US-China row could hurt post-pandemic recovery

While it’s not certain when the Covid-19 pandemic will end and its full impact is yet to be established, one thing is certain; technology will be critical in any global recovery efforts. 

As experts build post-pandemic scenarios, innovations, especially Artificial Intelligence (AI) and machine automated applications will supplement human efforts to rebuild lives, including filing in the gaps that have been exposed in public health policies globally.

It’s, however, worrying that emerging political and trade wars, especially between the US and China, could undermine the use of technology in the Covid-19 pandemic interventions.

Genuine businesses and huge investments are likely to get caught in between in the supremacy war. And the consequences will be costly. 

For instance, it’s apparent that the 5G innovation and its technological revolution potential are getting into the coronavirus politics, with a number of countries threatening to review their ties and other obligations with China.

This is fuelled by claims the Asian economic tiger has yet to come clean on the virus, given that it was  first reported in its Wuhan city.

If this escalates and the threats come to pass, then the novelty of the 5G innovation being pioneered by Chinese firm, Huawei, is bound to suffer. 

The US blames China for the virus outbreak and has proposed drastic changes on its international trade through the US Foreign Direct Product Rule.

If passed, the rules will impose restrictions on the use of technological equipment, including existing production facilities of all semi-conductor manufacturers around the world. 

This is drastic because it means even if a chip was not developed or designed in the US, and only one piece of US-origin equipment was used at any step in its production, then chipmakers outside of the US would have to seek approval from the US government before manufacturing chips. 

Such measures would disrupt trade flows as others, especially China, will retaliate causing turbulence in the current a system based on collaboration and predictability. 

If the US is allowed to arbitrarily change the rules to exert dominance and control over the global semi-conductor industry, it will set a dangerous precedent.

Similar measures might be adopted in other industries such as aviation and optoelectronics. 

Unfettered expansion of jurisdiction will undermine the trust in globalisation and free trade that the international community has worked hard to establish over decades.

Experts have projected that post Covid-19, ICT and the digital economy will play an important role in helping the world recover from an imminent recession.

They will help transform healthcare, education and numerous other industries. 

When the pandemic is behind us, the global economy will be in urgent need of an open, collaborative, and stable global value chain.

If the US takes restrictive measures at such a critical moment in our shared history, it will hurt the industry’s confidence and seriously hinder the recovery of the global economy.

The new rule threatens to strip chipmakers of the freedom to use their legally acquired private property.

Whether based in Japan, South Korea, Taiwan, Europe, or Singapore, chipmakers the world over will see a precipitous drop in asset use and a rapid depreciation of their core assets.

Should the Chinese government take up retaliatory measures, the global semiconductor industry will suffer tremendous losses—and standards will likely split.

 Overall, the China-US row will reverberate the world over.  —The writer is the Head, Media Development & Strategy at Media Council of Kenya