Digest opened free editor

Rola Khaleda, FT editor, chooses her favorite stories in this weekly newsletter.

The writer is a professor at Hong Kong University of Science and Technology The author of “The New China Playbook: Beyond Socialism and Capitalism”

Technological jumps are rarely generated in comfort. They are forged in conflict, competition and necessity. From nuclear energy to space race, and now the artificial smart competition between the United States and China – innovation is accelerated when the risks are higher. The catastrophic tariff war of US President Donald Trump may cause serious economic pain on China, but it may also ignite a technological increase – not by design, but necessarily.

Although the most urgent economic challenge in China is still internal, 125 percent of American definitions give Beijing a clear excuse to act – to stimulate strongly and strategic support, and sharpen the survival instinct and double the technological excellence.

If Washington’s goal is to suppress China’s ascension, this is wrong.

Definitions are not only changing trade flows – but also directing resources and reshaping industrial structures. If Trump’s goal is to reduce the technological progress of China, he will retain low definitions on the bulk of Chinese exports to the United States, which leads to the country’s imprisonment in the basic manufacturing of low margin. He said he would encourage high -tech exports to China, while making sure that progress in its advanced components.

But this is the opposite of what is happening. Ironically, just as the “Chinese shock” prompted the United States to get out of low manufacturing, Trump’s shock drives China to re -allocate resources to higher and advanced technologies that compete directly with the United States.

Beijing extracted its conclusion: innovation and control of basic technology is the only sustainable defense against definitions. Companies with private technology-such as Huawei and BYD- is isolated more than customs tariffs and supply chain shocks. China imagines a new supply chain: regional production, technical sovereignty, and the global supply chain.

You do not have technology and innovation central To China’s national agenda as it is today. the “AI+” strategy It aims to quickly include AI in all possible sectors. Deepseek is a low -cost artificial intelligence model under restrictions. It is now published all over the world.

In 2019, a RMB200 billion The bottleneck technology fund has been created to ensure 70 percent of home replacement in critical areas within three years. China invests extensively in optical quantum computing, as it builds low -or -oriented satellite networks to compete with Starlink from Elon Musk and lay the foundation for commercial space stations. It targets penetrations in the chip industry equipment and leads the world in the density of the factory robot.

If China is drifting towards the highly led business schedules, then the shock of the customs tariff brings it back to economic basics. The trade war acts as a reset, which reaffirms the priority of growth and competition. Private sector support shows signs of revival. Tax relief policies and business -friendly policies They return.

Technological restrictions often have unintended consequences. Instead of stopping progress, they re -direct the request inward. Take semiconductor: China consumes a third of the global chips and once relied on American suppliers. The penalties did not reduce this request – they reinstated. Now, local companies such as SMIC reports record revenues and invest in research and development.

As the Chinese proverb says, good companies do not “lie” – they adapt. The first wave of Trump’s penalties raised the madness of globalization. Chinese companies have moved quickly to transfer production, expand new markets and change their business models. The transcript on the Shenzhen list now has 51 percent of the smart phone market in Africa. The Xiaomi smartphone maker derives 75 percent of its revenues from the outside.

The high tariffs accelerate the shift towards digital supply chains, the services and cloud infrastructure – trends that play strengths in China on digital platforms, artificial intelligence and e -commerce. Although it is still a manufacturing force, China represents less than 6 percent of the global service trade, which leaves a wide range of growth in this way. Explodes For goods.

History has seen this dynamic before. When Napoleon Shell tried to British trade through the continental system, Britain equipped Asia, Africa and the Americas, towards manufacturing and mechanization. The increasing costs and wage pressure were the motor of the steam motor, fabric mills and marine power.

The United States may repeat this error. If America makes great again its goal, Trump should not be afraid of comfortable China; He should be afraid of a restricted one.