China is fighting back against the US and EU demands on its tech industry by ordering Chinese state offices to remove all tech designed and built by US and European companies, Japanese companies as well. They have three years to remove this technology and replace with domestic designed and built products – the Trade War is, in our view, now moving to the next logical level. When in discussions with my associates in Hong Kong, New York and Tokyo we always refer to the trade war for what it is – China is serious about winning, it has been for over 30 years. The US and Europe are, after 30 years of warnings from the Japanese, just waking up. The new China policy is called “3-5-2” in which overseas technology is replaced at 30% in 2020, 50% in 2021 and 20 percent in 2022. According to sources there are 20 to 30 million pieces of foreign equipment to be replaced over the next 3 years. This latests moving by the CCP or Chinese Communist Party is the most aggressive yet and from now things will only accelerate.
According to the Economist Intelligence Unit trade talks will be impacted, it depends on how the US digests this information – the recent China decisions. According to one expert, “discrimination against foreign technology has been part of the policy framework in China for years now.” China has a history, according to our Japanese sources of copying overseas technology and then mass producing it, in a wide range of products. While talks continue, the US issues with Huawei seems to only get worse while the EU, as many countries are starting to fade away from China built technology in favor of European, US and Japanese sourced product. The intellectual property rights and enforcement will be at the core of US China talks, with the EU listening and cheering in the background. China is working to become the world leader – the US is now aware of this fact.