Beijing justified to stay cautious over lifting of some bans on Huawei
- Chinese officials have been unusually muted about this key facet of trade war negotiations, but the Trump presidency is renowned for uncertainties and gaps between what is said and what is done
The revival this week in Beijing of talks on the trade war between China and the United States should be cause for optimism. But Chinese officials have instead been muted about a key facet of negotiations – bans imposed on telecommunications giant Huawei. US leader Donald Trump said after meeting President Xi Jinping on the sidelines of the Group of 20 summit in Osaka, Japan, that some restrictions against the firm would be lifted. But Trump’s presidency is renowned for uncertainties and gaps between what is said and what is done, making Beijing justified in taking a cautious approach.
Trump’s Huawei promise met with silence from China
Huawei founder and chief executive Ren Zhengfei has sensibly also adopted that stance, his company having repeatedly come under attack from Washington. Trump’s surprising remark, which caught even his administration off guard, has been greeted warily by the Chinese entrepreneur. Unproven allegations that the firm’s equipment is being used for spying and is a national security threat have led to bans on their use by US government agencies and the country’s allies, a bar on American suppliers providing parts and components, and almost two dozen criminal charges, some involving Ren’s daughter and Huawei’s chief financial officer, Sabrina Meng Wanzhou, who is in Canada fighting an American extradition request. A relaxation of the restrictions would be good for the company, a leader in next-generation 5G telecoms technology and networks and the world’s second-biggest maker of smartphones, but it needs certainty, not mere hopes, to plan and prosper.
That is why after Huawei and 70 of its affiliates were added to an “entity list” by the US government at the end of May, preventing American companies from doing business with them, a strategy of production self-sufficiency was set in motion. The ramifications were huge, supply chains for the electronics and telecoms industries being global and American companies having a major share. Ren estimated that the ban would cost Huawei US$30 billion over the next two years. Trump’s administration perceives China as a threat and rival and is intent on strangling the ambitions of its firms, particularly those involved in technology, but the ban was a double-edged sword, also harming Huawei’s US suppliers.
In the face of lobbying by American technology firms, Trump has relented; first he gave a 90-day stay of the ban, but his meeting with Xi led to a relaxation for “equipment where there’s no great national security problem”. What that means has to be worked out in negotiations likely to play a part in the wider trade talks with China.
Huawei has faced months of uncertainty, just as Beijing has over the trade war. Lessons have been learned; being cautious and not over-optimistic is the best approach.
