Trade restrictions set on foreign technology companies by the Chinese Government have created a tense situation in US-China economic relations.
Recently, China has had increasing problems with US software and technology companies that are looking to take full advantage of an enormous, and growing, market for internet services and technology products in China. These US corporations have taken offense to Chinese “security measures” that require heavy scrutiny of software, and backdoor access into programs by Chinese officials.
US companies are reluctant to hand over access to private information and data to the Chinese government. At the moment, these regulations apply only to banking software, but plans are in the works for more and more parts of the technology sector will be asked to capitulate in the future. The same companies, while displeased with the idea of giving access to government officials, have enormous incentives to give in and gain access to Chinese markets. They have asked the US government for help in addressing the issue in trade talks – but these talks have been unproductive and illuminate the distrust that the respective governments have in each others trade negotiations.
US companies will have to play each government carefully to achieve success in this circumstance. They need the support of the US government to maximize their own interest and privacy as companies, but cannot risk offending the Chinese government to the point of having large restrictions placed upon them, cutting them out of the huge profits to be made – ceding a niche to growing Chinese competition.
The growing protectionism of Chinese companies is troubling to foreign businesses. For years western countries have enjoyed relative dominance in Asian markets – especially those centered around technology. The growing competition is unwelcome, more so with the support of the Chinese state.
At this point, talks have been largely ineffective and stymied by allegations of monopoly and spying (especially after the NSA and Snowden scandals). Progress may come in the form of larger trade deals, but these have not come to pass.