Michael Sainsbury
January 18, 2017

Trump, China and impact on tech

Inauguration

Trump, China and impact on tech

Donald J Trump: The 45th President of the United States of America. Yup

As a visibly frightened world braces itself for what is already the most wildly unpredictable administration in at least 100 years.

With Donald J. Trump about to become the 45th President of the United Sates of America, the Barack Obama mantra of “Yes, we can” has been replaced by the more aggressive “Yes I absolutely will. Probably.”

This is collective hope replaced by authoritarian diktat.

The promises, false promises and outright lies have come rat-ta-tat-tat at his modern-day Nuremberg rallies, where he assured the crowds – weary and down-trodden by the relentless corporatisation of the US – that he would usher in era of change, make them wealthier, and wave his magic wand to expel both corruption and governmental stasis from Washington.

The concerns are almost endless and at the top of the heap are the big two: The threat to the global economy, and the threat to world peace.

His decision to scrap Obama’s landmark US healthcare program and impose heavy restrictions in immigration are each probably enough to upset the still stuttering growth.

Recovery in the US under Obama, together with China’s continued growth – which is not nearly as impressive as the numbers suggest, but still very important – has shouldered the burden of continuing to drive growth in the global economy.

We have already seen what has happened when China’s economy – the world’s second largest – runs into trouble: It hits almost every other country.

And no country in the world feels this as sharply as Australia with the Middle Kingdom taking about one third of our exports and accounting for about the same proportion in two-way trade.

People may have noticed, with shock or at least surprise that the strangely buoyant Australian economy ‘suddenly’ went backwards last quarter.

But any one paying attention to China’s mounting woes had been waiting for this to happen for some time.

Not only is Trump threating the healthcare of 32 million Americans and the North American Free Trade Agreement, he has threatened more than once to effectively start a trade war with China.

He wants to bring manufacturing jobs back from China to the US. Now while a couple of car makers (who would no longer be in existence if not for the help of Obama) have made token deals so that Mr Trump will focus on others, this simply won’t happen across the board.

The economics of their business will change sufficiently take companies either go bust or change to less labour intensitive product mix.

Apple, to take the tech sectors biggest player, cannot sustain its margins using US labour. And in any case, it is automation, not cheap offshore labour that poses the greatest threat to manufacturing jobs

Nonetheless, the tendency towards protectionism is another serious concern for the global economy.

It’s worth noting that China has already moved to counteract this by sending Chinese tech gazillionaire, Alibaba founder Jack Ma, as an unofficial business envoy for a meeting with Trump.

And if anyone knows how to play the big rhetoric/empty promise game, it’s China.

Jack Ma came armed with a detail free promise that he would ‘create’ a conveniently large and round number of jobs in the US – a cool 1 million, he said – by small business selling into China.

Just how small US companies are expected to understand how to appeal to Chinese consumers and business, is anyone’s guess, but it’s not something you can look up on a Youtube “how to” video.

Meanwhile, Mr Trump’s anti-China rhetoric is only likely to accelerate Beijing’s company-by-company program of replacing the software and hardware of US tech giants with its “homegrown” versions, by and large reverse-engineered.

If any of these threats are delivered on, the US – and ergo the worlds – economy is seriously threatened.

If he delivers on it all, then head for the hills.

And all that is if he doesn’t start an actual real war with China first, after his Secretary of State designate Rex Tillerson declared in his Senate confirmation hearing that the US would prevent China from accessing the artificial island it has built in disputed parts of the South China Sea.

China’s response was aggressive unhappiness.

The almost universally liberal, genuinely philanthropic billionaire bosses of the US technology sector see Mr Trump as a very different kind of billionaire.

After all, their companies have generally lead the way in providing exemplary working conditions, promoting diversity, embracing the GBLT community and have generally over paid – rather than under paid – their staff of course.

These are not the messages about life at the Trump Corporation.

Yet Mr Trump has been a one man promotional machine for Twitter, a company that had been losing the interest of potential buyers (and new users).

Mr Trump has been at his most controversial at 3am, launching intemperate tweet attacks on pretty much anyone who disses or annoys him.

Initially this was seen as a triumph for Twitter. Maybe not so much now, with vast numbers of users naturally appalled by the man.

Under Trump’s corporate and rich-folk tax-breaks, Silicon Valley is likely to win big time; already tech stocks have surged in what the market is still calling the Trump rally.

So, when the crème de la crème of the US tech sector were summons to Trump Tower, they collectively swallowed hard and promptly showed up.

When you think about it the Googles, Microsofts, Amazons and Oracles of this world, it’s all about finding ways to bedazzle us with their marketing machines, to convince us their technology will make our lives better, easier and makes us more free to do what we want.

Is this so different from leaving all your cars behind for a week at Trump’s Florida golf haven Mar-del-Lago. It’s not like they wouldn’t have anything in common with the President-elect.

And lots to talk about too.

The Trump Twitter Show is a much-needed corrective that reminds us the power that technology now places in the hand of the opposite reason its creators intended.

And Mr Trump himself reminds us that failing in US business is not hindrance to even greater success. This should sound familiar to people with an understanding of the US technology ‘ecosystem’ (as these elites and their conga lines of consultants, venture capitalists like to call it.)

This is the polished mantra of the ambitious. That it’s good to fail, to blow up other people’s money. This is a ‘learning’ – a legitimate path to success.

Based on this alone, you would think that had he not settled on property to sink his dad’s money into, Mr Trump could well have become a big wheel in the tech sector.

After all, he has managed to dodge the ignominy of a video anti-trust testimony that a squirming Bill Gates endured.

For all their surface difference, the tech mavens and America’s new President have much more in common than not.

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