Blockchain: Internet of Value/ Currency of Trust; Private cryptocurrency a misallocation among blockchain technology, say research & economist


  • Blockchain embodies the internet of value. How will it revolutionize our lives and our pockets?

  •  And, we look at the qualities Blockchain needs to spark mass adoption.

Blockchain, one of the buzzwords in technology, is set to rise in China. Recently,
Chinese President Xi Jinping underscored the fledgling technology as the country increasingly views Blockchain as key to future innovation. Has a digital game changer arrived? How will a boom in Blockchain impact our lives? Today we delve into the world of the new technology and talk to Don Tapscott, co-founder and executive chairman of the Blockchain Research Institute, to find out more.

Currency of Trust

Blockchain has the potential to be revolutionary. But, what hurdles must it overcome before it can hit the mainstream? In London, we invited Patrick McCorry, founder and CEO of PISA Research, a grant funded by a group of Blockchain companies, to decode this ever-changing world.

Private cryptocurrency a misallocation among blockchain technology, says economist

Cryptocurrency is digital-based cash among the internet world nowadays. Born from blockchain, this kind of “currency” is blooming in terms of high privacy. Acknowledging that, Nobel Prize-winning economist and Harvard professor Eric Maskin commented that private cryptocurrency is a misallocation.

“The most important application of blockchain so far has been cryptocurrency, and that is a terrible misallocation. In my view, cryptocurrency, at least private cryptocurrency like bitcoin is a mistake,” said Maskin.

“Because the public currency like RMB and U.S. dollar are much more useful than private currency. [Public currencies] they preserve the power of central banks to conduct monetary policy. If no one is using the dollar, then the U.S. monetary policy is useless. So I’m worried about cryptocurrency only to the extent that it reduces the use of currencies like RMB or dollar,” he added.

He also pointed out that cryptocurrencies could interfere with central banks’ monetary policies.

Meanwhile, Maskin supports the idea that blockchain is a technology. He noted that it is one of the exciting developments that have come along in recent years.

“Blockchain can make all sorts of transactions much easier and much more secure. It can also ensure that only the information that people need to have gets transmitted,” said Maskin.

“Blockchain is a way for me to guarantee that only what you need to about me gets told. And that’s valuable in a world where we’re beginning to worry about privacy issues,” the professor explained.

Besides, Maskin supports building the country’s own digital currencies. With the backdrop of e-payment booming around the world, Maskin said the digital currency can make transaction easier but it won’t have all of the unpleasant side effects of these private currencies.

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Blockchain with Chinese characteristics

 

 

 

How to outsmart smartphone scammers ?


You carry your smartphone everywhere. But the way you use it could leave you vulnerable to specific forms of identity theft, including robocall scams and hackers looking to hijack your phone number. — AP

Your smartphone is your confidante, your hand-held connection to the world – and one of your biggest vulnerabilities.

Scammers can take advantage of day-to-day tasks that seem innocuous, like checking a bank balance or charging a phone at a public USB port, to exploit personal information for their profit.

To keep that data safe, start by understanding the threats you face. Your phone has three main areas of vulnerability: its hardware, its software and your phone number. Each carries a risk, and there are steps you can take to mitigate them. Hardware vulnerability

A four-digit passcode alone isn’t enough to secure your phone’s hardware from intruders.

One weakness comes from the charging port. Think twice before plugging into a public USB jack for a quick charge at a cafe or airport.

“Any time you’re using a mobile port, you can be vulnerable to viruses or malware if you’re sharing it with other people who are plugging in their devices,” says Lisa Schifferle, ID theft programme manager at the US Federal Trade Commission.

Using a public charging port at an airport is like “finding a toothbrush on the side of the road and deciding to stick it in your mouth”, Caleb Barlow, vice president of X-Force Threat Intelligence at IBM Security, recently told Forbes .

Hackers can modify these ports to install malevolent software, aka malware, on your phone. Once installed, it can transfer your phone’s data to hackers. The hacked USB ports can also directly suck up your phone’s information. To avoid the risk, use your USB cord with your own charging block that can plug into a standard electrical outlet, or use an external battery pack.

