Trump to target China’s cloud services, says Beijing a currency manipulator

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The U.S. plans to open a new front in the technology warfare against Beijing: This time it is targeting China’s Cloud services after Beijing imposed new regulations in the sector.

However, while the U.S. is pondering on responding to China’s latest technology restrictions on U.S. firms, U.S. President Donald Trump attacked Beijing calling it a currency manipulator on Twitter (see below).

Beijing has required U.S. cloud-computing firms, such as  Amazon.com Inc.and Microsoft Corp. to form joint operations with Chinese companies and license their technology to the Chinese partners.

Last week Page 1 reported that the ‘trade war’ between the U.S. and China was Trump targeting China’s technology rise in a bid to regain the upper hand in the vital sector.

Wall Street Journal said the U.S. is now examining ways to retaliate to these restrictions on U.S. providers of cloud computing and other high-tech services.

The U.S. trade representative’s office is putting together a fresh trade complaint, probably under Section 301 of the Trade Act of 1974, arguing that Beijing unfairly restricts U.S. trade in these high-tech services, said The Journal today.

The U.S. has so far imposed tariffs on a total of $150 billion in Chinese imports.

The U.S. believes the Chinese trade practices would not allow U.S. firms to operate independently in China.

As a result, U.S. companies can’t market their cloud-computing services in China or sign up customers directly. Chinese firms, such as Alibaba Group Holding, by comparison, are allowed to operate in the U.S. without restriction, said The Journal.

On April 11, the Pittsburg Post Gazette said the Trump administration might launch a similar investigation of Chinese cloud, financial and value-added telecoms services.

It cited researchers for consulting firm Eurasia Group said in a report.

“We remain concerned that the tariff imposition process could spiral dangerously out of control, given that this trade action is really less about trade and more about China’s rise as a technology leader,” the researchers said.

China’s latest attack on U.S. technology firms is in response to Trump’s threat to hike tariffs on technology imports from China.

Analysts said this strikes at the heart of Beijing’s state-led blueprint for prosperity and restoring the nation’s greatness.

However, the Pittsburg newspaper said both countries also have their own business interests in mind.

Most Apple Inc. iPhones are assembled in China, but they have parts from all over the world, like batteries from Korea or screens from Japan. China contributes the labor to put it all together, but that’s only around 1 percent of the cost of a $500 iPhone, Reinsch said.

“It seems that the U.S. trade representative was very much aware of the global value chains in keeping some of these items off the list,” said Dean Pinkert, a trade lawyer and former commissioner of the U.S. International Trade Commission.