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Huawei ban a salvo in widening US-China standoff By Shaun TANDON Washington (AFP) May 20, 2019
In effectively banning tech giant Huawei, President Donald Trump has fired a new salvo against China as the United States increasingly sees confrontation as the best way to curb the rising power. The Trump administration has waged an intense global campaign against Huawei and last week hit it hard with orders that restrict the company's US sales and make it difficult for the company to buy critical US components, although it said Monday that it would delay implementation for 90 days. The United States has warned that Huawei, omnipresent in much of the world, puts both national security and personal privacy at risk due to its close ties to China's authoritarian government -- charges denied by the company, which says it is only seeking to compete freely. But US concerns extend far beyond Huawei. Criticism of China has become a rare cause that unites both parties in a divided Washington, where fed-up US businesses are no longer serving as Beijing's vital ally. The crackdown on Huawei comes amid tense trade negotiations between the world's two largest economies, with Trump raising the stakes by raising tariffs on $200 billion of Chinese goods. The United States accuses China of rampantly stealing US technology and has tried to rebut President Xi Jinping's "Belt and Road" infrastructure initiative, saying that Beijing's aggressive lending has forced developing nations into debt traps. Washington has also voiced alarm at China's growing military clout, including in the South China Sea and toward Taiwan, and, in a rarity for the Trump administration, has been outspoken on human rights in denouncing Beijing's mass detention of Uighur Muslims. Jonathan Hillman, a senior fellow at the Center for Strategic and International Studies, said that US policymakers have given up on their decades-long hope that rising prosperity would make China a more amenable partner. "To put it very simply, China is not becoming more like us," he said. "They have taken parts of globalization that work for them, while the state has continued to retain control. And I think all of that points to much longer-term competition," he said. - 'Fundamental, long-term threat' - Kiron Skinner, the director of policy planning at the State Department, said the United States was devising a comprehensive strategy on China akin to diplomat George Kennan's famed 1947 doctrine of containment for the Soviet Union. Skinner said that the United States also worried about President Vladimir Putin's resurgent Russia but saw it more as a "global survivor." "But China, we see it as a more fundamental, long-term threat," she told the recent Future Security Forum. While Secretary of State Mike Pompeo has said that the United States does not see a "Cold War" with China, Skinner explicitly drew a parallel to the Soviet Union. Except while the Soviet Union had nuclear weapons and a robust military, it had a "backwards economy," she said. "In China, we have an economic competitor (and) we have an ideological competitor, one that really does seek a kind of global reach that many of us didn't expect a couple of decades ago," she said. She also pointed to cultural differences -- a comment that drew eyebrows in Washington, where Trump has shaken up norms with his racially charged politics. "I think it's also striking that it's the first time that we will have a great power competitor that is not Caucasian," said Skinner, pointing out that the Soviets' Marxism stemmed from the Western intellectual tradition. - Trade understanding coming apart - Jacob Stokes, who advised former vice president Joe Biden on Asia policy, said that the Trump administration was inclined to see relations with China as "zero-sum," whereas Barack Obama's administration looked more for positive areas of cooperation. "That said, I think there's a consensus in the China-watching community that some rebalancing is justified and it's just a natural consequence of the changing balance of power and China becoming stronger in the world," said Stokes, now a senior policy analyst in the China program at the US Institute of Peace. After the United States welcomed China into the global trading order two decades ago, developed economies built a complementary relationship as the billion-plus nation supplied low-end labor. "That basic deal is coming part," Stokes said. "A large and growing part of China is a developed country and they are starting to act like a developed country," he said. Indeed, observers point out that for all of the anger about Huawei, no other company is a true global competitor in the game-changing field of fifth-generation networks. Democratic Senator Chris Murphy said that he supported the crackdown on Huawei but tweeted that without US firms that can compete, "we are fighting with one hand tied behind our back." "This is a Sputnik moment and the United States has no industrial policy to counter China."