For daily security, go beyond the four-digit passcode if possible, says Gary Davis, chief consumer security evangelist at the cybersecurity company McAfee. “Passcodes aren’t as effective as biometrics, like fingerprint readers or facial recognition software, because people can do shoulder surfing to see your passcode and get into your phone” if they steal it.

Software and network risks

Scammers can target your personal information using unsecured wireless networks and software vulnerabilities.

Network risks: Be wary of public WiFi networks.

“We advise against using public WiFi, but if you’re going to use it, avoid logging in to sensitive accounts,” says Allen Spence, director of product leadership at IDShield, an identity theft protection company.

To protect yourself from inadvertently using insecure WiFi networks, adjust your phone settings to avoid auto-connecting to WiFi.

Software: Hackers can exploit vulnerabilities in phone software. Schifferle of the FTC suggests consumers routinely check for and download software updates for their phones, because updates often include security patches.

Phone number vulnerabilities

There are two common ways that scammers target your phone number: robocall scams and phone number theft.

Robocalls: US consumers fielded nearly 48 billion robocalls in 2018, according to an estimate from robocall blocking service YouMail. That was a 57% increase from 2017.

A common scam comes from supposed representatives of the US Social Security Administration requesting you give your personal information or your benefits will be cut. If you get a call from a number you don’t recognise, don’t answer. That’s the best way to ensure you don’t get caught up in a phone scam. And know that government agencies won’t call you out of the blue seeking your personal information.

“You should never give personal info or money unless you have initiated the call,” Schifferle says. If you answer a call and realise it may be a scammer, hang up, she advises.

If you suspect your personal information was stolen by scammers, file a report with the FTC at identitytheft.gov .

Phone number theft: Scammers are stealing phone numbers, which can leave you vulnerable to other forms of identity theft.

The scam is clever: A malevolent actor calls your cellphone carrier pretending to be you, and after confirming some key information such as your mother’s maiden name, transfers your phone number to their device. You may not find out this has happened until you go to make a call and find that your SIM card has been deactivated.

Because phone numbers are often used as security keys, hackers may be able to get into many other accounts once they have access to your phone account. Make it harder to penetrate by avoiding common security questions, Davis says. “When you set up your security questions and answers, make sure you’re using really challenging questions that are going to be hard to figure out.” – NerdWallet/AP – Source link 

RELATED LINKS:
NerdWallet: Do you need identity theft protection services? http://bit.ly/nerdwallet-compares-identity-theft-protection-services
Forbes: Why you should never use airport USB charging stations http://bit.ly/forbes-airport-usb-stations
FTC: Report identity theft https://www.identitytheft.gov/
Sean Pyles Of Nerdwallet, The Associated Press

Related:

New phone scam imitates banks

https://youtu.be/lhHLuBQlSGUhttps://youtu.be/lhHLuBQlSGU

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American anti-China Hawks ignited the trade war, are Trump’s advisors


Illustration: Liu Rui/GT

US President-elect Donald Trump appointed Peter Navarro, a strident critic of China, as head of the new National Trade Council on Wednesday. Most of the Trump’s views in his accusation against China during and after the election are influenced by Navarro. Moreover, Trump’s special adviser Carl Icahn and Secretary of Commerce Wilbur Ross also take a hard line on the trade with China. The possibility of a potential trade war between China and the US after Trump takes office has come under heated discussion.

Trump’s Top China Expert Isn’t a China Expert

 

Peter Navarro doesn’t speak Chinese, and has scant in-country experience. Should that matter?

University of California at Irvine Economics Professor Peter Navarro, head of White House National Trade Council nominee for president-elect Donald Trump, arrives in the lobby of Trump Tower in New York, U.S., on Thursday, Jan. 5, 2017. A top congressional ally to Trump said Thursday that Republicans will repeal Obamacare, including some funding provisions, quickly while a replacement plan is due in “six to eight months.” Photographer: Albin Lohr-Jones/Pool via https://foreignpolicy.com/2017/03/13/peter-navarro-profile-national-trade-council-donald-trump-china-expert

The issue needs to be considered in the backdrop of a major adjustment of the US policies toward China. At present, there is a glaring contrast between the economic prosperity and political stability in China and the economic downturn and political division in the US, which stings the US policy elites who are steadfast defenders of the US hegemony and its role as the world leader. Those elites tend to believe that the increasingly powerful China has not made the changes approved by the US and is trying to upend the international order shaped by the US.

