Huawei becomes flashpoint in China-US economic showdown

Evarado Alatorre
May 18, 2019

"It will do significant economic harm to the American companies with which Huawei does business, affect tens of thousands of American jobs, and disrupt the current collaboration and mutual trust that exist on the global supply chain".

Escalating the bruising trade war with China, President Donald Trump has signed an executive order barring American companies from installing the foreign-made telecom equipment deemed a national security threat, a move apparently aimed at banning Chinese giant Huawei from USA networks.

Huawei warns that preventing it from doing business in the United States would slow down the start of next-generation communications technology. Before selling technology products, it's common to run the customer through a database to ensure the sale doesn't violate any US restrictions.

Repeated references to a "trade war" are misleading in what they suggest about the nature of Sino-American economic competition today. That prompted China to retaliate with a 25% tariff on $60 billion worth of US imports. "But we are against other countries' unilateral sanctions based on domestic law and practices that abuse export control measures", he said, adding, "We urge the USA to stop such practices and create favourable conditions for business cooperation". "China will take further necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises".

Washington has made it personal, prevailing on Canada to arrest Ren's daughter - Huawei CFO Meng Wanzhou - in Vancouver, and seeking her extradition on charges of evading Iran sanctions.

Details of how these export controls will work have not been released and it isn't yet clear whether restrictions on Huawei will cover all American components or only a narrow subset. The company has denied the allegations.

The U.S. Commerce Department has placed China's Huawei Technologies Co. and 67 of its affiliates around the world on a blacklist, restricting their access to U.S. suppliers.

The order does not specifically name any country or company, but USA officials have previously labelled Huawei a "threat".

Obtaining such approval will not be easy.

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The White House statement on the order, which can be read here, paves the way for a full ban on Huawei in the USA market. Thus, it is United States companies prohibited from taking without authorization from the government, with the Huawei shops.

Huawei smartphones are seen displayed inside a shopping mall in Shanghai, China May 16, 2019.

Ross dodged questions about whether the new moves against Huawei could lead to a negotiation with the company - or the Chinese government.

Members of Congress and administration officials said the move would make it hard for Huawei to sell many products because of its dependence on USA suppliers. Shares of Xilinx closed down 7.3 percent while those of rival chipmaker Qualcomm Inc fell 4 percent. -China trade negotiations. Thus, similar to Commerce's Denial Order against ZTE Corporation (ZTE) past year, Huawei's placement on the Entity List could be temporary pending further negotiations with China or the implementation of the regulations called for in the May 15 Executive Order.

At the same time, the U.S. and China's battle over trade continues, with President Trump raising tariffs on Chinese electronic components and other products up to 25%.

The company became the world's third-largest buyer of semiconductors previous year.

"Someone who plays video games 10 hours a day would be considered an idle person", the company's technology director has said.

By Wednesday, the United States and China had already announced staggering new tariffs on a combined $260 billion worth of trade-a figure reflective of a pretty bad week for bilateral relations. It could be deferred once more, they said.

Chinese army technician Ren Zhengfei founded Huawei with just US$5,000 (RM20,885) in seed money, according to company lore, but 32 years later it is at the centre of a titanic tug-of-war between the United States and China for world technological supremacy.

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