The US-China rivalry is putting innovation at risk – is it worth it?

Back in January, we warned that an intensifying "Tech Cold War" between the US and China over technology and trade could plunge global innovation into a deep freeze as both countries impose fresh restrictions on the free flows of money, people, and information that (throughout history) have powered new ideas.

We're not at the winter solstice of innovation just yet, but the US's move last week to restrict Chinese networking equipment giant Huawei's access to US markets and technology sent an awfully chilly wind through the tech sector.

Here are two ways that a decoupling of the Chinese and American tech sectors could damage innovation in the US:

  • Less good money: Huawei spends roughly $10 billion a year buying hardware and software from US firms. Total Chinese tech industry purchases are many times greater than that. A portion of that money is reinvested by Silicon Valley in R&D to help develop the next generation of innovative tech products. If Chinese firms can't – or won't – buy from American companies, a lot of R&D cash will vanish.
  • Fewer good brains: US semiconductor companies are already struggling to hire highly coveted Chinese engineers as the Trump administration slow-rolls their visa applications over national security fears. But top tech talent is hard to come by, and there aren't always qualified workers from the US or other countries available to pick up the slack.

The upshot: The United States has plenty of well-founded grievances with how China runs its economy and its increasingly powerful tech sector. But the costs of Washington's more confrontational approach are already becoming apparent. Those costs will rise further if the US and China's deeply linked tech sectors decouple more fully and formally, as some China hawks in the US hope. At what point do the costs start to outweigh the benefits?

This month, a bipartisan group of legislators in Washington state presented new legislation that could soon become the most comprehensive privacy law in the country. The centerpiece of this legislation, the Washington Privacy Act as substituted, goes further than the landmark bill California recently enacted and builds on the law Europeans have enjoyed for the past year and a half.

As Microsoft President Brad Smith shared in his blog post about our priorities for the state of Washington's current legislative session, we believe it is important to enact strong data privacy protections to demonstrate our state's leadership on what we believe will be one of the defining issues of our generation. People will only trust technology if they know their data is private and under their control, and new laws like these will help provide that assurance.

Read more here.

Let's be clear— the Middle East peace plan that the US unveiled today is by no means fair. In fact, it is markedly more pro-Israel than any that have come before it.

But the Trump administration was never aiming for a "fair" deal. Instead, it was pursuing a deal that can feasibly be implemented. In other words, it's a deal shaped by a keen understanding of the new power balances within the region and globally.

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Betty Liu, Executive Vice Chairman for NYSE Group, explains:

Do election years have an impact on the markets?

So, the short answer is it depends. There's lots of factors that affect the markets, right. But there are some trends. So, the S&P has had its best performance in the year before elections and the second-best performance on election year. Now since 1928, we've had 23 election years and the S&P has had negative returns only four times in that duration.

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For months now, the US has been lobbying countries around the world to ban the Chinese tech giant Huawei from building the 5G data networks that are going to power everything from your cell phone, to power grids, to self-driving cars. US security hawks say allowing a Chinese company to supply such essential infrastructure could allow the Chinese government to steal sensitive data or even sabotage networks. On the other hand, rejecting Huawei could make 5G more expensive. It also means angering the world's second-largest economy.

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The end of the interim in Bolivia? – Mere months after taking over as Bolivia's interim president, Jeanine Áñez has decided that "interim" isn't quite permanent enough, and she now wants to run for president in elections set for May 3. Áñez is an outspoken conservative who took over in October when mass protests over election fraud prompted the military to oust the long-serving left-populist Evo Morales. She says she is just trying to unify a fractious conservative ticket that can beat the candidate backed by Morales' party. (Morales himself is barred from running.) Her supporters say she has the right to run just like anyone else. But critics say that after promising that she would serve only as a caretaker president, Áñez's decision taints the legitimacy of an election meant to be a clean slate reset after the unrest last fall. We are watching closely to see if her move sparks fresh unrest in an already deeply polarized country.

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