China issues 5G licences in timely boost for Huawei


The battle over 5G network suppliers is part of a broader push by the Trump
administration to check China’s rise as a global technology powerhouse.PHOTO: REUTERS 

5G商用 中国准备好了! 20190605 | CCTV中文国际

News Wrap: Huawei to develop 5G networks in Russia

SHANGHAI/HONG KONG (REUTERS, BLOOMBERG) – China granted 5G licences to the country’s three major telecom operators and China Broadcasting Network Corp on Thursday (June 6), giving the go-ahead for full commercial deployment of the next-generation cellular network technology.

The approvals will trigger investment in the telecommunications sector which will benefit top vendors such as Huawei Technologies, just as the Chinese network equipment provider struggles to overcome a US blacklisting that has hurt its global business.

China approved four operating licences for 5G networks, setting the stage for the super-fast telecommunications system amid simmering tensions with the US over technology and trade.

The country’s three state-owned wireless carriers and China Broadcasting Network Corp were granted licences for full commercial deployment, according to state broadcaster CCTV.

The operators, China Mobile Ltd, China Telecom Corp and China Unicom Hong Kong Ltd, have been testing the technology in several cities including Beijing and Shenzhen.

Full deployment of 5G networks in a country with almost 1.6 billion wireless phone subscriptions is expected to boost local companies designing gear for applications in autonomous driving, robotics, remote surveillance and virtual reality. The faster-than-expected approvals also come as Shenzhen-based Huawei Technologies Co, the world’s largest manufacturer of networking equipment, has vowed to maintain its lead in the face of a US campaign pressuring allies not to use the company’s products.

Shares of some 5G-related companies fell in Hong Kong and Shanghai trading after the licence announcement, trimming gains made earlier in the week on expectations the companies would benefit from the push for the new networks.

China Tower Corp, the three major carriers’ infrastructure provider, fell 3% as of 10.50am in Hong Kong, paring its advance in the past four days to 9.1%. ZTE Corp, which makes handsets and telecom gear, dropped 4.3%, trimming its four-day rally to 7.1%.

Betting on the fate of the nation’s next generation of telecom networks has been one of the year’s hottest trades in China and Hong Kong. An index of telecom-related shares is up 20% this year, led by a 54% rally in ZTE’s Shenzhen-traded stock.

Beijing-based Xiaomi Corp in March said it would introduce China’s first 5G phone in May or June. Huawei and ZTE, have also said they intend to offer handsets compatible with the technology this year.

Introducing 5G will directly add 6.3 trillion yuan (US$912bil) to economic output and 8 million jobs by 2030, the China Academy of Information and Communications Technology estimates. — Bloomberg

Read more: 

If they must pick sides, tech firms will choose China

US President Donald Trump’s latest confrontation with
China’s telecoms giant Huawei may plunge the world into a long-term
technology “cold war,” forcing global companies to pick sides between
the US and China.

US may escalate trade war in six ways

All parties suffer during the trade war, a game of
“killing 1,000 enemies while losing 800 of our own.” Many institutions
have forecast the impact of increased tariffs on China’s economic growth
to be around 1 percentage point. While there is no need to panic, we
should also prepare for worst-case scenarios.

Trump’s Huawei Threat Is Nuclear Option to Halt China’s Rise

 

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How this US-China trade war will remake the world


New world order: People visit the bund in front of Shanghai’s financial district of Pudong. The US-China trade war looks like the beginning of a profound break in the global order. As China and the United form two opposing economic and geopolitical coalitions, the rest of the world will be forced to choose. – Reuters

President Donald Trump has long said the goal of his trade policy is simply to get better deals for Americans. But as the trade war intensifies, it seems increasingly likely that his policies will lead to something more: a lasting break with China and a new alignment of global power.

First, consider the evidence for the break.

The current impasse in trade talks was sparked by a sudden change in terms on the part of the Chinese negotiators.

This change likely caught the administration off guard, but Trump’s response is notable: He immediately ramped up tariffs, then announced a ban on business with Chinese telecommunications firm and national champion Huawei Technologies Co.

These actions have backed Chinese President Xi Jinping into a corner and turned the trade dispute into a matter of Chinese national pride.

This limits the possibility not only of a quick resolution, but also of the chances that the Chinese people will accept any concessions to the US.

Trump’s handling of this situation stands in sharp contrast to his negotiating strategy on other issues.

Though the president railed against NAFTA throughout his campaign, he’s touted its replacement as a huge success, even though it is only cosmetically different, and has been willing to suspend his tariffs on Canada and Mexico to ease its passage through Congress.