Thus, it has now gradually become an expectation for the incoming US government to discard the long-standing engagement policy and adopt tougher or more confrontational policies toward China instead.

Against this backdrop, the trade topics closely associated with employment and welfare have become more sensitive but quite effective tools for the China hawks to create an unfriendly public opinion against China. The China-US trade disputes are no longer simply economic topics, but have strong political and strategic implications.

The manufacturing industry is not only the foundation for the US economic recovery, but also the key to solving the unemployment problem and guaranteeing social stability. The imbalance of China-US economic and trade relationship is considered by economists represented by Navarro as the critical reason for the weakening US manufacturing industry. They believe that the current close trade ties have boosted China’s rapid development, whereas the hundreds of billions of dollars of US trade deficit with China has led to the current economic woes in the US. They also blame the US manufacturing companies that moved their factories to China for the high domestic unemployment rate.

In other words, the field of trade, which has long been regarded as mutually beneficial, is now considered by advisers of the incoming US government to be detrimental to their country’s interests. The US maintains that a major trade policy adjustment needs to be urgently pushed forward to give China a head-on blow.

Although bilateral trade generally works by following WTO rules, the US policy elites, represented by Navarro, maintain that their country’s serious inherent economic problems are caused by both China, which fails to address bilateral trade problems impartially, and the US government, which neglects the American public’s demands. They keep overstating China’s negative role to the American public, and thus have made full preparation for a big policy change toward China in the coming years.

Given the current policymaking atmosphere in the US as well as Trump’s picks of advisers, the US has a strong desire to make a major confrontational policy adjustment in its trade with China in the future. However, it still remains uncertain if the adjustment will directly lead to a trade war.

The high interdependence of bilateral trade indicates that any form of trade war provoked by the US will ultimately hurt itself. It is probably difficult for the Trump team to figure out how much self-damage their country is able to withstand.

During the election campaign, Trump denounced the greediness of Wall Street magnates and promised to create new jobs, but, ironically, the officials he appointed after winning the election mostly came from the Wall Street.

China’s economic power is no longer as it was before, and its defining power over bilateral relations in trade and all the other aspects is stronger than ever. It is impossible for China to sit back and let the US destroy the mutually beneficial situation in trade. Instead, China will firmly push forward the future bilateral ties under the concept of building a new type of major power relationship.

In contrast to the uncertain US trade policies toward China, China’s policies toward the US are clear and concise: get rid of any barriers and push forward bilateral relations in a stable and mutually beneficial direction. The evolution of China-US relationship has always been a process of moving forward and addressing various conflicts along the way. It is hoped “the China-US trade war” will only be a verbal clash, instead of a clash in real action.

By Li Haidong Source:Global Times Published: 2016/12/25 13:43:39

The author is a professor with the Institute of International Relations at China Foreign Affairs University. opinion@globaltimes.com.cn

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US anti-China hawks may yet scupper trade deal  

Right after the G20 summit in Japan, US Senator Marco Rubio made the headlines again by calling for legislation to continue the ban on Huawei, even after US President Donald Trump said he would lift some of the restrictions on US companies doing business with the Chinese tech giant.

Image result for US Senator Marco Rubio an Anti-China Hawk imagesSenator Rubio Prepares To Blast China …
forbes.com

 

Rubio is a salient representative of the US political extreme. Some US politicians appear to take advantage of the split in US society and are using their extreme political views to gain more voters as well as please different political groups. This actually reflects the increasingly prominent malfunction of US politics.
It is an important reason why China is concerned that the US-launched trade war against China will not end in the short term.

We believe there are rational people who know China well at the US government’s decision-making level. Even so, lawmakers like Rubio have gone too far. They are not messing with China but rather wearing down the credibility of US politics.

The US political system is becoming increasingly flawed. Many politicians deliberately act up to firmly oppose anything that would benefit China for the sake of being anti-China. That the political landscape is becoming extreme in the US is providing these politicians with the opportunity to play to their base if they show an open anti-China stance.

