By blacklisting Huawei, the US may have triggered a new era of protectionism for China – and the rest of the world

Every country is protectionist to some degree, but the US’ determination under Trump to punish China may discourage Beijing from further opening up, and instead encourage an inward turn – and this may well be repeated around the globe

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A man uses his smartphone outside a shop selling Huawei products in Beijing on Wednesday. The Chinese tech giant has filed a motion in the US courts challenging the constitutionality of a law that limits its sales of telecoms equipment. Photo: AP

Published: 1:00am, 31 May 2019Updated: 3:05am, 31 May 2019

The US has placed Huawei on a so-called entity list, making it almost impossible for the tech company and its affiliates to source components and services from the US. This is a major escalation in the US-China trade war and a huge win for protectionists in China, as well as the rest of the world.

Huawei purchases a substantial amount of components and services from the US, many of which have no alternative suppliers in other countries.

Although Huawei claims to have a backup plan for some important chips, it is generally believed that not all chips and software can be rapidly developed in-house, especially if the company wishes to remain competitive. The immediate impact on Huawei will be devastating, for sure.

Tremendous damage has also been done to the image of US companies as reliable suppliers for basic technologies, including chips and software.

The ban on Huawei (and, earlier, ZTE) shows that the executive branch of the US has too much discretionary power over the operations of American companies, in the name of national security. And President Donald Trump is not reluctant to abuse that power.

The blacklisting of Huawei will be a wake-up call for other countries to seek some degree of self-reliance in basic technologies. This may well, unfortunately, usher in a new age of protectionism.

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