As the United States heads into the final days of its presidential election, speculation is rife in China’s technology sector about what the outcome could mean for its future. If Donald Trump, the Republican candidate, wins, industry leaders expect a continuation of the hardline policies he championed during his previous term, potentially escalating sanctions and trade restrictions on China’s tech industry. In contrast, a win by Democratic candidate Kamala Harris may offer a more stable, albeit stringent, trajectory for Chinese firms.
Tech executives across China have weighed the implications, acknowledging that both candidates present significant challenges for the industry. Yet, they see Trump’s famously erratic approach as a double-edged sword — potentially yielding both escalations in sanctions and sporadic opportunities to maneuver around restrictions. In contrast, Harris’s policies are expected to maintain the current administration’s strategic but steady tightening of controls on technology exports to China.
During his presidency from 2017 to 2021, Donald Trump initiated a trade war with China that marked a pivotal shift in the Sino-U.S. relationship. Citing national security concerns and unfair trade practices, Trump imposed tariffs on billions of dollars of Chinese goods and sanctioned high-profile tech companies, including semiconductor manufacturer SMIC and telecommunications giant Huawei. The effects were immediate, with China scrambling to reorient its tech industry, decrease dependence on U.S. imports, and develop domestic alternatives.
For China’s technology sector, a Trump victory could revive some of these pressures. Executives and analysts believe that his unpredictable, confrontational style would likely mean intensified sanctions, particularly in the semiconductor industry, as well as stricter export controls aimed at limiting China’s access to critical components like advanced chips.
“As the initiator of a comprehensive upgrade in the containment of China’s science and technology, if Trump comes to power again … the domestic semiconductor industry may be further suppressed,” wrote Shanghai-based brokerage Topsperity Securities in an August analysis.
Some Chinese industry leaders, however, believe Trump’s uncoordinated approach may hinder the effectiveness of U.S. sanctions. During his first term, Trump often made abrupt policy shifts, suggesting a willingness to negotiate or even reverse certain measures. His flip-flop stance on social media app TikTok, which he threatened to ban due to its Chinese ownership, exemplifies this tendency.
This unpredictability has led some in the industry to conclude that Trump’s reelection could create opportunities for China to exploit diplomatic rifts between the U.S. and its allies, who may be less likely to support unilateral U.S. policies against China.
“Trump’s criticism of U.S. trade relations with allies such as Europe, Japan, and South Korea — which in turn have interests in China — could jeopardize cooperation,” noted a July editorial on EETop, a platform for Chinese electronics firms. “In the globalized semiconductor industry chain, unilateral suppression by the United States is ineffective.”
Kamala Harris, the Democratic candidate, is anticipated to maintain the Biden administration’s strategic approach toward China, emphasizing a coordinated and calculated approach to export controls. Analysts expect Harris would continue to build on Biden’s framework of incremental yet comprehensive restrictions on Chinese tech firms, with a focus on fostering multilateral alliances to strengthen global support for such measures.
Harris’s policies, rooted in predictability and consistency, are seen by Chinese executives as a “long-term, coordinated, and predictable” threat. These measures could bring more stable but perhaps longer-lasting challenges for Chinese companies seeking to compete globally. The Biden administration’s restrictions on advanced semiconductor technology, particularly in areas such as artificial intelligence, have already constrained Chinese firms from accessing cutting-edge resources. This approach has also placed increasing pressure on Chinese tech firms to develop domestic solutions.
One key aspect of Harris’s approach involves leveraging alliances with countries that have advanced semiconductor manufacturing capabilities, such as the Netherlands and South Korea. The U.S. has successfully pressured the Dutch firm ASML to withhold extreme ultraviolet (EUV) lithography machines — crucial equipment for producing advanced semiconductors — from the Chinese market. Harris would likely maintain this diplomatic pressure to prevent China from acquiring essential technologies, thereby stalling its ambitions in sectors like artificial intelligence and advanced computing.
“Policies Harris would inherit from President Joe Biden are more long-term, coordinated and predictable, which may bring more stable but longer-lasting challenges to China’s semiconductor industry,” observed an editorial in Material Energy Times, a publication for Chinese firms supplying semiconductor materials.
Amid trade tensions and intensifying restrictions, China’s tech industry has made significant strides toward self-reliance. The trade war has seen a series of retaliatory moves from China, including restrictions on exports of rare earth resources crucial to various high-tech industries. At the same time, China has rapidly expanded domestic projects designed to replace foreign technology.
A Reuters review of government procurement projects illustrates this shift: while in 2016, China had only four projects worth over 10 million yuan dedicated to replacing foreign technology with domestic alternatives, by 2023, this number had surged to 169. Such initiatives indicate a robust move towards independence in key technology sectors, driven by both necessity and national policy.
China’s tech companies are now far less dependent on U.S. components, having invested heavily in research and development to create indigenous solutions. The semiconductor industry, for instance, has seen an increase in domestic suppliers and manufacturing capabilities, with significant funding directed toward advancing China’s self-sufficiency.
“We have slowed them down on semiconductors, but the other sectors like robots, you can dream on,” said Robert D. Atkinson, president of the Washington DC-based Information Technology & Innovation Foundation. “They can get everything they need internally.”
Export controls have become a defining feature of U.S. policy toward China’s tech sector. Both Trump and Harris are expected to continue using them as a key lever of pressure, with Harris potentially intensifying their application in a more organized and multilateral fashion. By constraining China’s access to advanced technology, the U.S. aims to limit China’s ability to develop cutting-edge military and technological capabilities.
In an August speech at the Economic Club of Pittsburgh, Harris emphasized the need to restrict the flow of advanced semiconductor technology to China, explicitly calling out Trump’s record on semiconductor exports and hinting at her commitment to preventing such exports under her administration. Her speech aligns with the Biden administration’s broader stance on reducing China’s access to dual-use technologies with both commercial and military applications.
This policy direction has impacted China’s artificial intelligence sector, where high-performance chips from U.S. firms like Nvidia are essential for developing advanced AI models. Despite restrictions, Chinese firms have continued to invest heavily in AI research. As of July 2023, China accounted for 36% of the world’s 1,328 large language models, second only to the U.S., according to data from the China Academy of Information and Communications Technology.
Given the intensifying technological rivalry between the two nations, Chinese tech executives have adopted a more pragmatic approach to future developments. Many industry leaders are now resigned to a “new normal” characterized by ongoing U.S. pressure, regardless of which candidate wins the election. The unpredictability of a Trump presidency, paired with the calculated approach expected from Harris, has led executives to focus on building resilience and speed in innovation.
“We’re operating under a new normal now,” stated an executive at a major Chinese technology company. “We are blind to know what might come next, so we just keep going, as fast as we can.”
This strategy of relentless forward momentum reflects the broader trend in China’s tech industry toward minimizing reliance on external technologies and intensifying domestic research and development. Regardless of the election outcome, industry leaders expect China to prioritize self-sufficiency and resilience.