Rubio is one such politician. He paints himself as being hostile to China to draw attention. Despite the fact that the trade war and the Huawei ban are harming the interests of the US, Rubio insists on this excessively tough stance toward China because that could spark controversies which could end up favoring him.

This is what Rubio, an unsuccessful candidate for the Republican presidential nomination in 2016, needs to fulfill his political ambitions. Such narrow-minded thinking has de facto escalated the US-launched trade war against China.

Rubio doesn’t understand China and probably barely knows China’s history. But taking advantage of being anti-China, he can create hot debates and make headlines, and thus gain more assets for his political career.

Even though people who don’t know much about the world’s second-largest economy can be a senator in the US, it is a joke that someone like Rubio can pretend to be a China hand and comment on China’s policies. This is one of the key reasons for the ratcheted-up tensions between China and the US.

The fundamental split in the US political system provides openings for hawkish politicians who have long been hostile toward China. The US is now in the throes of the 2020 presidential campaign, when candidates vie with each other to make outrageous remarks to appeal to their supporters.

This marked increase in radicals in US politics makes it much more difficult for the US government to function normally and for Republicans and Democrats to reach compromises, especially on major issues.

Even though there are signs of China-US trade frictions turning around, as the US political system will not fundamentally change in the short term, China must remain vigilant and prepare for a long-term trade war, in case the hawks gain the upper hand.

By Xu Hailin Source:Global Times Published: 2019/6/30 19:53:39

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Xi-Trump G20 meeting in line with global expectations, agreed to restart trade talks; Trump meets Kim at Demilitarized Zone


Robot monks in Longquan monastery, Zhen Robotics delivery bots, the AI-powered Baidu Park in Beijing, are examples of how far China has come technologically. Its tech rivalry with America is at the heart of the US-China trade war that has embroiled companies like Huawei.

The agreement reached between Chinese President Xi Jinping and his US counterpart, Donald Trump, at the 14th G20 summit in Osaka, Japan, is in line with the best expectations of international public opinion. Given the fact that the Sino-US trade talks have run hot and cold in the past, opinions are divided over whether the new round of trade talks will successfully do the job.

The agreement has broken the deadlock between China and the US. However, Beijing and Washington still face the arduous task of implementing the consensus reached between the two presidents while overcoming differences during the negotiations.

During the meeting, Xi and Trump clinched a deal to restart economic and trade consultations between their countries on the basis of equality and mutual respect. The US side also agreed that it will not add new tariffs on imports from China. These deals add new possibilities to end the year-long trade dispute between the world’s two largest economies that has been deadlocked since May.

It is not a big surprise for Xi and Trump to reach such an agreement. The outcome is logical and guided by the principles of trade and economy. It is also in accord with the general expectations of the international community. Such a result is undoubtedly in the interests of both the Chinese and US societies as it frees people in both countries from the fear of an escalating trade war.

None of the business communities or general public in China and the US want a trade war against each other. In the US, the initiator of the trade war, the call to end the dispute is gaining more and more support. To sum up from all perspectives, the result of the meeting complies with the real expectations and desires of both societies.

Nevertheless, China-US trade tensions have not been completely settled. There is no winner in this current dispute. Public opinion in both countries will likely be critical of an “incomplete victory” against the other. It is a situation similar to the ice-breaking movement made by China and the US to solve trade issues last December. The US media has a tradition of thriving on criticism. In that case, some US media are expected to argue that Washington has made too many concessions to China. The Democrats will also take it as an opportunity to mount pressure on the US government. These uncertainties come from the US and are its own internal concerns.

The situation after resuming economic and trade consultations between the two countries is even more critical. It is worth noting that the Trump administration has repeatedly contradicted itself in the past. The complexity of the power structure of the US government, a divergence of opinion within the administration’s team and the need to win the 2020 presidential election are foreseeable reasons for its reneging. Not only has China been on the alert for such changes, but also the international community has learned from the US’ historically ambivalent attitude. It will take a while to see what the Trump administration will do this time.

