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Why China Faces an Uphill Battle to Develop Technology

SIMONE GAO: Another Chinese reaction to the DOC’s punishment of ZTE was that the Chinese magnate Ma Yun vowed to make China’s own chips. Do you think by developing these core technologies China can become independent of the international business regulations?

RILEY WALTERS: Yeah. It’s certainly possible for China to either become an indigenous innovator or autonomous innovator. There, of course, are costs with this. China, just like the United States, has become very reliant on the international market and innovation ideas from outside of their own borders. And so, while China, I think, could potentially domestically create the machine and software that ZTE requires, it’s going to be costly. And doing so will – it’ll have a heavy cost and it could potentially limit innovation and future growth prospects.

SIMONE GAO: China is the 2nd largest economy in the world, it is investing and purchasing a large number of Western companies. Do you think by expanding economic power, the Chinese Communist regime will eventually be able to replace the Western countries and become the standard setter for information technologies?

RILEY WALTERS: Yeah. I think China will have its limitations as it seeks to become the leader in a lot of these technologies. There’s talk about how China wants to become the standard setter and sort of the global powerhouse for a lot of emerging technologies. And I think what a lot of people, even within the United States, don’t understand is there’s still competition in standardized setting with all technologies. And almost in every sector. While China might be able to indigenously, as we were talking about, indigenously, domestically develop its own 5G, that doesn’t necessarily mean it will be implemented abroad. Some countries might be willing to adapt these standards, such as other emerging economies, but when we look toward the developing world, when we look toward Europe, especially Western Europe, United States, Canada, North America, it’s not necessarily something that’s for sure. So there will be competition, I think. And I think the Chinese government and Chinese companies will continue to see this going forward.