Why China won’t save Huawei from Trump’s devastating new blow

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There is a surprise turn in the wake of Trump’s ramping up of his sanctions against Huawei – China’s relative silence. A week after the US administration issued what some analysts have called a “death sentence,” Huawei quickly realizes that China is not about to shoot a silver bullet to turn the situation around.

China has denounced Trump’s latest attack as “brutal harassment” and “shameful”, a government spokesperson telling media that “the Chinese government will continue to take the necessary steps to protect the legitimate rights and interests of businesses Chinese ”. But there have been no threats or bomb retaliation against US companies operating in China. The comments were notably silent.

Perhaps Beijing is waiting for the November elections, hoping (probably naively) that a change in US leadership will radically reverse politics, fearing that an unpredictable president eyeing his electorate will announce new ad hoc measures. The more Trump paints Biden as China’s friend, the more unlikely it becomes. That’s actually more than the United States has managed to call China’s bluff this time around, with huge ramifications for the global tech industry and potential disaster for Huawei.

If you think the United States has been on a mission to “kill Huawei,” as some reports say, for more than fifteen years, then the question is why they didn’t think about this latest move sooner. A year after restricting Huawei’s access to U.S. components, the Trump administration upped the ante in May, banning Huawei from using custom chipsets designed or manufactured with the help of U.S. technology. Huawei admitted it would seriously harm the company and went with Plan B – the return to standard chipsets that others could buy as well.

And then came America’s knockout blow – Huawei would also be banned from these standard chipsets. This is because the company would not be allowed to purchase the silicon needed to power its consumer devices, cloud servers, and 5G networking equipment. Any supplier would need a license to sell to Huawei or risk sanctions on their own, no industry player – even in China – will take that risk. MediaTek – which had been set for a huge increase in sales to Huawei – applied for a license to continue these supplies. Others will follow. If the United States were to grant these licenses, however, it will raise a fundamental question as to what the purpose of the latter action was.

So – again, given the effectiveness of this latest initiative, why hasn’t the United States been there before? Perhaps Beijing’s envelope of resistance should be tested. A year ago, after the initial sanctions, China threatened to reciprocate American companies – but nothing has been done. Alternatively, maybe Washington was really surprised at how Huawei managed to thrive under the blacklist.

Here is another theory. China is the ultimate long-game pragmatist. It’s pretty obvious that it can’t win the short-term battle over Huawei – not the way the United States is playing its game. Trump has risked repercussions against American companies. who sell or manufacture in China, he’s raised the stakes, blacklisting dozens of other Chinese companies, and now he’s taken on social media giants WeChat and TikTok.

Trump’s calculation is quite simple: Who needs more? And Beijing calculated the same – the Chinese government said so in its state-controlled media, following Trump’s initial threat to ban TikTok. “Washington is well aware”, the China Daily said, “that Beijing will be wary of its retaliation because it values ​​foreign investment in China, and that considerable US investment in China is more important to the Chinese economy than the much smaller and declining Chinese investment for United States. economy. ”

This post was specifically about the forced sale of the US entity of TikTok, apparently nearing completion. But it was also an interesting public glimpse into Beijing’s state of mind. Huawei watchers (and we can assume Huawei itself) are surprised that Beijing hasn’t done more given the materiality of the latest attack. Maybe Beijing’s message is bigger than it looks.

Huawei is a strategic asset for Beijing, unlike TikTok. But break that down, and if you put aside the US allegations of state-sponsored espionage from Huawei, Beijing needs Huawei to build its own 5G infrastructure with ZTE, to continue investing in AI and autonomous machines, to continue a R&D catch-up game with the West.

Beijing is less concerned with selling stylish smartphones that rival Samsung Galaxy and Apple iPhone devices. Huawei is said to have stored more chipsets in the network kit than it can use in its high-end smartphones. And, beyond that, the reality is that China’s race to de-Americanize its silicon supply chain will replace chipsets in 5G base stations long before it matches the technology of Apple and Samsung smartphones. . Bad for Huawei’s results, maybe, but better for Beijing.

We’re still waiting for Huawei’s point of view – there is currently a media vacuum, with a lot of speculation but no counter-view from Shenzhen. As the Morning Message from South China he said, “With Washington’s latest move to tighten its grip on Huawei’s access to US core technology … the company is literally facing a life and death situation … so far Beijing has not. did not strike back with anything other than fiery rhetoric. ”

Playing the long game, China clearly sees itself building a domestic silicon industrial base that is not dependent on US technology. But, even if it is possible, it will take years. Huawei won’t survive in its current form until then unless there is some easing of sanctions, some breathing space. Either that or he will have to change his form, his purpose. There is no equivalent of a TikTok sale to solve this problem.

Underneath all of this, there is a grim irony in China’s lack of action at the moment. As the SCMP points out, “The fact that the Chinese government does not help in the company’s struggle with the United States must be a bitter pill for Huawei, which got into trouble with Washington in the first place because of its perceived ties to Beijing, an allegation that still refused.

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