As for China, it is important to keep a clear mind and strong determination in this situation. As it turns out, China’s perseverance in the fight against the trade bullying policy of the past few months has played an important role in reaching a positive result with the US side at the Osaka summit. China is willing to work with the US to find solutions. However, it’s getting more and more clear that China is not afraid of a trade war and will not be beaten by one. A strong image is essential for China to reach an equal and mutually respectful agreement in discussions with the US.

China is committed to a peaceful development policy. China has not been involved in any war, nor severe conflicts with other countries in the past 30 years. As a result, some people doubted the possibility of China standing firm and staying strong when confronted with strategic challenges. Now, they have a clear answer from China’s performance during this dispute. China is under the strong leadership of the CPC central committee and the Chinese government has the courage to take responsibility and make decisive decisions. Chinese society has actively responded to the government’s call, and the whole nation has shared the ups and downs of a difficult situation. Cohesion has been the collective belief of the Chinese public. External threats will not force their way into Chinese society.

China has no intention of benefiting from defeating other countries. China sincerely hopes that all parties will enjoy a win-win situation through interaction and cooperation. Diplomatic interactions between China and the US over the past few decades have served as a multiplier effect to boost their national interests. A trade war on a large scale is out of the expectations of both the Chinese government and Chinese public. There is no doubt that China is willing to push forward China-US economic and trade cooperation to keep pace with the times and bring the interests of both sides in line with each other. China has no strategic resistance to such cooperation.

However, the duress of unilateralism does nothing to help solve the problems between China and the US but rather it causes severe unrest and damage to both sides and the rest of the world. If China and the US can meet each other halfway and reach consensus on key issues, then the two sides will find a solution to the trade dispute that is acceptable to both countries and beneficial to the world.

After a lot of fine tuning, Chinese society has grown mature enough to deal with any profound changes there might be in the China-US relationship. Chinese people are well-prepared for any possible uncertainty in future trade talks. The path of China’s development will not always be smooth and that is accepted by the Chinese public. Chinese people will not be surprised by any potential turmoil in China-US economic and trade relations, and they know China will handle it accordingly.

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Trump meets Kim Jong Un at Demilitarized Zone 特朗普抵达板门店与金正恩会面

N. Korean glorious welcome for Predident Xi, China…

Calm attitude needed for future China-US trade negotiations

The meeting between Chinese President Xi Jinping and US President Donald Trump on sidelines at the G20 summit in Osaka broke the deadlock between the two countries sinceearly May. According to a briefing by the Chinese side, the two sides have agreed to restart trade consultations with the US declaring not to impose new tariffs on Chinese products. Trump said his meeting with Xi was “excellent” and “we’re right back on track.”
 At G20, Xi leads chorus for multilateralism

 US may lift ban on Huawei; industry representatives happy

World must contain capricious US actions

The G20 summit is being held in Osaka, Japan with the most pressing global tasks and anxieties on the table for the group of te world’s largest economies. We are in an era where advancement and problems coexist. Whether the problems can be seriously tackled depends, to a large extent, on the attitudes of the leaders in Osaka.


The G20 Question: Will there be a truce in the trade war?


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Tech war exposes urgent need for talent

 

Trade war involves science, tech strength: Huawei founder

Chinese students have increasingly become interested in participating in math contests organized by elite US institutions. Photo: IC

The escalating China-US trade war, which has become a new cold war in technology, has made attracting talent an urgent task.

The recent call by the founder of China’s Huawei to enhance the country’s fundamental education system was echoed across Chinese society, while observers emphasized the importance of science and math.

In a recent interview with China Central Television aired over the weekend, Huawei founder and CEO Ren Zhengfei, whose company is now in the middle of the China-US trade battle, reiterated the importance of fundamental education and research instead of spending too much time talking about his company’s future.

The 75-year-old entrepreneur said that he cares about education the most because he cares about the country. “If we don’t attach importance to education, we’ll actually return to poverty,” he remarked.

Huawei’s founder Ren Zhengfei meets the media in Shenzhen, South China’s Guangdong Province, earlier this month. Photo: Courtesy of Huawei

The country’s development relies on culture, philosophy and education, which are fundamental, Ren said. And the escalating China-US trade war involves strength in science and technology, which comes down to the level of education.

