Name: Insights: How a Tech War with China Could Curb U.S. Innovation
Uploaded: 2020-03-10
Duration: 5 min 29 s
Description: If the U.S. closes the door on China, we could miss out on shaping the future of the tech.

[MUSIC PLAYING] ALAN MURRAY: If this divide is going to continue, who wins, who loses? BEN HARBURG: I think, in the long term the scoreboard is going to show-- in the short term, China is being hurt by these decisions, by cutting off, for instance, core components to Chinese mobile phone makers, by restricting access to investment in the United States, and a lot of that core IP that was fueling a lot of the development around here as well. But I think, in the long term, the loser's the United States. I think that forcing self-sufficiency for the Chinese by decoupling supply chains, capital markets, talent, ultimately breeds a system internally of self-sufficiency for China. That capital and talent ends up coming home. And ultimately, that is used not only to develop native industries and build dominant global players locally, but it then is used to address emerging technology markets, where I believe the real battleground lies when we look at a scoreboard. ALAN MURRAY: It probably also creates investment opportunities for you, right? BEN HARBURG: Right. So it's been a saturated market on the consumer internet front, mobility fronts, anyway, in China, over the last few years. And so where the investment is going today, and where the capital is flowing today, is in these replacement self-sufficiency industries-- chips, quantum computing, AI for all kinds of different applications, from city planning to financial services to drug discovery. ALAN MURRAY: Paul, one of the questions I wonder about is whether this divide is almost inevitable, given the difference in values in the two countries around things like data privacy, public surveillance, free expression. There are a number of them. Would we have inevitably gotten to a divide? PAUL TRIOLO: Probably, at some level, divide-- I think the big question is how deep the divide goes. I think Ben mentioned the financial markets, the decoupling of supply chains, other things, but I think that something like data and data privacy, that's a really fundamental issue, where, for example, China remains outside of global best practices on data. And so I think that the challenge is going to be that there's still time for China's data governance regime, for example, to come into line with things like the GDPR in Europe, the cross-border privacy rules in Asia. But if something doesn't happen there, that's going to be a problem. And in the trade talks, they were talking about getting to start talking about these issues. So those are not insoluble problems, but they're being driven by perception that China is also misusing some of these technologies, like artificial intelligence, for certain applications, in terms of monitoring minority populations, that kind of thing. So I think there's a narrative that's very much about values, but I think that the real trick will be for China to try to come into some of the global best practices around data. Chinese companies do that. Hi Air, for example, we talked to this morning on the panel. They're GDPR-compliant internally. But China, as a whole, will probably not be judged compliant on data. So the question is how do you bridge some of those-- the gaps in how China is implementing things like data privacy. BEN HARBURG: The American decoupling moment is coming just at the wrong time. The rest of the world has woken up now-- and the emerging markets-- to the fact that Chinese-built, backed, or inspired business models are what going to dominate in those markets, from Indonesia to India to South Africa and Nigeria. And so, as America detracts and pulls away from the Chinese side, it leaves the Chinese standing alone as the only viable alternative for those markets, not just for things like 5G, which has obviously become a little cliche, but also just in terms of where the capital is coming from, where the inspiration is coming from. So when we talk to emerging market entrepreneurs today that once were heavily oversubscribed, and in order to curry favor with them, you had to tell them, I know this guy in Silicon Valley, and, I know this company in New York that I can connect you with, 18 months ago, started a trend where now, it's who do you know in China, and what Chinese business model can you instruct me on? And with that will come a whole slew of other knock-on effects, as Deborah mentioned. A lot of teams we're talking to are now saying, we want to limit the coding that we do in the United States to under that 20% threshold, so that we are not deemed an American business and so that we can keep the core IP outside the US purview. And we're seeing talent that was previously coming out of Intel and Qualcomm and should be sitting in San Diego today, coming back to China and building chip companies locally because of that uncertainty. We talk to researchers in American universities today that report feelings of a Red Scare, where there's the perception that if there is a Chinese-born national working on a US research team, even on something that is not of national security importance, something even critically lifesaving, like cancer drugs, that there might be a withdrawing of funding from federal sources. And so, as a result of that, a lot of that is now coming home and to everyone's detriment. America was always the country that accepted and welcomed global talent. ALAN MURRAY: But, Ben, you say, "to everyone's detriment," but it seems pretty clearly that you think that the bigger loss is going to be on the US side. BEN HARBURG: I mean, at the end of the day, if America is not the hub of innovation, where the world's best minds feel welcome to come and be funded and supported, that's to our detriment. But it doesn't help China in the long term either because really diverse, intercultural teams end up making better outcomes than siloed, individual teams. 

