Tech companies with operations in both China and the United States are increasingly struggling to comply with values and laws that are systemically in conflict. When you have a system that is predicated on total unfettered compliance with the Chinese Communist Party and mandates by law sweeping censorship as well was the collection of information of everyday internet users — and then you have another system that is predicated on the protection of that information through the rights of free speech, privacy, and protections against government searches and seizures — you have two systems that are fundamentally in conflict.
We see this tension become more concerning in the last two years with China’s new National Security Law and Data Security Law which grant the Chinese government the authority to apply its censorship norms extra-territorially. What this means fundamentally is that we’re like going to continue to see China and the US compete to influence other countries around the world to adopt their respective systems.
… [China’s] made that push in Asia, Africa, and Latin America offering very generous deals to build presidential palaces, infrastructure projects, as well as promoting contracts for fiberoptic internet cables via Hauwei. We could be looking at a world in the not-too-distant future where China envelopes other countries behind this great firewall. For technology companies, that inevitably means they’ll get caught in the cross hairs, and will likely sooner or later be forced to take a side, but it also means American companies need to think long and hard about whether they have any evidence to trust that they will ever get a fair shake and compete on a level playing field as China’s domestic champions in a world where the CCP writes the rules of the international system.
That was Jacob Helberg on a Venture Stories podcast episode, “Silicon Valley and the US-China Cold War“. Heldberg argues that companies will not be able to operate under a “one company, two systems” philosophy. I think there’s a very real risk that China will actively extend its power over tributary states around the world, forcing companies to comply or be expelled. What will the US do when subjugated populations start civil wars, calling on the West to support their right to self-determination? Certainly China will back their own side. And then what could escalation from periphery countries to the main stage look like?
I think in hindsight, there was a certain inevitability of total wars in the cases of Napoleonic France and Nazi Germany. WWI seemed more uncertain, subject to chance. I don’t think US-China armed conflict can be called inevitable at this stage. But what matters is that if there is a chance, then the US must prepare as though it were likely to happen.
That means making industrial mobilization a standing program. Leadership in the United States must prepare itself where China has its most decisive advantage: industrial strength of physical (and increasingly software) products. There’s little doubt that China could more rapidly scale up production of, say, autonomous attritable attack drones. And while the US is better trained and equipped, it cannot sustain attrition. As Mark Cancian observed:
Eventually, according to the Army’s budget documents, production could surge to 28 per month. In other words, when fully mobilized, tank production would replace about two days of losses every month.
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