Hi, there. Welcome back to Rui Thinking. 

ZTE, a state-owned digital giant based in Shenzhen, has become the first casualty in a raging high-tech war between the US and China. The Trump Administration has prevented American companies from selling components to ZTE and as a result, all signs point to major issues ahead for the Chinese company. 

On the surface, what has happened is apart of another battle for digital technology supremacy. Even Western observers have called this an iron curtain descending upon the digital frontier and our shorelines. 

It is the beginning of what some are calling a new Cold War and it's a wake-up call for the Chinese business community, especially our overseas operations. Chinese entrepreneurs need to comply with local laws and regulations and conduct careful legal risk assessment to minimize losses for the country, especially China’s reputation and credibility. 

Additionally, current online debates in China focus on whether business executives of ZTE should be punished or disciplined at home due to their clumsy internal maneuvers in defiance of the US punitive measures, and how to define national interest. Most netizens point out that the national interest and image of China should not be held hostage by individual bulls in a China shop. However, patriotic agencies and outlets such as The Global Times say that they side with ZTE. 

In an age of globalization, rules have to be followed. The issue is who sets the rules, or whether the rules should be bent to suit the interests of emerging markets. A hegemonic US under President Trump says it puts America First. Trade protectionism is gaining momentum on the back of populism. Is this the domestic politics of an embattled Trump? 

We note that the 1986 Iran-Contra scandal violated the congressional ban of selling weapons to Iran due to the 1979 Islamic Revolution and the hostage crisis in Lebanon and Tehran. But President Reagan was not held to account. Double standards are paradoxical stakes. We also need to keep in mind that domestic laws shouldn’t be applied to outside territories. 

In this case, Washington’s own rivalry with Iran should not affect China’s business stakes in the Middle East, particularly when one looks at how China has helped defuse the uranium enrichment crisis through the 6+1 talks. President Obama thanked China for its effective diplomacy. 

Long term, China trails far behind the US in digital technologies. The US-imposed digital embargo will be a game changer. China may mobilize national resources for its R&D. The days of trading market share for cutting-edge technologies are over. Britain will also join hands with the US to ban ZTE from entering its market, citing national security in a bid to show solidarity with American allies. 

This is a new battle for China, particularly when our top listed company is the Maotai liquor brand and the US's top-five listed companies are high-tech giants. China spends more than 200 billion US dollars importing microchips each year – more than our budget for energy imports. This is very embarrassing and needs to change. But time is on China’s side. Most Chinese politicians and scientists are confident. I am Yang Rui. 

(Yang Rui is the anchor of CGTN’s Dialogue.)