Chinese tech sector mired by spy allegations – Your Money

As the world’s two biggest economies go head to head in the race to dominate artificial intelligence, China’s tech sector faces a serious new threat – mounting global distrust.

China’s technology industry has been mired in global security concerns after the United States accused China’s Huawei of using its technology to spy on foreign governments.

Read: ‘Cold war’ heats up as Huawei bites back

Despite fervent denials from China, the allegations saw Australia ban Huawei technology from use in its 5G network and resulted in heightened scrutiny by New Zealand, Canada and the UK.

Speaking to chief business reporter Leo Shanahan, Nina Xiang, co-founder of digital platform China Money Network, said global distrust of Chinese tech has become especially problematic for Chinese companies looking to make their mark overseas.

“The degree of distrust and suspicion and alarm is very high. So this is a very, very important hurdle for all the AI companies in China if they want to expand their business elsewhere,” she said.

It’s left Chinese companies racing to make their products and services more transparent for an increasingly suspicious foreign market.

The global debate is especially pivotal to the development of AI, which is expected to be the next major game-changer on the technology front.

China has bold plans to be the world leader in AI by 2030, but to do so, it will need to edge out it’s biggest competitor, the United States.

US-China tensions

Donald Trump has accused China of stealing American intellectual property and of using Chinese technology to spy, slapping trade tariffs on billions of dollars of Chinese goods as punishment.

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That’s fuelled concerns about how much authority Beijing has over global Chinese companies such as Huawei and Alibaba.

“First of all, I think for most of the companies in China, the ownership structure is clear. Especially for public companies, you can clearly see who [are] the major shareholders,” said Xiang.

She also argued that state control of AI companies in China is limited because 80 per cent of funding comes from the private sector.

“The government would allocate the capital to a funnel fund so they’re not directly investing in companies at all, they are allocating seed capital to a funnel fund,” she said.

She also downplayed recent criticism from the US and EU that China’s government is profiting by forcing locally operated foreign companies to share intellectual property information.

“China really hasn’t achieved a lot on forced technology transfer,” she said.

“The foreign companies protect their IP and only give the portion of outdated technology to local Chinese pundits.”

The future of technology and who controls it may well rest on how China responds to this serious new threat.

Editor’s note: The segment that features in the above video was broadcast on 11 April 2019.

Watch the video above for more.

Read more: ‘Cold war’ heats up as Huawei bites back
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