Recently, Jay Richards interviewed Dr. Bob Kelly, Managing Partner of Ignition Partners, focusing on the panel he moderated at COSM 2019,“The Crisis of Big Tech: The US and China.” They explored the technological competition between the U.S. and China and what it means for the future. The panelists were futurist George Gilder, Wendy Liu, China market strategy analyst at multinational investment bank UBS, and Gary Rieschel, a venture capitalist in China and the United States.
From the interview:
Jay Richards: So what was the core controversy if you had to summarize it neutrally?
Bob Kelly: I guess I’d say the core controversy really is what stance do we as Americans, or in the technology arena, take towards China? And there’s a spectrum of views to be taken on that, and you saw them all, right? George Gilder, very vocally arguing we just cannot shut ourselves out of the Chinese market. We can’t shut it down for us and we can’t shut us down for them. If we want to maintain a level of leadership in technology and business on a global basis, we can’t shut off the biggest market in the world as consumers or producers.
Then you’ve got Gary who has a perspective of an investor. And thinking about what are the dynamics of investing in entrepreneurship? Because he’s an early stage investor, not a late stage. He’s been seeding in Series A companies for decades. And the kind of innovation he has been a part of, I mean, he’s very modest, but he’s one of the largest investors in Xiaomi, and was one of the biggest investors early. So he’s been a part of the growth of the entrepreneurial model in China.
And then Jim. You had a very unique perspective as an American company trying to operate in a global basis. He has 75% of his production done in the U.S., 25% done in mainland China. So he actually knows what he’s doing and how he’s dealing with it. But there’s a level of frustration from that perspective. So you’ve got those really interesting points of view. And then Wendy giving us that wonderful backdrop on how to just think about the growth that’s happened. Like Shenzhen going from literally 30,000 people to 24 million over a 17 year period, it’s just unimaginable, right?
Jay Richards: Yeah, it really is. And so, I mean, I spent all my time Econ 101 stuff, trying to tell people that, “No, trade can actually benefit both parties.” The simple stuff. China’s complicated, obviously. And a part of the discussion was, “Okay. Look, maybe in the political context, maybe the president is saying things that aren’t necessarily helpful, but there are some basic things that China’s doing based on prior agreements.” I mean, what is your sense about what would be the most positive way forward realistically?
Bob Kelly: I think Gary hit it on the head, and he said, “Look, we can try and boil the ocean or we can just try and get some things done.” And the get some things done is we have agreements in place with the WTO between the U.S. and China, and between China and the rest of the world, and those agreements aren’t being met. And so, the simple thing is rather than try and boil the ocean and try and shut off the market, or just create some kind of digital wall between the U.S. and China, is to actually hold the Chinese government accountable to the things that they agreed to, and start there, right? And if you get some motion on that, it’ll get a little bit of breath in the system. People will start to calm down just a little bit if they see that the Chinese are actually going to stand behind their word. That’ll change some of the market dynamics right now.
Many issues divide the United States and China today, including
– The United States has blacklisted 5G communications giant Huawei due to security concerns, prompting other countries and non-US firms to follow suit.
– The crackdown on the democracy movement in Hong Kong and the systematic suppression and internment of the Uyghurs has shattered hopes that China intends to move toward a more transparent, rights-oriented system of government.
– China’s new Wolf Warrior diplomacy has unsettled many nations worldwide, nations that had hoped for a more friendly relationship.
Many people just want to do business with China. But, as the panelists acknowledge, the conundrum is that the current situation challenges—even for big players—just what it means to just do business with China.
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