Contra China’s ‘Time Bomb’ U.S. Spying Concerns, Trade Is Peaceful

ZHENGZHOU, CHINA – APRIL 19: In this photo illustration, Nvidia H20 chip is seen on April 19, 2025 in Zhengzhou, Henan Province of China. (Photo by VCG/VCG via Getty Images)

VCG via Getty Images

It was inevitable that American companies would eventually reap the bitter fruits of protectionist activity within the U.S. See the Cyberspace Administration of China’s request to Nvidia for “an explanation regarding security risks of vulnerabilities and back doors.” American protectionism, meet your blowback.

For background, the Ministry of State Security in China recently expressed worry about “Backdoors” and “time bomb” spying threats within computer chips. Supposedly the H20 chips created by Nvidia specifically “could have been intentionally embedded – in the design and manufacturing stage,” thus “allowing the manufacturers to control devices remotely with particular signals, including automatically turning on camera and microphone, or ordering automatic collection of specific data in the background and sending it back.” The charges rate obvious questions.

Why would Nvidia want to engage in spycraft meant to weaken an alleged enemy nation like China? Exactly because China represents a huge market for Nvidia now, and a much bigger market in the future, why on earth would it go to such great and expensive lengths to build market share in China, only for it to endanger all it’s worked for with “backdoors” and “time bombs” meant to harm the very country it’s so intent on prospering within. The incentives just aren’t there.

In addition to risking the franchise with spying activities, why would Nvidia want to bring harm to China in the first place? See the previous paragraph. As evidenced by China’s growth potential, Nvidia is heavily invested in the country’s present and future prosperity.

Which is the point, though it’s one that protectionist entities with the U.S. political and administrative classes would be most wise to come to terms with. That’s because every time a Chinese company has the temerity to succeed stateside, protectionist impulses within the political and administrative classes get to work on discrediting the company with charges of – yes – espionage.

Consider a June editorial in the Wall Street Journal about increasingly popular (stateside) Chinese company, Temu. The editorial said, “As long as Chinese companies are putting backdoors and malware on American devices, state AGs can help protect consumers.” The implied point of the editorial was that trading with the American people by Chinese companies was and is a way to spy on the U.S. If the accusations sound similar to those lodged by China’s Cyberspace Administration and Ministry of State Security, that’s plainly the point. Both sides are essentially doing the same thing. The attacks on U.S.-based Nvidia and China-based Temu (along with other corporations hatched in China like TikTok and Huawei) aren’t about spying and national security, they’re about protectionism.

Considering Nvidia, Chinese businesses are big fans of its chips in much the same way that U.S. consumers are big fans of some of China’s top companies, not to mention their desire to purchase the plenty of many more. Think BYD.

The main thing is that when the U.S. political class attempts to discredit Chinese companies based on flinty national security concerns, they ensure blowback of the kind we’ve seen last week, and that some within the Chinese state love. Translated, they don’t want Chinese companies to become “addicted” to Nvidia chips in the same way that protectionist U.S. interests don’t want Americans to become “addicted” to Temu, TikTok and others.

The best, most peaceful solution to all this is for U.S. political types to walk away. As we see once again from last week, protectionism begets protectionism. Not only is the latter anti-growth, it’s also anti national security when it’s remembered that the best way to keep countries from warring with each other is to allow the people within them to trade with one another.