Likewise, Trump has been more than willing to trumpet his successful negotiations with North Korean leader Kim Jong Un even though the evidence for such success is thin.

Meanwhile, the president’s tough talk against Europe and Japan for their trade practices, and against NATO allies for their defence spending, has been mostly bluster.

When it comes to China, however, the president is doubling down.

He has encouraged US supply chains to move out of China and established subsidy programmes to cushion farmers from the effects of a protracted trade war.

Which leads to the long-term implications of this battle. A protracted trade war would almost guarantee a global realignment.

Supply chains that run through both the US and China would constantly be subject to disruptions, so global manufacturers would have to decide whether to pursue an America-centric or China-centric strategy.

That’s already the case in the digital sphere, where Chinese restrictions on the Internet divide the world into two parts: that which is served by US tech giants such as Google and Facebook, and that which relies on Chinese firms such as Baidu and WeChat.

China’s threat to cut off US access to rare-earth minerals points to a potential bifurcation in commodities markets as well.

The trend is clear: As China’s economic and geopolitical power grows, countries within China’s sphere of influence will feel increasing pressure to integrate their economies with Chinese supply chains and multinationals rather than American ones.

At the same time, as my Bloomberg Opinion colleague Tyler Cowen points out, the rise of China is a main driver of populist sentiment in the UK and Australia.

This creates political pressure in those countries for further isolation from China.

In the US, Trump has made it clear that he sees the trade war with China as politically advantageous for him, and he’s probably right.

It’s probably also true that this anti-China sentiment will outlast him.

Break in global order

Add up all these factors, and the US-China trade war looks like the beginning of a profound break in the global order. As China and the US form two opposing economic and geopolitical coalitions, the rest of the world will be forced to choose.

Maybe the European Union can form a third unaligned pole, as France and Germany’s membership in the EU (and the UK’s absence from it) provides them with the negotiating power to avoid falling under the Chinese or American sphere of influence.

Of course, in some ways this type of multipolar alignment would be a return to the past. The dual-superpower world that existed for much of the second half of the 20th century was always an exception, and the era of American supremacy that began after the collapse of the Soviet Union was never going to last.

Until recently, however, a new kind of bipolar arrangement seemed possible: a kind of competitive partnership between China and the US, with the EU playing a supporting role.

The events of the last few weeks have left that looking increasingly unlikely. — Bloomberg Opinion

By Karl W. Smith , a former assistant professor of economics at the University of North Carolina’s school of government.

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The Tech Cold War Has Begun – Bloomberg
China now has no choice but to pursue technological independence, and will burn the cash to achieve it. … A similar process took place when ZTE Corp. was banned from buying U.S. products after reneging on a deal to settle charges of breaking trade sanctions. … The U.S. ended up 

Another Long March begins

Chinese President Xi Jinping said that “we are on a new Long March now” during his inspection tour of Jiangxi Province this week and encouraged people to gain strength from the spirit of the Long March to overcome
difficulties and obstacles, China’s state media outlets reported on Thursday.
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https://youtu.be/oiGm2E8BaC4 Martin Jacques Martin Jacques (2012) Born 1945 (age 73–74) Coventry , England, Great Britain, U.

 

  https://youtu.be/nzhZGUfaZhI China-U.S. trade tensions | Mideast tensions take turn for worse    https://youtu.be/eQbQbvGBDaM

https://youtu.be/hRv0QMEwdas https://youtu.be/dtT0rHgJ9-I 《今日关注》是CCTV中文国际频道播出的时事述评栏目。该栏目紧密跟踪国内外重大新闻事件,邀请国内外一流的专家和高级官员梳理新闻来龙去脉,评论新闻事…

Huawei Technologies CEO Ren Zhengfei says Huawei would be “fine” even if Qualcomm and other American suppliers would not sell .

 

Huawei ban: Risk or opportunity for M’sian tech companies? US-China trade war a boon


KUALA LUMPUR: It looked like the start of semiconductor manufacturers’ nightmare when US President Donald Trump fired another salvo in the escalating US-China trade war by blacklisting China’s mobile phone equipment giant, Huawei Technologies Co Ltd.

The act sent shock waves along the supply chain of the global semiconductor industry, sparking strong sell-offs in semiconductor companies’ shares worldwide. The same was seen in Malaysia, which caused the Bursa Malaysia Technology Index to sink 3.47% on Tuesday — the biggest loser among the indices — led by companies linked to the industry.

But it may not be a losing battle in the long run, at least not for Malaysian companies. The trade diversion that will arise from Huawei’s ban in the US, which effectively cuts off US chipmakers from the supply chain of Huawei — the world’s largest provider of networking gear and the second-largest smartphone vendor — may benefit domestic players here.

