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US, China harden their stands on Huawei as tech war intensifies

The world's top two economies stepped up their rhetoric following President Donald Trump's decision to blacklist the smartphone and telecom firm over worries that Beijing uses it as a tool for espionage.

  • Published: May 24, 2019 8:33 AM IST
Huawei Stock Photo MWC Huawei Ban

The United States and China hardened their stances over Huawei Thursday as Washington brushed aside claims of “bullying” and accused the Chinese tech giant of misrepresenting its ties to the Beijing government. The world’s top two economies stepped up their rhetoric following President Donald Trump’s decision to blacklist the smartphone and telecom firm over worries that Beijing uses it as a tool for espionage.

US Secretary of State Mike Pompeo claimed in an interview that Huawei is not truthful about its relationship with China’s government and that this means any data touched by the company is “at risk” of falling into the wrong hands. “To say that they don’t work with the Chinese government is a false statement,” Pompeo said of Huawei.

The company “is deeply tied not only to China but to the Chinese communist party,” the top US diplomat told CNBC, disputing Huawei’s claims that it has no direct relationship with Beijing. “The Huawei CEO — on that, at least — isn’t telling the American people the truth.” On Wednesday, Chinese Foreign Minister Wang Yi warned that Beijing was ready to “fight to the very end” in its trade war with Washington.

“The US use of state power to arbitrarily exert pressure on a private Chinese company like Huawei is typical economic bullying,” Wang said. China’s commerce ministry spokesman Gao Feng said Beijing has lodged “solemn representations” with Washington, and warned that the country has the “confidence and ability to protect the lawful rights and interests of Chinese companies.” Companies around the world are scrambling to comply with the US blacklist, which would prevent them from supplying American technology components or software to Huawei.

Japan’s Panasonic was the latest to announce it would “suspend transactions with Huawei and its 68 affiliates that were banned by the US government,” saying the move was conveyed in an “internal notification.” But when asked for a response, Huawei pointed to a statement on Panasonic’s Chinese website that said the firm was supplying Huawei “normally.” Japanese firm Toshiba said later Thursday it had resumed shipment of all products to Huawei hours after announcing a temporary halt to check whether US-made parts were involved.

Major Japanese and British mobile carriers said this week they would delay releasing new Huawei handsets as a result of the US sanctions. Last week, Trump declared a national emergency to bar US companies from using foreign telecom equipment deemed a security risk — a move seen as targeting Huawei, which Washington suspects of being a potential proxy for Chinese intelligence services.

The Commerce Department has also announced an effective ban on US companies selling or transferring US technology to Huawei, though it later issued a 90-day reprieve. Google said it would cut off Huawei devices from some services on the Android operating system, a move that could effectively kill the Chinese handset maker’s prospects in many global markets.

Huawei has since indicated that it could roll out its own mobile this year in China and internationally next year. Analyst Richard Windsor, who writes the Radio Free Mobile tech blog, said Huawei’s prospects without Google are limited. “Whatever alternative Huawei comes up with for Google’s digital ecosystem is extremely unlikely to be able to prevent an almost complete loss of market share in markets outside of China,” Windsor said.

Trump’s moves came amid an intensifying trade war in which he boosted tariffs on USD 200 billion in Chinese goods, prompting Beijing to hike duties on $60 billion in American products. The trade dispute has snowballed into a tech war, with Huawei at the epicenter of a battle for supremacy in technologies that could shape the future of the world economy, such as next-generation 5G networks in which the Chinese firm is a global leader.

In Britain, telecoms giant EE, owned by BT, had been due to bring Huawei’s first 5G phone, the Huawei Mate 20X, to Britain, but chief executive Marc Allera said Wednesday the company had “paused” the launch. The delay would last “until we get the information and confidence and the long-term security that our customers… are going to be supported,” he said.

Vodafone soon followed suit, announcing a temporary suspension of pre-orders for Huawei handsets. In Japan, KDDI and SoftBank Corp, the country’s number two and number three carriers respectively, said they were delaying the release of Huawei handsets. ARM, the British firm which designs processors used in most mobile devices, also cut ties with Huawei, dealing a blow to Huawei’s computer chip design efforts.

  • Published Date: May 24, 2019 8:33 AM IST