US President Donald Trump appears bent on going after Chinese high-tech firms.
Following the export ban on ZTE Corp., it’s been reported that the US Justice Department has also launched a probe into Huawei Technologies over alleged violations of US sanctions against Iran.
Earlier, the Pentagon banned the sale of Huawei and ZTE phones on US military bases worldwide amid suspicions that the devices may pose a security threat.
Punishing Huawei and ZTE over alleged violations of US sanctions would deal a heavy blow to the development of 5G network globally.
The two Chinese firms entered the telecom equipment market during the start of the 3G era more than a decade ago.
With competitive pricing, they managed to beat rivals such as Nokia, Ericsson and NEC.
Just take a look at the size of their booths at the annual Mobile World Congress held in Barcelona in March, and you will have an idea of how big they have become.
Since 2012, Huawei has been the world’s largest telecommunications equipment provider. It also has filed many patent applications for the emerging 5G technology.
Washington apparently wants to remind Beijing that despite the large market share Chinese makers control, the core technology is still in the hands of American companies.
Punishing Huawei and ZTE with a US export ban would deprive them of access to Qualcomm chips for smartphones as well as Intel or Broadcom chips for telecom equipment.
It would definitely have a huge impact on global telecom technology development.
Will China take a tit-for-tat action on US products? For example, will Beijing block the sale of Apple devices in China? If so, Apple or its biggest supplier Foxconn may consider moving their factories back to the United States. But that’s exactly what Trump wants to happen.
How should Beijing respond to win this technology trade war?
This article appeared in the Hong Kong Economic Journal on May 3
Translation by Julie Zhu
[Chinese version 中文版]
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