Concerns over US-China trade conflict loom large at Asia’s largest hi-tech conference
Participants at the RISE conference in Hong Kong see the trade dispute threatening growth in the global technology industry
The US-China trade dispute loomed large at the opening of the RISE technology conference in Hong Kong on Tuesday, as major hi-tech companies, start-ups and various industry experts discussed the latest developments in blockchain, artificial intelligence, the internet, e-commerce and other related fields.
While Hong Kong is more than 13,000 kilometres away from Washington, recent policy decisions made by the administration of US President Donald Trump have apparently hit close to home for a number of conference participants.
“We should all realise that we benefit so much from the openness of the vast technology community,” said Wayne Xu, the president of ZhongAn Technologies International Group, a unit of Hong Kong-listed ZhongAn Online Property & Casualty Insurance. “If barriers are put up today, it will destroy what we have achieved.”
Trade tensions between the world’s two largest economies have also raised concerns about Chinese companies being squeezed out of crucial technologies, such as semiconductors. That recently came to the fore when ZTE Corp, China’s largest listed telecommunications equipment maker, was forced to shut down most of its operations amid a US government ban on the export of American-made chips and other components to the company, which failed to punish staff involved in selling products to North Korea and Iran.
While the ban has been temporarily lifted under the terms of ZTE’s settlement with the US government, China’s government and the nation’s prominent tech industry leaders have reiterated calls for investing in crucial technologies to help cut the country’s reliance on imported chips, software and other resources.
Bessie Lee, founder of Shanghai-based Withinlink, a venture fund and start-up incubator focused on marketing and communications technologies, said the Chinese government was keen to break free from that dependence.
“At the moment, China lags behind the US in chips [technology],” Lee said. “But give it a couple of years … There’s actually quite a lot of investment and effort from the central government.”
The anxiety expressed by a number of participants at the RISE conference follow the first salvoes made in the US-China trade dispute last Friday.
The Trump administration introduced 25 per cent tariffs on US$34 billion worth of Chinese goods, which targeted 818 products central to Beijing’s “Made in China 2025” initiative – an industrial policy launched by Premier Li Keqiang in 2015 to guide the country’s industrial modernisation, including the substitution of foreign technology with innovation developed on the mainland.
China retaliated by imposing similar 25 per cent tariffs on US$34 billion worth of goods from the US.
Trump has threatened to target another US$400 billion in Chinese products with tariffs if Beijing continues to hit back.
The main sectors in China to be affected by the new duties imposed by the US are machinery and electronics as well as information and communications technologies, according to an analysis of the tariffs by insurance company Credendo.
China is the world’s largest production base for electronics products, such as personal computers and smartphones.
Chen Lei, chief executive at Shenzhen-based blockchain company Xunlei, said companies affected have a lot of figuring out to do.
“Barriers to market are harder to penetrate than technology barriers,” Chen said. “When companies are forced to develop a certain technology, they almost always find a way to develop that.”
The trade dispute, however, is not expected to derail the business expansion for start-ups on the mainland, according to a prominent investor across a range of hi-tech market segments in the US and China.
“In reality, Chinese start-ups don’t do much business in the US. They do more business in the emerging markets,” said Hans Tung, a managing partner at venture capital firm GGV Capital. “So the tariff [war between the US and China] has very little impact on our decision-making.”
Amid the discussions on the RISE exhibition floor and stage about the trade conflict, Hong Kong chief executive Carrie Lam Cheng Yuet-ngor said the city was stepping up efforts to support the new economy and tech companies after missing out on major opportunities, such as the listing of Alibaba Group Holding and the development of leading Chinese drone maker DJI. New York-listed Alibaba is the parent company of the South China Morning Post.
“We are making listing rules more in step with the new economy,” Lam said in a one-on-one interview on stage at the RISE conference. “We need to continuously revisit our rules and regulations to adapt to the new changes.”
Industry experts taking part at RISE also discussed regulation of blockchain, the online ledger technology behind cryptocurrencies like bitcoin and ethereum.
At a press conference, Joseph Lubin, a co-founder of ethereum said dialogue with regulatory bodies must be continued.
“We have to help regulators from around the world understand the technology,” Lubin said. “We anticipate the potential of the technology will win out.”
The Hong Kong Monetary Authority had set out seven core initiatives in September last year to bolster local financial technology initiatives, which was made in response to criticism the city was lagging behind other economies in Asia in adopting advanced technologies like blockchain.
While speculation swirls on how the US-China trade conflict pans out and its potential impact on various segments of the tech industry, there are people who look to profit from the chaos.
Colin Bogar, chief executive at Shanghai-based Property Passbook, an online platform that sells investment real estate around the world, said such “instability is one of the best things that I can imagine in my business”.
“If a repeat of the financial crisis in 2008 happens, there would be a lot of good deals,” he said.