His remarks put the focus on basic education.

Wang Lixin, vice mayor of Shenzhen, a city that is often seen as the new Silicon Valley as it gathers hundreds and thousands of high-tech firms, said at a recent conference that fundamental research is important to not only Shenzhen but the whole country.

“In the 1980s, we often said if you learn math, physics and chemistry well, you will achieve anywhere. Then we had doubts, as working in finance, economy or design would earn you more money. Considering the current situation, it’s time to bring up that slogan again,” Wang was quoted as saying in media reports on Sunday.

As part of broader efforts to strengthen science and technology, Shenzhen, which is now at the forefront of the China-US tech battle, where tech firms such as Huawei and DJI being targeted by the Trump administration are located, has vowed to invest one-third of its science and research funding to fundamental research, to the tune of over 4 billion yuan ($580 million), reports said.

On China’s Twitter-like Weibo, net users praised Ren’s call and considered improving the country’s education system as the most urgent task. “High-tech growth cannot be supported only by a huge amount of money. Only with continuous efforts in fundamental education can the goal be achieved,” a netizen said.

A mother surnamed Song, who lives in western Beijing’s Haidian district, said she has always insisted that fundamental education should not become a heavy burden for children. However, the escalating trade war, especially the Huawei incident, has made it more urgent to enhance the country’s overall STEM education, she believed.

STEM stands for science, technology, engineering, and mathematics, and these academic disciplines are often seen as fundamentals for a country in a race for high-tech supremacy.

“I’m thinking about sending her to an afterschool training course on mathematics this summer,” she told the Global Times on Monday, referring to her 7-year-old daughter, who is now living at an increasingly competitive environment.

Fundamental research

As the world’s two largest economies spar over tech, Chinese industry representatives are considering enhancing fundamental education, including science and math, as a major task, especially after many Chinese parents have been complaining in recent months about the current dogmatic policies of stifling rising talent.

The authorities’ latest move to ease the schoolwork burden on primary and middle school students also weakened science and math education, and the ban on extracurricular coaching for Olympiad-style contests issued in 2018 will seriously affect the cultivation of talented students in STEM, analysts said.

“This one-size-fits-all approach will hurt fundamental education in the country and make our children fall behind their American counterparts in the future, which needs to be corrected,” Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times.

The Ministry of Education issued a guideline in December 2018 to ease academic burden in primary and middle schools. The guideline says primary and high schools are forbidden from hosting math Olympiads to recruit students. The move follows a change in policy on stopping the awarding of extra points to students who have won academic Olympiads or science and technology competitions.

But parents also applauded the government’s efforts to ease the children’s burden, while some advocated a happy-elementary-education approach.

Ren said he attaches great importance to fundamental research, and the country should invest more in developing mathematicians, physicists and chemists instead of just pouring money into industries.

The US clampdown on Huawei, as part of the China-US tech battle, will stimulate technological self-reliance while boosting scientific research and innovation, as US sanctions also exposed the country’s high-tech Achilles’ heel due to Huawei’s reliance on American technologies and core components reflecting the overall shortcoming in the sector.

It’s becoming more urgent for Chinese tech companies to attract talent, as the tech war will eventually become a battle for more talent, analysts said.

“Our country has to have an awareness of crisis, and to clearly see the real gap between China and the US in education,” Chu Zhaohui, a research fellow at the National Institute of Education Sciences based in Beijing, told the Global Times on Monday.

For instance, American students have a deeper understanding of natural sciences and mathematics, as they learn by following their own interests, he noted. “How to arouse the interest of Chinese students in science and technology, which will lead to better fundamental research, remains a challenge,” he said.

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US technology sector faces triple threat


Uncertainty over the future of US-China economic relations has derailed the once high-flying global equity market, which rose almost 15 per cent in the January-April period.

Clive McDonnell, head of Equity Strategy at Standard Chartered Bank, looks at the causes behind the decline.

The technology sector, now facing challenges on a number of fronts, is supposedly the main cause behind the decline.

