Investors believe that the next U.S. president – whether it’s Kamala Harris or Trump – will take a tough stance on technology policies towards China, but the approach may vary.
Regardless of who wins the U.S. election in November, both the U.S. and Chinese tech industries are expected to diverge, with the difference being Harris’ stable detachment or Trump’s unpredictable detachment.
Former editor-in-chief of the Hong Kong-based South China Morning Post, Wang Xiangwei, wrote in a July article citing sources familiar with the matter that Chinese Communist Party leaders spent a considerable amount of time discussing a person during a closed-door meeting at the Third Plenum – a person who could disrupt their plans from over 10,000 kilometers away.
According to sources familiar with the thoughts of the Chinese Communist Party leadership, the potential impact of Trump, who may occupy the White House for a second time in November, was a hot topic at the Third Plenum.
Eric Rosenblum, managing partner of Foothill Ventures, a venture capital firm, and one of the earliest signatories of “VCs for Kamala,” told Nikkei Asia that both the Democratic and Republican parties take a hard line on China in their positions, just with different approaches.
Harris, hailing from California, has a large number of IT and venture capital elite donors in Silicon Valley. California is a Democratic stronghold and traditional voting base.
Just on August 11, a tech fundraising event hosted by Harris in San Francisco attracted 700 attendees and raised $13 million in funds.
Harris was swiftly nominated by the Democratic Party as the presidential candidate following Joe Biden’s withdrawal on July 21. She officially completed the nomination process at the Democratic National Convention this week.
So far, her policy agenda is not well-known to the public. It is widely expected that Harris will continue Biden’s policies towards China and technology.
Biden’s administration restricted exports of chips to China and limited U.S. funding for advanced technologies such as artificial intelligence, semiconductors, and quantum technology in China. His cabinet has repeatedly stated they do not want to decouple from China.
The Nikkei reported that Darrell West, a senior researcher at the Brookings Institution’s Tech Innovation Center, believes Harris will not significantly relax technology export or investment restrictions because “American companies are still doing a lot of business in China.”
“He will take a tough stance on things with military applications, but I don’t think she wants to completely decouple from China and separate the two economic entities,” West said.
More and more American venture capital firms are separating their U.S. and China operations, including DCM Ventures, GGV Capital, and Sequoia Capital. However, many U.S. companies still hold substantial stakes in Chinese startups, and exiting could be a long and complicated process.
Harris has close ties to Silicon Valley. During her tenure as California Attorney General, she prosecuted tech companies for regulatory failures in online harassment. As a senator, she pressured tech executives like Meta CEO Mark Zuckerberg on Capitol Hill.
But she has also benefited from substantial political donations from many tech executives. Harris has not made a clear statement on antitrust and breaking up big tech companies; she is more cautious when discussing large tech companies compared to Biden.
Though Harris may continue many of the tech policy initiatives already initiated by Biden, it is expected that her approach towards businesses will be more friendly, especially as she may continue to focus on issues such as women’s reproductive rights, immigration, and democratic values.
Trump, with his unpredictable nature, has been a headache for Beijing. The former president has hinted at imposing new bans on U.S.-China investments and has vowed to exclude China from America’s “critical industries” to ensure U.S. investments do not aid the CCP’s development.
Trump said at a press conference at Mar-a-Lago, “China has taken our business like never before.”
In his first term, Trump initiated a trade war with Beijing and signed the U.S.-China phase one trade agreement, with his tariff policies being continued by the Biden administration.
For a potential second term, Trump has suggested imposing a 60% tariff on all Chinese goods imported to the U.S. Bloomberg Economics analysis shows that this move would nearly wipe out China’s planned $575 billion export to the U.S.
He stated that the tariff hike is meant to “bring businesses back to America.”
On his campaign website, Trump clearly outlines 20 policy points, including “stopping outsourcing and making America a manufacturing superpower,” and “preventing World War III, restoring peace in Europe and the Middle East, and establishing a massive Iron Dome missile defense system across the entire country – all made in America.”
Xiaomeng Lu, director of the Geotechnology Practice at the Eurasia Group, told Nikkei that Trump may compound the situation in different ways, including expanding restrictions on U.S. investments in China to cover more technology areas.
Lu added that Trump may also pressure U.S. allies and partners to strengthen restrictions on Chinese AI investors.
Another Silicon Valley venture capitalist focused on consumer technology told Nikkei, “For various reasons, investing in China has certainly become increasingly difficult in recent years.” He is concerned that Trump’s re-election may completely sever economic ties between the U.S. and China.
However, some speculate a shift in Trump’s views on TikTok; his stance towards China may take a step back.
Rob Atkinson, president of the Information Technology and Innovation Foundation, said Silicon Valley should not assume that Trump will adopt softer policies towards China than others.
He believes that the Biden administration thus far has had a “fairly narrow interpretation of how to restrict China,” with policies that are “controlled but limited.”
In domestic U.S. tech issues, industry executives and analysts have expressed that, while specific policies of the two candidates are yet to be seen, it is generally expected that Trump will have a looser regulatory approach than Harris, particularly in emerging areas such as cryptocurrency and artificial intelligence.
Rosenblum, who supports Harris, stated that both Trump and Harris have a tough stance on China, but their approaches differ.
“The Trump administration will vehemently (criticize the CCP) unexpectedly,” he said. “The Biden-Harris administration will be more predictable.”
Lu mentioned, “Even if Harris’ personal views on technology are not rooted in Silicon Valley culture, they are influenced by it. However, in the broader context of populist-driven anti-big tech public sentiment, she must align her views with the Democratic tech labor politics.”
For Trump, he initiated a trade war with Beijing in his first term, and his actions are often unpredictable and confrontational, but he also likes making deals.
Bloomberg noted a key difference between Biden and Trump – Trump’s approach carries a more transactional nature and often seems more like a solo act. Trump also had multiple disputes with American allies and adversaries over trade issues.
In contrast, Biden has built a broader alliance with shared interests in preventing Beijing from undermining the U.S.-led world order. For instance, Biden convinced the Dutch and Japanese governments to restrict the transfer of chip technology to China and limit the sales of critical enterprises like Dutch chip equipment giant ASML to China.