Friday, November 1, 2024

Analysis-China’s sanction-hit tech industry puzzles over impact of Trump, Harris presidencies

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By Eduardo Baptista and Anne Marie Roantree

BEIJING (Reuters) – Donald Trump winning the U.S. presidency next week would muddle the outlook for Chinese technology firms far more than a win for Kamala Harris, with executives saying his unpredictable style could lead as much to a reprieve for the sanction-hit industry as increased restrictions.

The Republican candidate initiated a Sino-U.S. trade war during his 2017-2021 presidency by banning high-tech exports to China citing unfair trade practices and national security. Yet his combative approach coupled with his record of sudden, wide-ranging tariffs could unsettle U.S. allies and undermine any coordinated effort, Chinese tech executives said.

He is tied in voter polls with his Democratic rival who executives expect to continue with the incumbent’s policy of regular, incremental changes to export controls and leveraging international alliances to slow China’s technological and military development.

Whoever wins, observers widely expect fresh restrictions to curb advances at a time when Beijing is more assertive in territorial disputes in the South China Sea, increasing navy and air force activity around Chinese-claimed Taiwan and strengthening ties with an at-war Moscow.

Predictability makes Harris the pick of the two for many executives yet, ironically, Trump’s seemingly erratic approach could work in China’s favour, according to opinions in over a dozen analyses published by Chinese industry groups, think tanks and brokerages, reviewed by Reuters.

The analyses provide a more candid window into how China’s tech sector is gauging its outlook under the next presidency, unlike state media which toe the government line on political and sensitive issues.

Half of the analyses considered a Trump victory as negative in the short term due to a greater perceived likelihood of intensifying export controls and sanctions on China’s semiconductor sector. In Trump’s term as president, he imposed tariffs on billions of dollars worth of Chinese goods and sanctioned conglomerates including chipmaker SMIC and telecommunications manufacturer Huawei.

“As the initiator of a comprehensive upgrade in the containment of China’s science and technology, if Trump comes to power again … the domestic semiconductor industry may be further suppressed,” Shanghai-based brokerage Topsperity Securities wrote in August.

The remaining analyses were more nuanced in their conclusions. Material Energy Times, writing for Chinese firms supplying semiconductor manufacturers with raw materials, in July said Trump’s “unilateralist policies may also encounter opposition and non-cooperation from the international community”.

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