While President Trump’s policies get blamed for a lot of events impacting global equity markets, he is probably less responsible for the upset in the technology sector than many would have you think.

There are three primary challenges facing the US technology sector:

1. The sector’s high overseas revenue share: over 60% of total revenue comes from

abroad.

2. The threat of regulation on accessing and using personal data.

3. Monopoly powers and the risk of an antitrust investigation.

Let’s consider each factor. US economic growth appears resilient in the face of weaker growth prospects in the euro zone and emerging markets.

However, since US technology companies generate more than 60% of their revenue from overseas, they are acutely sensitive to slower growth prospects outside the US. In the past, they have been able to offset slower growth in the euro zone with robust growth in emerging markets led by China.

The next downturn may witness slower growth in both regions, which would leave US technology companies exposed relative to US banks and utilities which have the lowest overseas revenue exposure amongst US companies.

Additionally, there is a risk that China responds in kind to the US President’s targeting of Chinese technology companies. There is also a risk that US dollar strength creates a negative effect on US technology sector earnings once overseas revenue is converted into US dollars.

The threat of regulation on accessing and use of personal data looms large for technology companies, particularly those in the social media space. Europe has been at the forefront of regulating use of personal data via the General Data Protection Regulation (GDPR).

These regulations changed the balance of power between individuals and companies over the use of personal data. The rules give EU citizens more control over their personal data held by companies and the right to have their data removed from databases, the so-called “right to be forgotten” law.

The challenge for US companies is these rules cover their processing of personal data in Europe, regardless of the residential location of the individual generating the data.  

The rules give EU citizens more control over their personal data
held by companies and the right to have their data removed from
databases.

Similar to the long arm of US financial regulators – which impact banks regardless of where they are incorporated once they engage in US dollar transactions – European rules on personal data are impacting US technology companies in ways that are not covered by domestic laws.

The central business challenge for US technology companies, in particular those in the social media sector, is their business models are built on free access to consumer data in exchange for free use of their software, including search, email and productivity tools, such as those available on Google Drive.

If these companies lose unfettered access to personal data, they would likely start charging consumers for use of the same software.

This, in turn, will have a significant impact on their advertising revenues, as the precision they have been able to offer companies targeting customers would decline. No doubt their business models would evolve, but this could be at the cost of lower net margins relative to the near-20% margins they currently enjoy.

Finally, the perceived monopoly power of some of the sector’s leaders and the resultant risk US technology companies face from antitrust investigations is probably the biggest risk to the sector.

The definition of monopoly power in the US, focusing on the short-term price impact on consumers from company actions, has been unchanged for over 40 years.

Specifically, if company actions lead to higher prices, it could be designated as a monopoly (and importantly, the reverse also applies). This is relevant for technology companies as many have helped to lower prices for consumers.

The definition of monopoly power is changing. This is led by Lina Khan, a Legal Fellow at the Federal Trade Commission and an academic Fellow at Columbia Law School.

In a paper, entitled “Amazon’s Antitrust Paradox (1)”, she challenged the current interpretation of antitrust law which is designed to curb monopolistic power. She proposed that lower prices were not necessarily good for consumers if prices were used as a tool to choke off competition and eventually restrict consumer choice.

The primary tool available to technology companies to manipulate consumer choices (and some would say restrict competition) is their search algorithm.

Whenever a social media or e-commerce company implements a change to their search algorithm, the ensuing uproar amongst its users and customers is a measure of the importance this tool has to drive sales and choices for consumers.

The search algorithm assumes unique power once a platform becomes dominant in an industry and consumers no longer look at other platforms as they believe that their chosen one offers them all the choice they need.

The risk is: their choices are being determined by companies who pay more to appear higher up the search results than those which pay less, even though the latter companies may offer lower prices.

If regulators’ definition of monopoly power evolves, as Lina Khan suggests, there is a risk of antitrust investigations against US technology sector leaders, with penalties ranging from fines to reversal of prior acquisitions.

The challenges facing the US technology sector have converged at a time when valuations are elevated and earnings growth has weakened.

They are shining a light on their business model, which can undoubtedly evolve, but may require changes that the market is not currently anticipating.

Clive McDonnell is Head of Equity Strategy at Standard Chartered Private Bank.