Pentamaster Group Bhd co-founder and chairman Chuah Choon Bin told The Edge Financial Daily that he expects the group’s telecommunications segment to see a 20% to 30% decline in sales as a result of Huawei’s blacklisting in the US. The contraction may take away some 18% in total sales it anticipates for the year.

However, Chuah said Pentamaster may also stand to benefit from the ban, as he expects China will become more aggressive in ramping up their product developments in the face of what happened to Huawei.

So, he sees a silver lining for the group in the form of trade diverted from US chip suppliers to those located elsewhere, possibly in Malaysia, where Pentamaster supplies chip tester equipment or automated tester equipment.

As such, Chuah does not expect Pentamaster to be greatly affected by Huawei’s ban in the US. In fact, the eventual tally may show Pentamaster gaining from the situation.

Pentamaster was among the technology counters on Bursa Malaysia that took a beating on Tuesday, following the news on Huawei’s ban.

Its shares sank as much as 29 sen on Tuesday to RM4.05, before easing to settle at RM4.10, down 24 sen or 5.53% at market close. It was one of the top losers in Bursa Malaysia’s Technology Index, which retreated to 30.9 points, dragging the FBM KLCI down 0.1% to close at 1,603.74.

Other semiconductor stocks that were badly hit include: Inari Amertron, which fell 10 sen or 6.67% to RM1.40; Mi Technovation Bhd, which was down 11 sen or 6.43% to RM1.60; Globetronics Technology Bhd, which retreated 10 sen or 5.92% to RM1.59; and Frontken Corp Bhd, which fell eight sen or 5.63% to RM1.34.

Nonetheless, the rebound on Wall Street among semiconductor stocks that were bogged down by fears over the trade war’s ripple effects, raised hope that its peers in Malaysia may follow suit, if the upward trend seen on Tuesday is sustainable.

The share price recovery was fuelled by the temporary 90-day reprieve that was granted to Huawei on Monday. The initial ban was to take effect on May 20. The Philadelphia Semiconductor Index gained 2.1% to end a three-day slump on Tuesday.

“The disruption to (the) supply chain will definitely be negative in the short term,” said an analyst who tracks the semiconductor industry, citing as example people who are considering switching mobile phones after the news that Alphabet Inc’s Google would be cutting off the supply of hardware and selected software services to Huawei once the 90 days is up.

“The trade war seems like breaking the supply chain into two … this is going to be bad in the short term. But if China cannot get their supply from the US, they are likely to turn inwards … [or to] countries like Malaysia,” the analyst added.

A Singapore-based fund manager commented that Malaysian tech companies presently do not have much to do with Huawei. But the ban is causing everyone in China to sit up and rethink their supply chain strategy. “In short, no one will believe in the US [anymore]. It is not a reliable and credible supplier. What it means is that it is positive for some of those tech companies in Malaysia that can offer what the Chinese need,” he said.

Some analysts, however, have a more cautious stance, saying it is too early to draw any conclusions on the matter given that it is hard to predict any retaliatory moves the two countries could make.

The lingering concern remains that any slowdown in international trade volume will not augur well for the world economy, including Malaysia. Meanwhile, some have pointed out that the valuation of Malaysian semiconductor stocks are relatively higher compared with elsewhere.

 
Read more:

 

US-China trade war a boon 

 

Pentamaster still confident of another record earnings year
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China won’t accept unequal trade deal

China won’t accept unequal trade deal


https://youtu.be/nzhZGUfaZhI
China-U.S. trade tensions | Mideast tensions take turn for worse 

封杀华为 发难大疆 美滥用国家力量打压中国企业!| CCTV中文国际

Growing US pressure won’t force China to submit

 

The US Department of Homeland Security warned that drones pose a potential information risk because they contain components that can compromise users’ data and share information on servers other than users.

Since nearly 80 percent of the Unmanned Aerial Vehicle (UAV) drones in North America are produced by China’s Dajiang Innovation (DJI), a Shenzhen-based company, analysts generally believe that tarnishing DJI’s reputation may be laying the groundwork for taking actionsagainst DJI.

DJI is the world’s largest producer of civilian drones and is said to control more than 70 percent of the world’s civilian drone market. The drones it produces are not only good in quality but also cheap. Many products are under $1,000, so they are popular and increasingly versatile.

The US military is also a DJI drone user. The use of DJI drones by the US military has not completely stopped following the controversy over its information security. This shows that while the US has real concerns about the information security risks of DJI UAV , there is no real evidence to support such concerns.

