US should not politicise trade with China in ZTE and Huawei issue

PUBLISHED : Thursday, 11 October, 2012, 12:00am
UPDATED : Thursday, 11 October, 2012, 12:27am


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Little is as damaging for a company's value and overseas expansion plans as to be singled out by a government for criticism. When it is a Chinese firm being taken to task by the world's most powerful economy, the US, and the concern is state-sponsored espionage, the matter instantly moves from business to the realm of trade and politics. The claim has been levelled at two of the biggest telecommunications equipment makers, Huawei and ZTE, just weeks after Ralls Corp was prevented by President Barack Obama from building wind farms near a military base. In the absence of evidence, we can only make assumptions - and with the American presidential election looming, political point-scoring and protectionism are immediate suspicions.

Obama and challenger Mitt Romney have often mentioned China on the campaign trail, accusing it of unfair trade practices. Twice in the past three months, the president has filed trade complaints against Chinese companies. In such an environment, his decision last month to back the Committee on Foreign Investments in the United States' recommendation to bar Ralls from acquiring four wind farms on security grounds seemed unsurprising. The latest cases appear headed for the panel after the release of the House of Representatives intelligence committee's report.

Huawei and ZTE have struck deals in dozens of countries without problems. Economic espionage is a commonly heard accusation that is rarely substantiated. It is a serious allegation, yet no charges have been filed. The rebuttals made would seem justified: that the report is political, its intention being to block competition and stymie the growth of Chinese companies.

The last time a US president blocked foreign investment in an American company was in 1990 and that also involved a Chinese firm. That was in the wake of the Tiananmen killings, but perceptions have been shifting thanks to diplomacy, trade, investment, contact and co-operation. It is disappointing that the US and Obama are acting as if nothing has changed.

Chinese companies thinking of investing in the US, particularly state-owned firms, have to clearly spell out business intentions and strategies. In a world of globalised trade, though, there is no room for protectionism. Allegations like those made can easily have serious consequences with long-lasting effects. They can breed nationalism, prompt a trade war and send diplomatic ties into a tailspin. This is not what China, the US or the world needs.