The views expresssed here are entirely the writer’s own.

 

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US block spurs tech independence drive by Chinese companies

The latest US blacklisting of the Chinese supercomputing companies will not reduce domestic technology companies’ resolve to pursue innovation and research and development (R&D) as they strive to make up for shortcomings in certain segments to pursue further growth despite “irrational assaults” by Washington, industry insiders said.

 

Innovation is a driving force within China’s economy today. Yet behind that innovation, what’s the role of research and development?

 

US hypocritical in accusing China of tech theft


Photo: IC

https://youtu.be/tGD072hQGP8

 

 

The US has no lack of a “criminal record” in terms of technology theft.

 

The US has repeatedly ignored China’s innovative breakthroughs through self-reliance and hard work but accuses China of “stealing” US technology and intellectual property rights. These arguments do not hold water.

These absurd accusations imply that the US must be the absolute leader in technological innovation – only the US is qualified to make major breakthroughs while others should merely follow its lead and import its technology, otherwise they are “stealing.” Such logic is ridiculous.

A country’s technological innovation capability is closely related to its scientific research resources, such as talents, capital, and scientific experimental devices. Leading scientific research resources have determined the US leading position in various science and technology fields. Nonetheless, economies including the EU, China, Japan, Russia and India have also mastered considerable scientific research resources and developed technological innovation capabilities with their own characteristics and advantages.

It is due to such relatively scattered distribution of global research resources that the US can never be an “all-round champion” of technological innovation. It is natural that other countries will catch up with the US in certain fields.

Historically, the US made a great fortune during WWII, and out-competed the Soviet Union in terms of comprehensive national strength during the Cold War. Even so, the US failed to gain absolute dominance over the Soviet Union in technological innovation.

As a major technological innovator keeping pace with the US, the Soviet Union set multiple world records in its golden age. The world’s first nuclear power plant, artificial earth satellite, manned spacecraft, space station and intercontinental missiles were all built by the Soviet Union. As far as weapons and equipment are concerned, both the Soviet Union and the US had something in which they excelled. Even now, Russia, the successor state to the Soviet Union, surpasses the US in some respects.

The US made its first nuclear power plant, artificial satellite, manned spacecraft, and intercontinental missiles after the Soviet Union’s success. Based on its current logic, should these US cutting-edge technologies be regarded as something stolen from the Soviet Union?

There are more examples. China led the US in the processing power of supercomputers for many years. In June 2018, the US retook the world’s lead thanks to its machine “Summit” which could process 200,000 trillion calculations per second. By following US logic, should we say the US surpassed China by stealing China’s supercomputing technology?

Some have already noted that the US is actually the guilty party that files the suit first. The country has no lack of a “criminal record” in terms of technology theft. In the first decades after its founding, the US tried hard to “steal” advanced industrial technology from the UK to develop its own industries.

During WWII, prior to Germany’s surrender, the US established the Alsos Mission. The team was sent to Germany not to fight, but to capture top German scientists and their technologies ahead of the Soviet Union. It is said that Wernher von Braun, one of the founders of the US space program, was a leading figure in Nazi Germany’s rocket development program.

When the Soviet Union collapsed, the US took the opportunity to obtain advanced military technology that the Soviet Union had accumulated for years and to lure away many top technical talents.

After that, plenty of US weapons benefited from the Soviet Union’s technology to varying degrees, which saved the US time and money. The US technology theft from the Soviet Union has produced generous returns.

However, the US is not ashamed of such records. Many Hollywood blockbusters have molded American spies conducting such theft into the embodiment of justice, and molded theft into a just act. Perhaps it is precisely because of this that the US is now judging others by itself.

In recent years, China has continued to increase investment in science and technology. In 2018, the country’s research and development funds amounted to nearly 2 trillion yuan ($290 billion), second only to the US. The efforts will naturally pay off.

Nevertheless, the US deliberately turned a blind eye to China’s efforts to promote independent innovation and contain China’s development. The past actions and current absurd logic of the US are being seen through.

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Innovation is a driving force within China’s economy today. Yet behind that innovation, what’s the role of research and development?

 

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