Huawei ban reflects ‘Cold War mentality’

By Chen Qingqing Source:Global Times Published: 2019/5/16 23:28:40

China-US decoupling to hurt US more: analysts


Photo: Huawei's FusionStorage 8.0, distributed storage to support enterprise applications Photo: Chen Qingqing/GT



 The latest ban on Huawei reflects Washington's dangerous Cold War mentality that will lead to further US-China decoupling, which is also casting a shadow over stalled trade talks between the two countries and will hurt the global tech industry, Chinese analysts said on Thursday. 

US President Donald Trump signed an executive order on Wednesday declaring a national emergency and prohibiting foreign companies that pose national security risks from taking part in the US information and communications technology (ICT) construction, paving the way to barring Chinese telecoms equipment providers such as Huawei and ZTE from entering the US market. 

The US Commerce Department said Wednesday it is adding Huawei and 70 affiliates to its Entity List, Reuters reported. This will ban the Chinese telecom giant from buying parts and components from US companies without US government approval, the report said. 

Huawei is against the decision made by the Bureau of Industry and Security (BIS) of the US Department of Commerce, which is in no one's interest and will do significant harm to American companies that do business with Huawei, a Huawei spokesperson said in a statement on Thursday.  

"Huawei will seek remedies immediately and find a resolution to this matter. And it will also proactively endeavor to mitigate the impacts of this incident," the spokesperson said. 

China will take necessary measures to safeguard the legitimate interests of Chinese companies, the Foreign Ministry said on Thursday. 

"The Chinese side firmly opposes unilateral sanctions imposed by any country on Chinese entities in accordance with its own domestic law. We also oppose national security excuses and abuse of export control measures," Lu Kang, spokesperson of the ministry, told a press briefing. 

"We urge the US government to stop making mistakes and to create a normal business environment, avoiding causing further impact on China-US relations," he noted. 

The Ministry of Commerce also expressed its opposition to the US decision, vowing to protect Chinese companies' interests. 

"It's a dangerous escalation. The worst-case scenario is to forbid US companies from supplying Huawei, as US authorities will have the final say on tech exports. And that signals the decoupling of the US and China in high-tech," Fang Xingdong, founder of Beijing-based technology think tank ChinaLabs, told the Global Times. 

Huawei, the largest telecom equipment provider by market share, unveiled its 92 core suppliers in 2018, of which 33 were from the US including Intel, Oracle, Microsoft and Qualcomm, media reported in November 2018. 

Analysts said export controls, once they take effect, will exert much more pressure on Huawei's overall business as it may face obstacles in working with American partners. 

"It reflects 'Cold War mentality'," Xiang Ligang, director-general of the Information Consumption Alliance, told the Global Times on Thursday. 

However, barring Huawei from participating in the US 5G build-out has little impact considering its tiny footprint on the US market, they said.  

"We haven't had too much business in the US over the years, but we've never given up on this country. We keep on trying, and this is because we respect the US. If they don't let us sell, then we won't sell," Ren Zhengfei, founder of Huawei, said in an earlier interview. 

'Huawei is not ZTE' 

The Trump administration has been curbing China's high-tech rise by targeting Chinese tech giants. But Chinese analysts warned that Washington cannot easily crush Huawei by imposing unilateral sanctions. 

"Huawei has put much effort in strengthening its competitiveness and core technology. If the US side cuts ties between Huawei and American firms, they'll realize that Huawei is not ZTE," Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Thursday.  

ZTE was forced to stop most of its business between April and July last year due to US sanctions. It paid a $1.4 billion fine to lift the sanctions.

With more than $15 billion in research and development (R&D) every year, Huawei is ranked among the top five tech firms worldwide in R&D spending. And it has been working heavily on its self-development components ranging from core server chipsets to operating systems. 

Huawei grew in 2018 despite the US-led crackdown, and regions like Europe and Asia-Pacific have fueled the growth. 

Complicating trade talks 

Blacklisting Huawei at this point is also likely to dampen the outlook of China-US trade negotiations, which had hit an impasse due to unsettled differences, analysts noted. 

This new move of the Trump administration is meant to pressure the Chinese side in trade talks, and policymakers must come up with effective measures to strike back, Xiang said.

China-US decoupling will hurt US companies more considering their large presence in the Chinese market, analysts said. 

For instance, more than half of Qualcomm's revenue comes from China, and Apple and Intel rely on the Chinese market. 

"It will hurt their interests more and might be catastrophic. Imagine their market value on NASDAQ vanishing, which would be even worse than the dot-com crash," Fang said.



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