May 17, 2019
Hopes of a trade deal recede as experts fear American companies could face a backlash.
China has slammed the United States for putting technology giant Huawei on an export blacklist and said it will take “all necessary measures” to protect the legal rights of Chinese firms.
The latest twist in the face-off between the US and China not only suggests that hopes of a trade deal are fast evaporating, but it could also delay the roll-out of 5G networks worldwide. US technology firms could also face a backlash, experts said.
China’s Ministry of Commerce said yesterday that it resolutely opposed any country using its own domestic laws to unilaterally sanction Chinese firms. It also spoke out against the abuse of the concept of national security. “China has repeatedly stressed that the concept of ‘national security’ should not be a tool for promoting trade protectionism,” said its spokesman Gao Feng.
US President Donald Trump had signed an executive order late on Wednesday that effectively barred US firms from using telecoms equipment made by Huawei, citing national security concerns.
Separately, Huawei and 70 affiliates were put on an “Entity List”, which bans the Chinese tech giant from buying parts from US firms without US government approval.
Huawei said restricting it from doing business would not make the US stronger or more secure, but would serve only to limit the US to inferior and yet more costly alternatives.
Experts said the Trump administration’s latest move could wreak havoc on supply chains, with possible delays to the global 5G network roll-out. So far, Huawei has been the leading vendor in supplying 5G network equipment, having secured 40 global contracts. It is trailed by Nokia and Ericsson.
The dual bans will hamstring Huawei, which relies on US suppliers such as Qualcomm and Marvell. But the more immediate damage was to the climate for trade talks, said Chinese experts.
“The US’ action of using the banner of national security to maintain its advantage in the (information and communications technology) space – rather than through fair competition – is an attempt to suppress China’s high-tech industry and makes it harder for the two sides to reach a trade deal,” said Professor Jia Qingguo of Peking University.
He added that Beijing might hit back by restricting US technology firms’ access to the Chinese market.
Professor Su Hao of China Foreign Affairs University said the bans are in line with the White House’s strategy of decoupling the US and Chinese economies by forcing firms from both sides to sever ties, while putting increased pressure on Beijing to make a deal on trade.
“Though China is still looking at its economic relations with the US in a positive light and is still looking at making adjustments and even compromises in trade negotiations, Beijing might have to take undesirable actions if it feels that the US’ behaviour has become overly egregious,” he said.
In a sign that Beijing might be reaching the end of its patience on trade talks, Chinese Ministry of Foreign Affairs spokesman Lu Kang stressed that for talks to be meaningful, there has to be sincerity, as he quoted a Chinese proverb about capricious use of power.
Mr Gao said China was confident of prevailing in a long-drawn trade war. “China’s macro policy tools are many, and we are confident we can cope with any difficulties or challenges. China’s industry system is complete, its market size is huge, its room for manoeuvring is big and its prospects are very bright.”