Insights: How a Tech War with China Could Curb U.S. Innovation

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We could miss out on shaping the future of the tech.

How a Tech War with China Could Curb U.S. Innovation

If the U.S. closes the door on China, we could miss out on shaping the future of the tech.

If this divide is going to continue, who wins? Who was? I think in the long term the scoreboard gonna show. In the short term, China is being hurt by these by these decisions by the, uh, by cutting off, for instance, core components to Chinese mobile phone makers by restricting access to investment in the United States and a lot of that core I p. That was fueling a lot of the development around here as well. But I think in the long term, the losers United States, I think that forcing self efficiency for the Chinese by decoupling supply chains, capital markets Talyn ultimately breeds the system internally of self sufficiency. For China, that capital in talent ends up coming home on. Ultimately, that is used not only to develop native industries and build dominant global players locally, but it then is used to address emerging technology markets where I believe the real battleground lies when we look at the scoreboard probably also creates investment opportunities for you, right? Right. It's been a saturated market on the consumer Internet front mobility front anyway, in China over the last few years, and so where the investment is going today, and where the capital is slowing today is in these replacements. Self efficiency industries, chips, quantum computing. Aye, aye. For all kinds of different applications from city Planning. Financial service is to drug discovery. Well, one of the questions I wonder about is whether this divided is almost inevitable, given the difference in values in the two countries around things like data privacy, public surveillance, free expression there there are a number of them does. Would it would we have inevitably gotten to a divide? Probably some level divide. I think that I think the big question is how how deep divide goes. I think, uh, Ben mentioned in financial markets the decoupling of supply chains, other things. But I think that something like data and data privacy, that's a really fundamental issue where, for example, China remains outside of global best practices on data, and so I think the challenge is gonna be there. Still there still time for training data governance regime, for example, T come in tow line with things like the GDP are in Europe, the cross border privacy rules in Asia. But if something doesn't happen there, that's that's gonna be a problem in the trade talks. They were talking about getting to start talking about these issues those air, not insoluble problems, but that they're being driven by perception that China is also misusing some of these technologies, like artificial intelligence for some certain applications in terms of moderate monitoring minority populations. Like I think so. I think there's a narrative that that's very much about values, but I think the real trick will be for China to tryto come into some of the best global, the best practice around data. Chinese companies do that hi air, for example. We talked to this morning on the panel. They their GDP, are compliant internally, but China as a whole will probably not be judged compliance on data. So the question is, how do you bridge some of the gaps in on how China's implementing things like data privacy? The American decoupling moment is company just at the wrong time. The rest of the world has woken up now in the emerging markets to the fact that Chinese built back or inspired business models are what are what going to dominate in those markets from Indonesia to India to South Africa, in Nigeria and so as America kind of do tracks and pulls away from the Chinese side. It leaves the Chinese standing alone as the only viable alternative for the market, not just for things like five G, which is obviously become a little cliche, but also in terms of where the capital is coming from, where the inspiration is coming from. When we talked to emerging market entrepreneurs today that once we're you know, we're heavily oversubscribed and in order to curry favor with them, you had to tell them. I know this guy in Silicon Valley, and I know this company in New York that I can connect you with 18 months ago started a trend where now it's who you know in China. And what Chinese business model can you instruct me on and with that will come a whole slew of other knock on effects of Deborah mentioned. Ah, lot of teams we're talking to are now saying we want to limit the coding that we do in the United States under that 20% threshold so that we're not deemed in American business and so that we can keep the core. I pee outside the U. S. Purview and we're seeing talent that was previously coming out of Intel on Qualcomm and should be sitting in San Diego today coming back to China and building chip companies locally because of that uncertainty, we talk thio researchers in American universities today that report feelings of a red scare where there's the perception that if there is a Chinese born national working on a U. S. Research team, even on something that is not of national security, important something even critically life saving, like cancer drugs, that there might be a withdrawing funding from federal sources. So as a result of that, ah, lot of that is now coming home and to everyone's detriment. America was always the country that he accepted and welcomed global. But you say to everyone's detriment. But it seems pretty clearly you think that the bigger loss is gonna be on the US side. I mean, at the end of the day, if America is not the hub of innovation and where the world's best minds feel welcome to come and be funded and supported that to our detriment. But it doesn't help China and long term, either because really diverse intercultural teams and making better outcomes than siloed individuals