conversation promoted the true understanding of the U.S. and China in all aspects.

In the beginning, our research looked into industry development and governance of autonomous driving in China, the United States and Europe in a parallel way. The group’s conversation inspired the discussions how one region’s regulations and industry policy may create impacts on another region’s innovation particularly when a new technology such as autonomous driving is emerging. Although the technology of autonomous driving is in the early stage and the cross-border development of autonomous driving technology has not become a target of the trade war between the United States and China, different from the traditional automobiles R&D, manufacture and trade of autonomous driving cars will not be able to avoid interdependence of the global innovation ecosystem, global value chain, as well as industrial policies. Thus, it is meaningful to analyze how such interdependence will affect development of autonomous driving technology and possible strategies to use such interdependence to promote development and safety of autonomous driving technology as well as to prevent potential barriers to the future trade of the new type of autonomous driving cars when the technology is matured.

The current tension between the United States and China is a process to reform a balanced and stable relationship of the two countries. Thanks to the continuing innovation and strong technology foundation, the United States may still take lead in the world’s technology development. However, it is inevitable and not deniable China has been very strong on certain fields of technology development, like 5G and AI. China’s strength will give it more bargaining and speaking power during the process to reform the relationship with the United States. The two countries have their own strength and weakness. China and the United States will keep working together and borrowing the other side’s talents to promote their own technology development. However, China has to pay significant attention and resources on stabilization of society. On the other hand, the United States needs to deal with uncertainty and lack of leadership from its administration. These internal concerns may potentially cause delay to each other’s technology development. For the future, the United States has to find a way to fully open the Chinese market and make it profitable in one way and protect its technology in the other way, which U.S. companies have been struggling to accomplish for many years. Although some Chinese companies have successfully entered into the U.S. market, such as Alibaba and TikTok which do not act like a typical Chinese companies, China has to build up trust and fair competition while putting more focus on technology catching-up.

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