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China warns USA against trade 'harm' over Huawei ban

18 May 2019

On Thursday, a day after Trump's order was signed, it was revealed that the Netherlands intelligence agency is investigating a Huawei "backdoor" spying operation that targeted a Dutch telecom firm, reports Reuters.

President Trump's executive order did not go as far as to name any companies or countries specifically but it will likely do the opposite of improving relations between the United States and China.

The president's executive order does not identify a country or company by name.

The response came after president Trump stepped up measures against Huawei on Wednesday, in which he effectively barred the telecom from the United States market and added it to a blacklist restricting U.S. sales to the firm. According to Reuters, this means Huawei is barred from obtaining parts and components from USA companies without US government approval. The president signed an executive order which effectively bars US -based companies from using foreign telecoms, which are believed to pose national security risks, the White House said.

Huawei's biggest competitor ZTE landed on the same Entity List a year ago and had to shut down temporarily.

Huawei has also responded to the move, saying it will result in the US lagging behind in 5G. Without access to components, ZTE couldn't make its phones and and even some of its software.

In other words, if a foreign company produces a product that relies on components or technology provided by US companies, the USA government can effectively cut off the part of the supply chain for the foreign company's product that is produced by US companies.

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The restrictions "will not make the USA more secure or stronger", the company said.

Commerce Secretary Wilbur Ross said the United States will not cave in to Chinese telecom giant Huawei.

"We spend over $11 billion a year from American high-end suppliers, which translates into thousands of American jobs", he said. China has barred foreign companies from building significant market share in data-intensive technology sectors, such as cloud computing and financial services, which is a key sticking point in ongoing U.S.

On Wednesday he called for "risk mitigation practices", which European governments use.

Dearlove, who spent 38 years in British intelligence, said it was deeply worrying that the British government "appears to have made a decision to place the development of some its most sensitive critical infrastructure" in the hands of a Chinese company. Cheddar has reached out to Nokia for comment. The big question is whether Trump's ICT announcement and Huawei decision will jumpstart a new round of discussions - or kill talks entirely.

The US leader has banned the Chinese firm from buying US technology without seeking special approval, while also effectively barring its equipment from being used by US telecom networks. And Congress' skepticism dates back to at least 2012, when an investigation into threats posed by Huawei and ZTE began.

"I think launching now a technological war or a trade war vis-a-vis any other country is not appropriate", French President Emmanuel Macron warned Thursday.

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"This is going to be very messy", a China-based source at a US tech company said.

In recent months, the USA government has taken a number of steps against the firm, including getting Canadian authorities in December to arrest Huawei CFO Meng Wanzhou over allegations of defrauding several banks by concealing payments from Iran in violation of US sanctions.

When asked if Huawei's problems go away if trade negotiations were to be resolved, Purdy didn't seem overly optimistic.

"What these trade negotiations could mean for us is that maybe then the USA government would be willing to talk with us", he said.

Let's be clear about this - most components are made in China anyway, so any of these manufacturers could equally be in league with the Chinese government, based on the same arguments that The White House has been using over Huawei.

That leaves a very confounded situation for Huawei.

Huawei has spearheaded China's campaign to develop its own high-end technologies to reduce reliance on foreign imports, and such efforts have taken on urgency after U.S. sanctions on ZTE.

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China warns USA against trade 'harm' over Huawei ban