The US Department of Homeland Security raised the issue of the information security risks of UAV to increase leverage and pressure on China after the US decision to cut off supplies to Huawei. It seems Washington is in a hurry to press China to make concessions and reach a trade deal at an early date beneficial only to the US.

The vast majority of users in the US use DJI drones in non-classified areas. The airspace over sensitive US institutions is closed to drones and there is another set of security measures that have nothing to do with the use of DJI drones in the US market. The prevention of forest fires, assistance with construction layouts, and the development of express delivery services to remote areas are obviously not the direction that intelligence agencies are aiming for. It is hard to believe that DJI has an incentive to engage in “intelligence activities” at the risk of being shut out of international markets.

The US is abusing the concept of national security. It is the US that was caught a few years ago spying on the leaders of its allies. It is now saying that Beijing’s intelligence threat is everywhere. A big part of it is putting on a show. It may be partly because the US does install a lot of “back doors” into its electronic exports, Washington thinks other countries will do the same.

China will not fall into the trap to make unconditional compromises as Washington increases its pressure. If the US cracks down on Chinese companies, American consumers and suppliers will also suffer losses.

The US is having a profound effect on the global economic order by abusing national security and trampling on commercial principles. Current US administration is destroying the reputation and national image that generations of Americans have built. Such arrogance and hegemony are by no means good signs for the US..

Read more: 

US orchestrates self-defeating maneuvers

Chinese people do not know whether we should call US approaches hegemonic politics or profiteering politics. But in short, they are crooked means. The threat of tariffs will not work. Neither will US threats against Chinese companies create a shock wave against China. The US is picking a wrong opponent at a wrong time. It will find no way of crafting a good result from a strategic mistake.

华为公开宣布主权!5G不再共享!所有工厂撤离美国,美股瞬间暴跌,特朗普全完了!

中國是世界上唯一的文明!

“What China Will Be Like As A Great Power” : Martin Jacques Keynote (32nd Annual Camden Conference)

 

http://www.you-books.com/book/M-Jacques/When-China-Rules-the-World

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华为不惧美国封杀 美式霸凌失道寡助!Huawei’s goodwill gesture being treated unscrupulously by the US !

Huawei CFO arrest violates human rights as US takes aim at Huawei, the real trade war with China


In custody: A profile of Meng is displayed on a  computer at a Huawei store in Beijing. The Chinese government, speaking through its embassy in Canada, strenuously objected to the arrest, and  demanded Meng’s immediate release. — AP

China urges release of Huawei executive

– In violation of universal human rights

Chinese officials are urging the US and Canada to clarify why Meng Wanzhou, a senior executive of Huawei Technologies, has been detained and to immediately release her, slamming the arrest as a violation of her rights.

Experts said on Thursday that Meng’s detention is a move by the US to heat up the ongoing trade war between China and the US.

Meng, who is Huawei’s chief financial officer and the daughter of Huawei’s founder Ren Zhengfei, was detained as she was transferring flights in Canada, according to information provided by Huawei, one of China’s tech giants.

Meng’s detention was made following a request by the US, which is seeking her extradition on as yet unspecified charges made by prosecutors in the Eastern District of New York, a Huawei spokesperson told the Global Times on Thursday.

Meng was arrested in Vancouver on Saturday, the New York Times reported on Thursday, citing a spokesperson from Canada’s Justice Department.

“China has demanded that the US and Canada immediately clarify the reasons for Meng’s detention and to release her,” Geng Shuang, spokesperson of China’s Ministry of Foreign Affairs, told a daily press briefing on Thursday.

He noted that Chinese consular officials in Canada have already provided assistance to Meng.

Meng’s detention, made without any clearly stated charges, is an obvious violation of her human rights, said Geng.

The Chinese Embassy in Canada also said on Thursday morning that it firmly opposes and has made strong protests over the action which has seriously curtailed the rights of a Chinese citizen.

“The Chinese side has lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Meng Wanzhou,” the Chinese Embassy in Canada said in a statement published on its website.

A Canadian source with knowledge of the arrest was quoted in the Canadian newspaper Globe and Mail on Thursday as saying that US law enforcement authorities allege that Huawei violated US sanctions against Iran but provided no further details.

Although Meng’s detention stems from terms of the US-Canada extradition treaty, the US should not be taking such legal action without providing concrete evidence, especially when it has been trying to restore relations with China, Hao Junbo, a Beijing-based lawyer, told the Global Times on Thursday.

Chinese officials and experts criticized the US for its long-arm jurisdiction, which not only hurts individuals but also enterprises.

