Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

For all his rhetoric about building a wall along the Mexican border, Donald J. Trump may build an even bigger barrier against China.

During his campaign, Trump labeled China a currency manipulator and accused it of stealing American jobs. If the President-elect lives up to his vague promises, he would alienate the largest export market for some of the country's most important companies.

Chinese Love Affair
Apple and Qualcomm are seeing an increasing proportion of their sales coming from China as takings elsewhere slow
Source: Bloomberg
Note: Apple data is for Greater China, which includes China, Hong Kong and Taiwan.

Already China has been looking for excuses to reduce its expenditure on U.S. goods. A 2015 antitrust case brought against Qualcomm Inc. ended in a Pyrrhic victory for the San Diego-based chipmaker, but the message to Western corporations was clear: You operate in China under our terms. With half its revenue coming from the Middle Kingdom, being able to keep selling there with reduced royalties was far better than the alternative.

With global smartphone sales slowing, and its own revenue shrinking, Apple Inc. also needs to stay in China's good books. Having the president of its home nation hurling abuse at China from 6,000 miles away won't enamor Beijing or its citizens.

Sales Slide
U.S. technology companies are facing slowing growth amid weakening global demand for electronic devices such as smartphones
Source: Bloomberg
Note: Data is for fiscal year ending September. Figures for 2017 are analyst estimates.

If Trump then follows through on his promises to use whatever means necessary to push back against China and drag manufacturing jobs home to the U.S., the fight could quickly turn from rhetoric to action. China has all manner of tools at its disposal to stop Qualcomm chips, Apple iPhones or Boeing Co. jets from being imported, from standards licensing to yanking government support for mobile operators and outright bans on specific products or firms.

Such bans would not only hurt America, but bolster Chinese President Xi Jinping's campaign to make the country technology-independent. With unlimited funds at its disposal, the Chinese government hasn't been shy about its willingness to spend whatever it takes to develop semiconductor, networking, aerospace and other technologies.

The U.S. may be the world's largest economy, yet it is China that is a larger contributor to economic growth. And in terms of job creation and economic stability, growth matters more.

If Trump builds a wall around China, you can be sure the U.S. will pay for it.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Qualcomm had to pay a fine, but its business model remained intact.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net