X-Industry

Huawei CEO, Ren Zhengfei

On 15 May 2019, US President Trump declared a national emergency over the dangers of importing technology from adversary countries, a move universally understood to be targeted at the Chinese corporation Huawei Technologies.  The “ban” on Huawei is being enacted by the US Department of Commerce, charged by the White House with deciding on the mechanisms of blocking Huawei’s connections to the US. The ban hurts Huawei in two ways: by closing the US market to Huawei equipment sales and by preventing Huawei from purchasing US-manufactured chips and other components it needs for building its network equipment. 

Huawei is a giant corporation and the world’s largest network equipment manufacturer, and its health is of great importance to the Chinese government.  However, the official government response to the US ban has so far been relatively mild.  Foreign Ministry spokespersons have criticized the ban but have used muted diplomatic language: “We urge the US to stop this practice and instead create better conditions for business co-operation.”  Neither the Foreign Minister nor President Xi Jinping have commented publicly on the Huawei ban.

Huawei itself has pushed back by claiming the ban will ultimately hurt the United States, that it “will cause great harm to US corporate partners” and “impact tens of thousands of US jobs.”  The company said it would “seek remedies immediately,” but made no threats about retaliation or gave specifics as to what remedies it hoped to find.

Huawei has reportedly been stockpiling hardware purchased from the US for nearly a year, which could allow it to continue to produce equipment for some months while it searched for new supply chains.  It has also claimed that it is developing its own chip sets, but there are no indications that development is far enough along to fill the gap created by the US ban.  In sum, the US ban has created real problems for Huawei with no obvious solution for either Huawei or the Chinese government to attempt.

For the full report, see attached link: IR Chinas Reaction to the US Ban on Huawei 190521 FINAL.pdf

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