Rising obstacles

Huawei has been targeted by the US for many years, from patent infringement lawsuits to political pressure, Xiang Ligang, chief executive of the telecom industry news site cctime.com, told the Global Times on Thursday.

“As the Chinese company grew stronger, it faced more obstacles in foreign markets as it is considered as a threat to local players,” he said.

Cisco Systems filed the first lawsuit against Huawei in 2003. Motorola filed a lawsuit accusing Huawei of theft of trade secrets in 2010, according to media reports. The company also faced investigation by the US Congress on security issues.

Since at least 2016, US authorities have been probing Huawei’s alleged shipping of US-origin products to Iran and other countries in violation of US export and sanctions laws, Reuters reported in April.

The US also asked its major allies to say ‘no’ to Huawei equipment, as it was worried about alleged potential Chinese meddling in 5G networks, the Wall Street Journal reported on November 23.

While the company faces rising difficulties in the US market, it has been actively exploring other markets such as the EU and Africa.

It became the world’s largest telecom equipment provider in 2017, surpassing Ericsson and ZTE, industry website telecomlead.com reported in March, citing IHS data.

Huawei has a 28 percent market share in the global telecom infrastructure industry, followed by Ericsson and Nokia, which have 27 percent and 23 percent respectively, said the report.

Escalating trade war

The US will not stop countering China’s rise in the technology sector and will never drop its hostility toward China’s “Made in China 2025” strategy, Wang Yanhui, head of the Shanghai-based Mobile China Alliance, told the Global Times on Thursday.

“Huawei has become another card for the US to play against China in the ongoing trade war,” he said.

China and the US announced a trade truce following a meeting between the two countries’ top leaders in Buenos Aires on Saturday.

But experts warned that China should be prepared for a long-lasting and heated trade war with the US, as it will continue to attempt to counter China’s rising power.

“The latest Huawei incident shows that we should get ready for long-term confrontation between China and the US, as the US will not ease its stance on China and the arrest of a senior executive of a major Chinese tech company is a vivid example,” Mei Xinyu, a research fellow with the Beijing-based Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Thursday.

Huawei said there is very little information about specific allegations and that the company is not aware of any misconduct by Meng.

“The company complies with all laws and regulations in the countries in which it operates, including export control and sanctions laws applied in the UN, the US and the EU,” Huawei said. – Global Times by Chen Qingqing

Canada’s treatment of Meng Wanzhou in violation of human rights

We hope that Canadian authorities handle the case seriously and properly. We also hope that Ms Meng will be treated humanely and will be bailed out. We would like to see Meng’s case being handled properly, so that she can regain her freedom as soon as possible. Chinese society has always respected Canada, and it is sincerely hoped that the way how Canadian authorities handle this matter will live up to Chinese people’s expectation and impressions regarding the country.

 With executive’s arrest, US wants to stifle Huawei

The Chinese government should seriously go behind the US tendency to abuse legal procedures to suppress China’s high-tech enterprises. It should increase interaction with the US and exert pressure when necessary. China has been exercising restraint, but the US cannot act recklessly. US President Donald Trump should rein in the hostile activities of some Americans who may imperil Sino-US relations.

US takes aim at Huawei

 Arrest of telecom giant’s CFO escalates US-China tech battle

THE Trump administration’s efforts to extradite the chief financial officer of China’s Huawei Technologies Co over criminal charges mark the start of an even more aggressive phase in the technology rivalry between the United States and China and will increase pressure on Washington’s allies to shun the telecommunications company.

Armed with a US extradition request, Canadian authorities arrested Meng Wanzhou on Dec 1, the same day as President Trump was holding a summit with Chinese counterpart President Xi Jinping. But White House officials said Trump had no advance knowledge of the arrest, indicating the action was on a separate track from trade talks currently under way between Washington and Beijing.

Meng’s detention underscores a sense of urgency, at the Justice Department and other US agencies, to address what they see as a growing threat to national security posed by China’s ambitions to gain an edge in the tech sector. For years, Washington has alleged the Chinese government could compel Huawei, which supplies much of the world with critical cellular network equipment, to spy or to disrupt communications.

Huawei has long said it is an employee-owned company and isn’t beholden to any government, and has never used its equipment to spy on or sabotage other countries. The Chinese government, speaking through its embassy in Canada, strenuously objected to the arrest, and demanded Meng’s immediate release.

US prosecutors made the extradition request based on a sealed indictment for alleged violations of Iran sanctions that had been prepared for some time, people familiar with the matter said. A federally appointed US overseer, formerly charged with evaluating HSBC Holdings PLC’s anti-money-laundering and sanctions controls, relayed information about suspicious Huawei transactions to federal prosecutors in the Eastern District of New York, some of the people said.

