190316 trade war
Image Credit: AFP

With each day, the trade war between the US and China is getting worse, and not sparing the rest of the world. It has left a deep impact on stock markets and the global economy, arising from uncertainties for international trade movements and the future of new technologies.

These technologies were exclusive to the US through its giant Silicon Valley companies, which have dominated the world from end to end, including countries that do not have friendly relations with Washington. The signs started to show up with the arrival of Donald Trump to the White House, when he imposed tariffs and counter-tariffs, reconsidered trade agreements, and sharply criticised the World Trade Organisation (WTO).

Yet, as time goes by, new signs, more important and dangerous, loom on the horizon, especially as the world is on the threshold of a new phase of challenges through the deployment of high-speed and highly versatile 5G systems, which will take communications to levels never known before.

This coincides with serious attempts by China to break the US monopoly. Even the European Union (EU) and Russia have not been able to compete with Washington on 5G networks.

Only Beijing began to extend its influence. Through its own tech giant Huawei, it has made remarkable progress in developing 5G systems at competitive prices, prompting countries, including developed ones such as Germany and Britain, to introduce Chinese-made 5G networks, and a step that poses a serious challenge to US interests.

Such a significant development led to dramatic changes in the contours of the US-China trade war, and one no longer confined to tariffs, but rather to a new type of commercial conflict that relates to the future of telecommunications and artificial intelligence. This is in part because all aspects of economic activity, education, medicine and even defence and security affairs will depend on 5G in the near future.

Trade and security and are the two core issues in the war between the two largest economies. The US does not want to see a strong competitor in these two fields, especially as the opponent uses US techniques through which it could make huge business gains and penetrate the security systems of other countries.

This has prompted Washington to take firm action against China by trying to prevent US companies, such as Google and Microsoft, from allowing Huawei to use its operating systems three months from now. This effectively means disabling Huawei devices, unless China can develop alternative operating systems.

It is worth mentioning that Huawei made profits of $9 billion in 2018. In short, Huawei is not just trying to eat the Apple, it would rather cut it up into pieces.

At the same time, the US administration has pressed its allies to cancel agreements with Huawei, done by British, Japanese and South Korean companies for commercial and security reasons. Huawei’s entry into these developed markets means huge trade gains, an increasing dependence on China, and strong competition to the US as China is expected to dominate the 5G space by 2022.

In addition, the consequences extend to cybersecurity, whether that be of the US or China. Five years ago, a US spy operation targeting German Chancellor Angela Merkel communications was discovered, sparking a crisis between the two countries, and which resulted in banning the use of iPhones in official communications.

Germany’s move was followed by Russia and others, which means that these risks persist.

The world is facing an unconventional trade war that is not limited to commercial gains, but extends to a nation’s security, military interests and strategic aspects that are influential in determining the global powercentres of the future.

Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.