US tech firms to take hit from Huawei sanctions American firms last year sold an estimated $11 billion worth of components to Huawei, which was put on a blacklist last week by Washington over national security concerns as trade frictions grow between the US and China. Trump's executive order could effectively ban makers of US hardware and software from selling to Huawei by requiring a special license from Washington. The Commerce Department on Monday delayed the sanctions on Huawei for 90 days, saying the additional time was needed to allow for software updates and other contractual obligations. The agency said it was granting Huawei a "temporary general license" through August 19 allowing for transactions "necessary to maintain and support existing and currently fully operational networks and equipment, including software updates and patches, subject to legally binding contracts and agreements" signed before May 16. - Hardware and software - Bloomberg News reported that US-based chipmakers Intel, Qualcomm, Broadcom and Xilinx have indicated they would halt shipments to the Chinese firm which is the world's number two smartphone maker and a leader in telecom infrastructure and super-fast 5G networks. Google said it would comply with the US order, leaving Huawei without access to critical services for the Android operating system such as Gmail and Google Maps. Microsoft, which supplies the Windows operating system for many Huawei devices, did not respond to an AFP query on how the order might impact the Redmond, Washington-based firm. Bob O'Donnell of the consultancy Technalysis Research said any ban would almost certainly affect Microsoft. "If it affects Google I don't see why it wouldn't affect Microsoft," O'Donnell said. "Any version of Windows comes from Microsoft, since there is no open-source version." - Moving toward independence - Roger Kay, founder and analyst at Endpoint Technologies Associates, said the ban is likely to accelerate efforts by Huawei and other Chinese firms to develop their own sources of microprocessors and other components. "The short-term effect on both American and Chinese companies are inevitably negative," Kay said. "The longer-term effect is that Huawei and other Chinese companies turn away more sharply from American suppliers." Neither Intel nor Qualcomm responded to queries on how they would respond to the order on Huawei. Avi Greengart, founder of the research firm Techsponential, said a ban on sales to Huawei could hit a wide range of large and small US firms including Corning, which makes the popular Gorilla Glass for smartphones, and Dolby, a producer of video and audio software for handsets. "When you think about all the software and hardware components you get a pretty big list," Greengart said. "The US is a big part of the global supply chain." Few firms offered public comments on their response to the Huawei executive order. But one, California-based Lumentum Holdings, a maker of optical and laser applications, said it would comply with the executive order and that Huawei accounted for 15 percent of its revenue so far in the current fiscal year. - Risks to Apple - Greengart said Apple could also suffer from any protracted crisis over Huawei, estimating the iPhone maker gets about 17 percent of its revenues from China. Even though Apple might benefit in the premium smartphone market in Europe, "I think the risks are higher than the rewards for Apple," Greengart said. "If there is a backlash against Apple in China, that could have damaging long-term effects." Greengart said that Google might not see a major impact for the moment. "Ironically (the ban) won't affect Google much because Google doesn't make money selling Android." Patrick Moorhead, of Moor Insights & Strategy, said he sees a limited impact on US firms in the short run. "The impact to the US companies depends on the length of the ban but also how indexed they are in sales to Huawei," Moorhead said. "Neither Intel, Google or Nvidia do more than three percent of their business with Huawei, so short-term, it shouldn't be an issue." O'Donnell said a bigger risk is that Huawei and other Chinese firms step up efforts to develop software and hardware that allows them to break free from Silicon Valley. "The longer-term question is: does this drive Huawei to develop a third mobile platform?" O'Donnell said. "China is already developing its own technology infrastructure, and this plays into the whole notion of a separate internet in China, which would be a big deal."
China's state media hits back at US on trade Beijing (AFP) May 14, 2019 Beijing unleashed its tightly controlled media this week after keeping a lid on rhetoric for months as the trade war with Washington reignited, with fiery clips from state media ricocheting around the internet. The spree of editorials and commentaries in China's state media Monday and Tuesday ramped up attacks on Washington and its trade tactics, with Beijing rolling out the propaganda campaign in sync with its retaliation on US goods. China announced Monday it would raise tariffs on $60 billion ... read more
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