Meng, the daughter of Huawei’s founder, Ren Zhengfei, is now in custody in Vancouver, and a bail hearing has been scheduled for Friday, according to a spokesman for Canada’s justice department.

Some worried a lack of coordination on the various strands of the Trump administration’s China initiatives could be counterproductive, especially if Trump decides to use the detention of Meng as leverage to extract concessions in the trade talks. The two sides agreed on a 90-day window from the Dec 1 summit to settle a trade dispute that has seen the two sides exchange tit-for-tat tariffs on each other’s goods.

“I’m very concerned that that’s just going to ratchet this trade war and make negotiations much more difficult,” said Gary Locke, former US ambassador to China. “This is I think a really hot-button, almost a grenade with respect to the 90-day negotiations.”

China has a long history of reading darker motives into US actions. “The risk is conspiracy theories in Beijing,” said China scholar Michael Pillsbury at Hudson Institute, who consults regularly with the Trump trade team. He compares the events to when China rejected US explanations that the United States had made a mistake when it bombed the Chinese Embassy in Belgrade in 1999 during the Kosovo war.

The arrest indicated the Justice Department had significant evidence against Meng, and that additional charges were likely, said Brian Fleming, a trade and national security lawyer at Miller & Chevalier. “This is just the tip of the iceberg,” he said.

The arrest could also add ammunition to an extraordinary US government campaign to persuade wireless and Internet providers in allied countries to stop using telecommunications equipment from Huawei, said national security experts. US officials say they are intensifying efforts to curb Huawei because wireless carriers world-wide are about to upgrade to 5G, a new wireless technology that will connect many more items—factory parts, self-driving cars and everyday objects like wearable health monitors – to the Internet. US officials say they don’t want to give Beijing the potential to interfere with an ever-growing universe of connected devices.

 

By Kate O’keeffe and Bob Davis

 

Huawei reveals the real trade war with China

Tech rivalry: The high-tech trade war shows that for all the hoopla over manufacturing jobs, steel autos and
tariffs, the real competition is in the tech sector. — Reuters

IF you only scan the headlines, you could be forgiven for thinking that the US-China trade war is mainly about tariffs.

After all, the president and trade-warrior-in-chief has called himself “Tariff Man”. And the tentative trade deal between US President Donald Trump and Chinese President Xi Jinping was mainly about tariffs, especially on items like automobiles.

But the startling arrest in Canada of a Chinese telecom company executive should wake people up to the fact that there’s a second US-China trade war going on – a much more stealthy conflict, fought with weapons much subtler and more devastating than tariffs. And the prize in that other struggle is domination of the information-technology industry.

The arrested executive, Wanzhou Meng, is the chief financial officer of telecom-equipment manufacturer Huawei Technologies Co (and its founder’s daughter). The official reason for her arrest is that Huawei is suspected of selling technology to Iran, in violation of US sanctions.

It’s the second big Chinese tech company to be accused of breaching those sanctions – the first was ZTE Corp in 2017. The United States punished ZTE by forbidding it from buying American components – most importantly, telecom chips made by US-based Qualcomm Inc.

Those purchasing restrictions were eventually lifted after ZTE agreed to pay a fine, and it seems certain that Huawei will also eventually escape severe punishment. But these episodes highlight Chinese companies’ dependence on critical US technology.

The United States. still makes – or at least, designs – the best computer chips in the world. China assembles lots of electronics, but without those crucial inputs of US technology, products made by companies such as Huawei would be of much lower quality.

Export restrictions, and threats of restrictions, are thus probably not just about sanctions – they’re about making life harder for the main competitors of US tech companies.

Huawei just passed Apple Inc to become the world’s second-largest smartphone maker by market share (Samsung Electronics Co is first). This marks a change for China, whose companies have long been stuck doing low-value assembly while companies in rich countries do the high-value design, marketing and component manufacturing.

US moves against Huawei and ZTE may be intended to force China to remain a cheap supplier instead of a threatening competitor.

The subtle, far-sighted nature of this approach suggests that the impetus for the high-tech trade war goes far beyond what Trump, with his focus on tariffs and old-line manufacturing industries, would think of. It seems likely that US tech companies, as well as the military intelligence communities, are influencing policy here as well.

In fact, more systematic efforts to block Chinese access to US components are in the works. The Export Control Reform Act, passed this summer, increased regulatory oversight of US exports of “emerging” and “foundational” technologies deemed to have national-security importance. Although national security is certainly a concern, it’s generally hard to separate high-tech industrial and corporate dominance from military dominance, so this too should be seen as part of the trade war.

