Collapse of Huawei deal with AT&T ‘will threaten China-US trade ties’

The collapse of a deal in which Huawei Technologies was to distribute its smartphones through US carrier AT&T will threaten Sino-US trade ties – and Beijing should consider “countermeasures” if the situation escalates, experts and a former Chinese commerce official said.

Shenzhen-based Huawei was due to announce its partnership with AT&T in Las Vegas on Tuesday, but the deal was cancelled at the last minute – a major setback for the Chinese company’s global expansion.

It was called off because of “political pressure”, US-based online tech news site The Information reported, citing sources. AT&T was pressured to cancel the deal after members of the US Senate and House Intelligence committees sent a letter on December 20 to the Federal Communications Commission, citing concerns about Huawei’s plans to launch consumer products through a major US telecoms carrier, the report said.

The abrupt cancellation of the deal is the latest sign of tensions between China and the US over trade and investment, with Washington calling for trade actions against China and tightening screening of Chinese companies, especially in the hi-tech sector.

Huawei is the second Chinese company facing a serious setback in the United States in a week, after the US Committee on Foreign Investment rejected Chinese firm Ant Financial’s takeover bid for US-based money transfer firm MoneyGram, citing national security concerns. Ant Financial is an affiliate of Alibaba, which owns the South China Morning Post.

He Weiwen, a former business counsellor at the Chinese consulate in New York, said the failure of the Huawei deal reflected heightened worries in the United States about Chinese investment.

“Investment cooperation between China and the US will be squeezed,” He said. “The US is very worried about the impact in the US from the growth of China’s hi-tech industry. It is worried that Chinese companies will transfer US technology through mergers and acquisitions.