US President Donald Trump’s plan to ban Chinese telecommunications equipment from US wireless networks will not have a major impact on China’s economy, analysts have said. However, the ban would be a new blow to the expansionary plans of China’s telecoms giants, which account for the bulk of the country’s exports in this sector. Currently, the US imports a relatively small amount of telecoms equipment from China that could be used in wireless networks. Granular data is not available, but according to the latest available figures from China Customs, the US imported US$38.9 billion of telecoms equipment in total in 2016, 19 per cent of China’s total telecoms exports. According to a 2017 report by a Beijing-based research institute affiliated with real estate developer China Fortune Land Development, most of China’s telecom equipment exported to the United States are wireless base stations and core network equipment. These accounted for 10 per cent of China’s total exports of telecoms equipment, the study found. Analysts have suggested that with US restrictions on Chinese companies in the sector, this is likely to have fallen since 2017. In August, Trump banned US government agencies from buying equipment-made by Huawei Technologies, the Chinese telecoms and technology giant. Trump is now set to expand the ban by signing an executive order that would bar private companies in the US wireless sector from buying any Chinese telecoms equipment. This is expected to come ahead of Mobile World Congress Barcelona, the world’s largest conference for the wireless industry, which takes place between February 25 and 28, according to a report by the US news group POLITICO. “Unless the executive order includes something like an export ban – which would forbid American companies from selling to Chinese tech firms, thus crippling good parts of their supply chain – the domestic impact on the economy shouldn’t be much,” said Nick Marro, a China analyst at the Economist Intelligence Unit. US-China trade war could slash almost 1 million jobs from the US economy, new study says “[The executive order] may have an indirect impact on the Chinese economy. It will blunt the international expansion plans of China’s big tech companies, and there could be a spillover effect into other major developed markets, as we’ve seen with Huawei.” At stake is China’s position as the world’s biggest telecoms exporter. In 2017, China exported US$592 billion in telecom equipment, 32 per cent of the world’s total, according to the World Trade Organisation. That figure probably slipped in 2018 after the US imposed restrictions on Chinese telecom equipment firms Huawei and ZTE in the same year and looks set to decline further if trade tensions continue, said Stanley Chan, director of research at Emperor Securities, an investment company. China’s office and telecom equipment sector is largely domestic, so a drop in exports would not have major impact on the wider economy, he added. However, the move could be a further hindrance for the jewels in China’s telecoms economy, Huawei and ZTE, which have become mired in the trade war and have seen their economic fortunes suffer as a direct result. The arrest of the Huawei chief financial officer, Sabrina Meng Wanzhou, is viewed as one of the key junctures in the conflict, which has escalated significantly since the first tariffs were introduced in July 2018. Meng arrested in Canada on December 1 and faces possible extradition to the United States. US prosecutors are pursuing more than two dozen charges against Meng and Huawei, including claims that the company stole trade secrets or violated US sanctions against doing business with Iran. At the beginning of this year Ren Zhengfei, the founder of Huawei and Meng’s father, predicted that the company’s growth rate would be slower this year, because of “challenges in the international market”. Apple iPhone shipments plunge in China with Huawei gaining ground against wider industry slump The company grew 21 per cent in 2018 and is forecast to grow “below 20 per cent” in 2019. The company expects revenue of US$125 billion this year, slightly lower than its initial forecast of US$125.9 billion. “If Trump signs the order, Huawei’s expansion will be affected, of course, but the door to some other countries is still open,” said Wang Huiyao, president of the Centre for China and Globalisation (CCG), a Beijing-based think tank. ZTE, meanwhile, is forecast to post a loss of between 6.2 billion yuan (US$919 million) and 7.2 billion yuan in 2018, compared with a profit of 4.57 billion yuan (US$677 million) in 2017. The firm was forced to pay a US$1 billion fine to lift a ban on sourcing imports from the US. The seven-year ban was imposed in April 2018, for illegally exporting US technology to Iran and North Korea. Both Huawei and ZTE declined to comment when reached by the South China Morning Post. A greater concern for China’s telecoms and technology companies may be their isolation from bidding processes for 5G networks around the world. Many experts predict that 5G wireless technology will revolutionise the world’s economy. It is set to power the next generation of smart devices, from self-driving cars to smart homes and the operation of remote factories. It has become a key battleground in the economic and geopolitical rivalry between the US and China, the world’s two largest economies. “The US has long been trying to impose restrictions on Chinese telecom equipment makers. Chinese 5G companies are being especially targeted,” said Stanley Chan. The US has been lobbying Western allies to follow its lead in restricting Huawei’s access to the roll-out of 5G networks on security grounds. The so-called Five Eyes alliance – a group of nations consisting of Australia, Canada, New Zealand, the United Kingdom and the US – have been exchanging classified information on China’s foreign activities with other allied countries such as Germany and Japan. “Any Western country allowing equipment from Huawei Technologies or other Chinese makers to be used in critical infrastructure projects will face the risk of US countermeasures,” said the US Ambassador to the EU, Gordon Sondland, in a recent interview with Bloomberg. China-EU 5G research project to continue despite growing concerns about Huawei As well as the aforementioned nations, France, Norway and South Korea are also considering a restriction on or outright ban on the use of Huawei equipment, over concerns that the hardware can be used by Chinese intelligence for espionage purposes. However, on February 10, Uwe Herzog, the coordinator of the 5G Drive project, a collaboration between the European Union and China, said that the project was going ahead as planned. Despite all of this, some analysts are still positive on the outlook for China’s telecoms sector. “It would be a big loss to Huawei and its overseas expansion plans if US-China trade tensions continue, and more countries ban Huawei,” said Mo Jia, research analyst at technology research firm Canalys. “But China continues to be a leading provider of 5G telecom development and the roll-out of its network is still on track given the strong support from the government.”