A second weapon in the high-tech trade war is investment restrictions. The Trump administration has greatly expanded its power to block Chinese investments in US technology companies, through the Committee on Foreign Investment in the United States.

The goal of investment restrictions is to prevent Chinese companies from copying or stealing American ideas and technologies. Chinese companies can buy American companies and transfer their intellectual property overseas, or have their employees train their Chinese replacements.

Even minority stakes can allow a Chinese investor access to industrial secrets that would otherwise be off-limits. By blocking these investors, the Trump administration hopes to preserve US technological dominance, at least for a little while longer.

Notably, the European Union is also moving to restrict Chinese investments. The fact that Europe, which has opposed Trump’s tariffs, is copying American investment restrictions, should be a signal that the less-publicised high-tech trade war is actually the important one.

The high-tech trade war shows that for all the hoopla over manufacturing jobs, steel, autos and tariffs, the real competition is in the tech sector.

Losing the lead in the global technology race means lower profits and a disappearing military advantage. But it also means losing the powerful knowledge-industry clustering effects that have been an engine of US economic growth in the post-manufacturing age. Bluntly put, the United States can afford to lose its lead in furniture manufacturing; it can’t afford to lose its dominance in the tech sector.

The question is whether the high-tech trade war will succeed in keeping China in second place. China has long wanted to catch up in semiconductor manufacturing, but export controls will make that goal a necessity rather than an aspiration. And investment restrictions may spur China to upgrade its own homegrown research and development capacity.

In other words, in the age when China and the United States were economically co-dependent, China might have been content to accept lower profit margins and keep copying American technology instead of developing its own. But with the coming of the high-tech trade war, that co-dependency is coming to an end. Perhaps that was always inevitable, as China pressed forward on the technological frontier. In any case, the Trump administration’s recent moves against Chinese tech – and some similar moves by the EU – should be seen as the first shots in a long war.

— Bloomberg by Noah Smit

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Tariffs won’t make US firms produce in US


“It would not be profitable to build the Focus Active in the U.S. given an expected annual sales volume of fewer than 50,000 units,” automaker Ford Motor Company said in a statement on Sunday.

US President Donald Trump tweeted earlier on Sunday that “‘Ford has abruptly killed a plan to sell a Chinese-made small vehicle in the US because of the prospect of higher US Tariffs.’ CNBC. This is just the beginning. This car can now be built in the USA and Ford will pay no tariffs!” Ford quickly clarified the facts, evidently rebuffing Trump’s tweet.

Likewise, tech giant Apple Inc. wrote a letter to US Trade Representative Robert Lighthizer, saying that a proposed 25 percent tariff on $200 billion of Chinese imports would cover a “wide range of Apple products.”

In another tweet, Trump told Apple to make their products in the US instead of China. Apple hasn’t responded.

According to the US media, the price of iPhone may increase to $2,000 if the company does as told.

The multinational companies that produce automobile and mobile phones have different manufacturing and sales layouts. Car manufacturers tend to produce their products where they are sold, while mobile phone manufacturers optimize their production chain costs worldwide. That’s the natural law of economic globalization which can’t be easily changed by a country’s government.

The White House lacks understanding of the global production and value chains. “Make your products in the United States instead of China” seems naive. Instead of coercing companies to follow demands, imposing tariffs will only scare them off.

Simply making US companies produce in the US can’t deal with the complicated global industry today. We have also learnt from history that neither side will gain in a trade war.

China is the world’s largest automobile and mobile phone market. Setting tariff barriers between Beijing and Washington won’t make US companies give up on China for the sake of their own country. As long as China doesn’t make things hard for US companies, it’s unavoidable that they will place production operations in China. The Chinese market can help them make money, but the White House can’t.

Most American high-tech companies will face difficulties if they leave China. The larger the market is, the higher return the companies will get from their research and development. High-tech companies, if they can’t grow to be giant, don’t usually survive for long, and it would be fatal for many of them to lose the Chinese market.

There hasn’t been a previous US government that dares to instruct multinational companies in production layouts, and the current administration has overestimated its executive power. The global industrial chain today is formed by market rules established over decades and can’t be easily changed by one government.

It would be the White House’s dream to expect that the US is not only the world’s technology and financial center, but also the world’s factory that sells its products globally. If the US doesn’t want to wake up from this dream, then the outside world has to step in and rouse Washington.

Source:Global Times

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Trump’s overture to emerging Asia drowned out by trade war with China


US Trade war with China overshadows US$113m investment initiatives trumpeted by US Secretary of State

 

 

SINGAPORE (Reuters) – When the U.S. Secretary of State flies into Southeast Asia this week with a new investment pitch for the region, the response could be: thanks a million, but please stop threatening a trade war with China that will make us lose billions of dollars.

