By Greg Ip
Democrat Mark Warner, a former telecom executive, suggests
industrial policy may be necessary to sustain Western competition
to China.
When Mark Warner was in the telecommunications business in the
1980s and 1990s, he didn't think much about how U.S. rules and
standards shaped the global use of technology -- it was a given. "I
never appreciated how much we set the standards on almost every
technology and innovation, even if not invented in America," Mr.
Warner said in an interview this week. "We flooded the zone with
engineers. We had the best schools, we had most of the companies.
It got built in as an assumed advantage, and we kind of got lazy
about it."
Today, as the top Democrat on the Senate Intelligence Committee,
he sees China's erosion of that technological advantage as an
existential threat to American values at home and abroad.
Nor is he happy with the U.S. response -- either the hands-off
attitude of previous administrations or an "erratic, reactionary"
approach, exemplified by the current administration's campaign
against the social media app TikTok. In a series of speeches over
the past year Mr. Warner, a former governor of Virginia, has laid
out an alternative strategy: set standards on where interacting
with China poses unacceptable risks to national security, get
allies on board, and then pour the necessary resources into
building up Western alternatives to Chinese companies.
In a speech last week he confessed that he once thought China
would liberalize economically and politically by integrating with
the world, and that technological innovation could only flourish in
free societies. "Like so many, I was wrong," he bluntly told the
National Democratic Institute. "Instead, China has shown that the
development and use of cutting-edge technology and economic
expansion are, indeed, possible within authoritarian-state
capitalism."
He describes China's strategy thus: First, allow domestic
companies to fight it out until a national champion emerges and
nurture it by keeping out foreign competition. Use state resources
to expand into foreign markets. Then target the international
bodies that set standards that allow differing manufacturers'
equipment to work together, from mobile phones to artificial
intelligence and facial recognition. In this way, he said, Chinese
instead of American values will become embedded in the way the
world uses technology.
As a former telecom investor -- he co-founded the wireless
company that became Nextel -- who still calls himself a "tech guy,"
Mr. Warner knows that with technology, a market can "tip" to one
company or one standard, and its competitors then wither away.
Despite the Trump administration's all-out efforts to constrain
Huawei Technologies Co., its share of global telecom revenue
continues to climb, hitting 32% this year, according to Dell'Oro
Group, as that of its main competitors, Sweden's Ericsson AB and
Finland's Nokia Corp., shrink.
"We've been told that if Huawei is able to gain 50% global
market share, it will send Ericsson or Nokia -- and potentially in
the longer term, both -- into a tailspin," he said last week.
As China's technological prowess advances, so does its ability
to suppress domestic dissent "at scale," to export that suppression
abroad to, for example, the Chinese diaspora, and eventually
challenge U.S. economic and geopolitical leadership, Mr. Warner
warned.
Mr. Warner proposes several steps in response. First, all
stakeholders, not just the federal government, must be involved.
Mr. Warner and Sen. Richard Burr of North Carolina, until May the
intelligence committee's Republican chairman, have had intelligence
officials brief leaders of universities, businesses and the
Asian-American community on China's efforts to acquire American
know-how and influence the Chinese diaspora.
The senators' message "was that things were changing, they had
new concerns [about] the relationship between China and the U.S.,"
said University of Pittsburgh Chancellor Patrick Gallagher, who
attended one meeting, in an interview. For example, international
academic collaborations may pose risks that didn't exist before, he
said. "That's a jarring shift for a lot of research faculty."
Next, the U.S. needs clear security standards on how much
business U.S. companies and researchers can do with Chinese
entities. It must then persuade as many allies as possible to sign
on to common principles on cybersecurity, socialmedia abuse,
technology standards and permissible use.
Mr. Warner said the Trump administration uses haphazard tactics
that repel rather than attract allies. He called negotiations over
TikTok "the epitome of nontransparency." Why, he asked in the
interview, is Oracle Corp., a supporter of Mr. Trump, now the
preferred bidder instead of Microsoft Corp.? A Treasury spokeswoman
declined to comment. (The Journal reported that TikTok's parent,
Beijing-based ByteDance Ltd., saw Oracle as more aligned with its
interests than Microsoft.) The U.S., he said, is losing credibility
on what constitutes a national security threat by using it to
justify tariffs on steel and aluminum imports from allies.
Finally, to ensure access to equipment as good as anything China
produces, Mr. Warner said the U.S. may have to embrace industrial
policy, often criticized as "picking winners." He has co-sponsored
one bipartisan bill to fund an international consortium that
develops telecommunications equipment and another to fund
semiconductor research and development.
Many businesses will no doubt see Mr. Warner's road map as
overkill. Nor would China take such measures lying down. Moreover,
having accused China of undermining the rules of global commerce
with state aid and discriminatory policies, the U.S. would in
effect be piling on by imitating those same practices.
Mr. Warner doesn't deny that risk. The goal, he says, should be
for the U.S. and its allies to "only buy from countries with
systems that are based on rule of law."
Write to Greg Ip at greg.ip@wsj.com
(END) Dow Jones Newswires
September 23, 2020 10:01 ET (14:01 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Ericsson (NASDAQ:ERIC)
Historical Stock Chart
From Apr 2024 to May 2024
Ericsson (NASDAQ:ERIC)
Historical Stock Chart
From May 2023 to May 2024