Technical tensions between the US and China received't go away even when Biden wins the election, the analyst says
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Technological tensions between the US and China will remain even if Democratic presidential candidate Joe Biden wins the US election in November, according to an analyst.
Relationships between the two business giants have steadily deteriorated this year as Washington increasingly targets Chinese tech giants from phone maker Huawei to video sharing app TikTok. The Trump administration says Huawei and other Chinese tech companies could collect American user data and hand it over to Beijing, a claim that both Huawei and TikTok have denied.
"Imagine a scenario where Biden becomes president. I don't think the technology problems will go away in any meaningful way," said Taimur Baig, chief economist and managing director, DBS Group Research. ""It may be less volatile, it may be more rule-based, but the tensions remain. "
In early August, President Donald Trump banned all US transactions with Chinese technology companies Tencent and ByteDance. Tencent owns the popular Chinese messaging app WeChat, and Bytedance is the parent company of TikTok.
I don't think the US election result per se will make things infinitely better for China. It probably makes it a little less volatile.
Chief Economist and Managing Director, DBS Group Research
According to reports, last week the US imposed export restrictions on China's largest chip maker, SMIC. According to a letter from the U.S. Department of Commerce last Friday, it cited the risk that the equipment supplied to the company could be used for military purposes.
"So I don't think the US election result per se improves things infinitely for China. It probably makes it a little less volatile," repeated Baig, speaking to CNBC on Monday.
Relations between Washington and Beijing deteriorated in 2018 when the Trump administration imposed billions of dollars in tariffs on Chinese goods and Beijing retaliated with the same punitive measures, embroiling both sides in a protracted trade war.
As Republicans embraced Trump's "American First" agenda and abandoned traditional party goals such as unrestricted trade, Biden has struck a trade war with China, declaring that tariffs have harmed American businesses and consumers. Nevertheless, he urged the US to "be tough on China".
Trade experts said Biden may be under pressure to continue tough stance on China – and maintain these tariffs.
Baig said: "On the one hand, one could argue that trade tensions have forced China to invest more in domestic technology and it is, if you will, inadvertently acting as the mainspring of Trump … by cornering China (and) forces China into what they call self-sufficiency. So I don't think that will harm China in the short term. "
But it becomes "very problematic" for SMIC and some of the tech companies in the short term – "when they have absolutely no chips," Baig said.
However, he asked how sustainable it is for the US to continue on this path.
"Well, I think the US can rightly say, Biden or Trump, that it doesn't want China's military to have access to US-made technical hardware, but that still leaves out large quantities of consumer devices, too Use chips – and for that it will be very difficult to make a national safety argument, "he added.
– CNBC's Jacob Pramuk contributed to this report.