Huawei finds itself in the crossfire of US-China trade war

Thursday, May 16th, 2019 10:17am

Huawei has achieved quite the feat: in the space of a year, it's gone from a little known company in the US to a "national emergency".

US President Donald Trump didn't name the Chinese telecoms business in his executive order.

At this stage, he doesn't have to: Huawei's notoriety in the current administration means we all know who he's talking about.

The order effectively bans Huawei from the US market. That's less of a big deal than you might suppose.

First off, Huawei has already been banned from federal networks. And it doesn't have much of a presence stateside.

Its huge revenues - $107bn (£83bn) in 2018 - overwhelmingly come from China and the rest of the world.

However, another statement is more worrying for the company.

The US Commerce Department added Huawei to its "entity" list. This means that American companies cannot sell technology to Huawei without a special licence.

For all its undoubted and home grown prowess in 5G networks, Huawei still relies on American technology, from chips to software.

The US applied a similar order to ZTE, another Chinese telecoms business and it was a hammer blow.

Chinese President Xi Jinping asked Mr Trump to remove the order as part of trade negotiations. Mr Trump said he did so as a favour to Mr Xi, keeping the company alive.

Huawei is better placed than its compatriot company but will still be put under pressure.

That sort of favour is unlikely this time.

Relations between the US and China have deteriorated since then as both sides have imposed new tariffs on each other's imports.

Mr Trump is still a fan of "King" Xi as he likes to call him - even more so, perhaps, after he said that Mr Xi wrote him a very nice letter last week.

But no deal has been reached between the two sides and we're closer to a full-blown trade war than we've ever been.

Up against the might of the US state, it's almost tempting to feel sorry for Huawei.

This is after all a private company being targeted by a government. And the company has fought a vigorous and successful rear guard action: it persuaded the UK that it could be trusted on at least some 5G networks, in defiance of the US's networks.

And you could argue that Huawei finds itself in the crossfire of a new age of strategic competition between the US and China.

But Huawei is undoubtedly close to the Chinese state.

For years, that was a benefit, acting as a business with tacit government support.

The downside is that Huawei's future now does not depend on business or economic decisions, but geopolitical ones.

Sky News

© Sky News 2019

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