Analysts say the $113 million of technology, energy and infrastructure initiatives trumpeted by Mike Pompeo earlier this week – the first concrete details of U.S. President Donald Trump’s vague ‘Indo-Pacific’ policy – may be hard to sell to countries that form an integral part of Chinese exporters’ supply chains.

It may even further inflame tensions with Beijing, which has been spreading money and influence across the region via its Belt and Road Initiative development scheme.

“The Southeast Asian capitals are more worried about any blowback effects for them of U.S.-China trade tension than they are about how much they can benefit from this $113 million initiative,” said Malcolm Cook, senior fellow at the Institute of Southeast Asian Studies in Singapore.

“Pompeo has a hard selling job. There is still no real positive trade story for Asia coming out of the United States.”

Hot on the heels of Washington’s new economic plan for emerging Asia came reports the United States could more than double planned tariffs on $200 billion of imported Chinese goods from dog food to building materials. China called it “blackmail” and vowed retaliation.

After a brief meeting with new Malaysian Prime Minister Mahathir Mohamad in Kuala Lumpur, Pompeo will fly to Singapore – a global trading hub that could be one of the hardest-hit in the region by a trade war – for a sit-down with the 10-member Association of Southeast Asian Nations (ASEAN) on Friday.

Singapore’s biggest bank, DBS, estimates that a full-scale trade war – defined as 15-25 percent tariffs on all products traded between the U.S. and China – could more than halve Singapore’s growth rate next year from a forecast 2.7 percent to 1.2 percent. Malaysia’s growth rate in 2019 could fall from an estimated 5 percent to 3.7 percent.

“We are all acutely aware of the storm clouds of trade war,” Singapore’s Foreign Minister Vivian Balakrishnan said at the opening of an ASEAN foreign ministers meeting on Thursday that precedes meetings with the United States and other nations.

Singapore’s Prime Minister Lee Hsien Loong said earlier this year that a trade war would have a “big, negative impact” on the country.

Ratings agency Moody’s said this week that an escalation of trade tensions in 2018 had become its “baseline expectation”, and that Asia was “especially vulnerable” given the integration of regional supply chains.

SANCTIONS ON NORTH KOREA

As well as trade, Friday’s meeting will also cover security issues such as South China Sea disputes and North Korea’s nuclear disarmament. The United States will press Southeast Asian leaders to maintain sanctions on Pyongyang following reports of renewed activity at the North Korean factory that produced the country’s first intercontinental ballistic missiles capable of reaching the United States.

Pompeo will also travel to Indonesia during his trip – Southeast Asia’s biggest economy which under Trump faces losing some of the trade preferences given by Washington for poor and developing countries.

Few officials around the region offered comment on the Indo-Pacific strategy when contacted by Reuters for this story. One said that the ASEAN meeting in Singapore would be an opportunity “to have clarity and a more unified position” on the vision.br

One reason for caution is that the region has been wrong-footed by U.S. advances before.

Former U.S. President Barack Obama’s “pivot” to Asia went on the backburner after Trump won the 2016 election promising to put “America First”. One of his early acts in office was to pull out of the Trans-Pacific Partnership (TPP) trade agreement, which involved four Southeast Asian states.

The result was that across Asia, more and more countries were pulled into China’s orbit: softening their stance on territorial disputes in the South China Sea and borrowing billions of dollars from Beijing to develop infrastructure.

The Philippines is one example of a country which has taken a more conciliatory approach to China despite a bitter history of disputes over maritime sovereignty.

Its President Rodrigo Duterte frequently praises Chinese counterpart Xi Jinping and in February caused a stir when he jokingly offered the Philippines to Beijing as a province of China.

Thailand, one of Washington’s oldest allies, is another major regional power perceived to have moved closer to China after U.S. relations came under strain because of concerns about freedoms under its military-dominated government.

Thai foreign ministry spokesperson Busadee Santipitaks told Reuters the country was proceeding with “a balanced approach” towards the United States and China.

U.S. officials said the Indo-Pacific strategy does not aim to compete directly with China’s Belt and Road Initiative. Yet, in an apparent reference to China, Pompeo said Washington will “oppose” any country that seeks dominance in the region.

While Chinese officials have not criticized the U.S. approach, its influential state-run tabloid the Global Times said in an editorial on Tuesday: “Belt and Road is destined to continue to flourish. This has nothing to do with certain forces that are selfish and engage in petty practices and make jibes.”

John Geddie Reuters

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