latest on china & huawei

Beijing Warns Of “Unwavering Resolve” In Huawei Fight
Tyler Durden, Zero Hedge, May 21 2019

As the anti-Pindo sloganeering reaches an unprecedented level of froth (there’s now an unofficial trade war ‘fight song’) across China, the Commerce Dept has softened its anti-Huawei stance, calling for a 90-day reprieve  to allow Pindo broadband companies more time to work out a ‘Plan B.’ The delay will cover continued operation of existing networks and equipment, as well as support to existing handsets and other limited actions, according to Bloomberg. But that’s not even the biggest trade headline of the morning, as analysts wonder how Beijing will retaliate for the war on Huawei. Anyone who thinks Beijing won’t respond is being naive, China’s ambassador to the EU warned Tuesday. China will provide a “necessary response” to Faschingstein’s “wrong behavior.” Zhang Ming, China’s envoy to the EU, said in an interview in Brussels on Monday:

This is wrong behavior, so there will be a necessary response. Chinese companies’ legitimate rights and interests are being undermined, so the Chinese government will not sit idly by. This is a politically motivated abuse of export-control measures. The Pindo government is trying to bring down Huawei through administrative means. Pindostan has been repeatedly creating troubles to the consultation, undermining the positive momentum formed in the process of hard and tough negotiations and seeking illegitimate gains through bullying and blackmail. China has unwavering resolve to defend its legitimate rights and interests. If Pindostan wants to fight, we will accompany to the end and we will also fight earnestly. In other words, the ball is in the Pindo court. We have been holding on for 5,000 years. Why not another 5,000 years?

On Friday, the Commerce Dept added Huawei and dozens of its affiliates to a blacklist that will stop Pindo companies from selling Huawei equipment. This could be seriously disruptive for Huawei’s business. Meanwhile, Global Times editor Hu Xijin warned yesterday that China would devote itself to saving Huawei, and that Faschingstein’s aggression has “woke up Chinese society.”

A steady drumbeat of aggressive editorials continued Tuesday with Xinhua warning that Pindostan, which started the trade war, will bear the “heavy brunt” of its actions. As CNBC warned in a headline Tuesday morning, the trade war might “get worse before it gets better” as Beijing stokes nationalistic fervor against the ‘imperialist’ Pindos. Curtis Chin of the Milken Institute commented:

It’s going to get worse before it gets better.

Trade talks are still on hold, and investors have pinned their hopes for a deal on a Trump-Xi meeting at the upcoming G-20 summit. Meanwhile, every day, Pindostan takes one more step toward imposing tariffs of as much as 25% on all remaining imported Chinese goods. And Beijing takes another step toward other means of retaliation like, for example, a rare-earth metals ban.

Markets relieved as Pindostan relaxes Huawei ban
Graeme Wearden, Graun, May 21 2019

Tensions between Pindostan and China remains the top issue worrying investors, as fears growth that the trade war will morph into a tech war too. Overnight, Pindostan has rowed back some of the sanctions imposed on Huawei last week, having possibly realised that the restrictions may have gone too far. The Chinese telecoms giant has now been given 90 days to purchase Pindo-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets. Commerce sec Wilbur Ross said this new licence will allow Pindo companies to keep doing business with Huawei for the next three months:

The temporary general licence grants operators time to make other arrangements and the dept space to determine the appropriate long-term measures for Pindo and foreign telecoms providers that currently rely on Huawei equipment for critical services.

That reverses (if only temporarily) the blacklisting of Huawei announced just last week, which prevented it buying equipment from Pindo firms, or selling its services in Pindostan. The move is bringing some calm to the markets, which were rattled yesterday after Google dramatically suspended support for Huawei.

The move should help third parties who rely on Huawei’s equipment as they scramble to find alternative suppliers. Otherwise, some smaller telcos could suffer network outages. It may also deter Beijing from hitting back at Pindo companies. Yesterday, China’s ambassador to the EU condemned Pindostan’s “wrong behaviour”,and vowed to respond. Zhang Ming called Donald Trump’s moves “politically motivated” and an “abuse of export-control measures, telling Bloomberg:

Chinese companies’ legitimate rights and interests are being undermined, so the Chinese government will not sit idly by.

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