On May 15, the United States upped the ante yet again in its economic disputes with China.
Trump's executive order declared that foreign adversary threats to communications networks, technology and services are a national emergency.
"This will prevent American technology from being used by foreign-owned entities in ways that potentially undermine United States national security or foreign policy interests", Commerce Secretary Wilbur Ross said.
Huawei has said its work does not pose any threats and that it is independent from the Chinese government. That suspicion only deepened when the U.S. Department of Commerce, later the same day, added Huawei and its affiliates to the Bureau of Industry and Security's Entity List. Just $5 a month.
In other words, if a foreign company produces a product that relies on components or technology provided by US companies, the USA government can effectively cut off the part of the supply chain for the foreign company's product that is produced by US companies.
"The bigger concern would be [that] U.S. allies that used to buy Huawei's components may not continue businesses with Huawei, because of fear of possibly upsetting the United States", said Doh Hyun-woo, an analyst at NH Investment & Securities in Seoul. "China will take further necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises".
She says looking at Wednesday's executive order from Trump, "In some places, if you did a blind test with China's cybersecurity law and tried to guess which is which, it would be hard to tell".
China has threatened to retaliate against U.S. sanctions seen as an attempt to restrict global trade by the Chinese technology giant Huawei.
Among Huawei's chip suppliers, United States companies are undoubtedly the most, Intel, Qualcomm, Marvell, TI, Nisshin, Skyworks, etc. "This information includes the activities alleged in the Department of Justice's public superseding indictment of Huawei, including alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of US sanctions".
Huawei has spearheaded China's campaign to develop its own high-end technologies to reduce reliance on foreign imports, and such efforts have taken on urgency after USA sanctions on ZTE.
Lu gave no details, but analysts warned the export controls threaten to worsen a U.S.
President Trump has ramped up the pressure by raising tariffs on a list of $200 billion worth of Chinese imports from 10 percent to 25 percent. Accordingly, there's some speculation that the Huawei gambit is meant mostly as a negotiating card - that Trump is hoping he can do Xi another "favor" (as he described the ZTE reversal) in exchange for concessions in the trade negotiations. He drew a compelling parallel between British companies building telegraph networks all over the world in the late 19th century and Huawei today, arguing that while neither commercial enterprise was set up as an arm of their nation's government, circumstances pushed them into doing the home country spies' bidding for them. In other words, many believe that the Chinese government could compel Huawei to use its products to spy on the West.
If Trump is waiting for Xi to come begging for a reprieve, though, he's misread the changed circumstances.
"This is going to be very messy", a China-based source at a US tech company said.
The US in particular has grown increasingly concerned that a Chinese company would be providing much of the technology for these networks.
RoundupHuawei has been kicked by a USA national emergency proclamation hitting "foreign" gear, spent some cash in France, claimed it's worth billions to Britain and was described as "a potential security risk" by a former head of MI6. "However, it is regrettable that the US side unilaterally escalated trade disputes, which resulted in severe negotiating setbacks". But it follows months of USA complaints about Huawei. The worldwide community bears witness to all this. Previous reports also highlighted that Huawei's lead in 5G might be one reason why the U.S. government has been moving against the tech company, and the whole situation gets even more complicated when you factor in the escalating trade war with China.
"What these trade negotiations could mean for us is that maybe then the USA government would be willing to talk with us", he said.
This week's penalties for Huawei came as no big surprise.
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