Picture: BLOOMBERG/GILLES SABRIÉ
Picture: BLOOMBERG/GILLES SABRIÉ

Beijing — On Thursday, China slammed a decision by the US government to put telecom giant Huawei on a blacklist and said it will take steps to protect its companies, in a further test of ties as the superpowers clash over trade.

Huawei said  it will challenge the decision.

China strongly opposes other countries imposing unilateral sanctions on Chinese entities, a commerce ministry spokesperson said, stressing that the US should avoid further impacting China-US trade relations.

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The crackdown on Huawei came as US treasury secretary Steven Mnuchin said he would visit China soon for more trade discussions. Hopes for a deal to end a trade war were thrown into doubt after the world’s two biggest economies increased tariffs on each other’s goods in the past week.

The US commerce department said on Wednesday that it was adding Huawei Technologies and 70 affiliates to its so-called “entity list” in a move that bans the Chinese company from acquiring components and technology from US firms without prior US government approval.

US President Donald Trump, separately on Wednesday, signed an executive order barring US firms from using telecom equipment made by companies deemed to pose a national security risk. The order does not specifically identify any country or company, but US officials have previously labeled Huawei a “threat” and lobbied allies not to use Huawei network equipment in next-generation 5G networks.

“China has emphasised many times that the concept of national security should not be abused, and that it should not be used as a tool for trade protectionism,” Gao Feng, spokesperson at the Chinese commerce ministry, told reporters. “China will take all the necessary measures to resolutely safeguard the legitimate rights of Chinese firms.”

First, there must be mutual respect, equality and mutual benefit. Second, one’s word must be kept, and not be capricious
Chinese foreign ministry spokesperson Lu Kang

US commerce Ssecretary Wilbur Ross said Trump backed the decision to “prevent American technology from being used by foreign-owned entities in ways that potentially undermine US national security or foreign policy interests”. In response, Huawei, which denies its products pose a security threat, said it was “ready and willing to engage with the US government and come up with effective measures to ensure product security”.

It said restricting Huawei from doing business in the US would “limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment and eventually harming the interests of US companies and consumers”.

Uncertain outlook

Trump had softened his trade rhetoric on Tuesday and insisted talks had not collapsed. He also announced plans to meet Chinese President Xi Jinping at a G20 summit in Japan late next month. When asked about media reports that the two leaders had to meet face to face to resolve the dispute, Gao said those reports were not true.

He added that he had no information on any plans for a US trade delegation to visit China at present.

Foreign ministry spokesperson Lu Kang, asked if China had invited US officials for more talks, said China always advocated resolving disputes through dialogue. “Negotiations and consultations, to have meaning, must be sincere,” Lu told reporters at a separate daily briefing. “First, there must be mutual respect, equality and mutual benefit. Second, one’s word must be kept, and not be capricious.”

As negotiations towards resolving the US-China trade war stalled last week, the US ramped up the pressure by raising tariffs on  $200bn worth of Chinese imports to 25% from 10%. China retaliated with higher tariffs on a revised list of $60bn worth of US products. Trump has threatened to launch 25% tariffs on yet another $300bn worth of Chinese goods.

“The tariff hike by the US will only bring greater difficulties to the consultations,” Gao said. “We urge the USs to cancel the wrong practices as early as possible, avoiding greater losses to Chinese and American companies and consumers, and causing a ‘recession-like’ impact on the world economy.”

Three core concerns

Three differences remain between the two countries, according to China.

China believes tariffs were the genesis of the trade dispute, and that all tariffs must be eliminated in order to reach a deal. The second issue centres on the additional volume of US goods that China will agree to buy, vice-premier Liu He, China’s lead trade negotiator, said last week without giving details. The third is over how balanced the text of the draft agreement of the trade deal should be, he said.

“To reach any agreement, China’s three core concerns must be properly resolved,” Gao said. 

French President Emmanuel Macron warned on Thursday about the danger of a “technological war or a trade war” between the US and China as the countries clash over Huawei. 

“Our perspective is not to block Huawei or any company; it is to preserve our national security and European sovereignty,” Macron told reporters at the Vivatech trade show in Paris. “But I think launching a technological war or a trade war vis-à-vis any other country is not appropriate. First it is not the best way to defend your national security — we don’t need itl and second, it is not the best way to develop your own ecosystem and have a world of co-operation and decrease tensions.” 

US officials have been trying to persuade allies not to allow China a role in building next-generation 5G mobile networks, saying the state-controlled firm poses a security risk.

With AFP