Is Huawei a bargaining chip in the US-China trade war?

Recent revelations indicate that US President Donald Trump may have used the US clampdown on Huawei as a bargaining chip in the US-China trade dispute.

The revelations come in recent excerpts published by the Wall Street Journal from former White House security advisor John Bolton’s memoir, The Room Where It Happened. They coincide with the British government deliberating on whether it will ban Huawei from Britain’s 5G networks.

The US clampdown on Chinese companies has included a law banning the US federal government from using Huawei and ZTE equipment, and another that restricts US companies from doing business with Huawei without a government licence.

There are also US export restrictions aimed at preventing Huawei from manufacturing semiconductors using US technology or software.

The idea that Huawei is becoming a bargaining chip in the US-China trade war was given more credence by statements by former Google CEO Eric Schmidt, who said in a recent interview that US suppression of Huawei may be based on anti-Chinese prejudices about copying technology.

“Those prejudices need to be thrown out,” he said. “The Chinese are just as good, and maybe better, in key areas of research and innovation as the West.”

While Schmidt has made claims of national-security contraventions against Huawei, he also says that partnering with Chinese companies allows Western companies to push their own ideologies.

“The more segregated the platforms are, the more dangerous it is. It is in the West’s interest that every technology platform has Western values in them,” Schmidt noted.

UK network decisions

In the UK, Huawei has received planning permission to build a $494-million research and development centre in the UK to develop chips for use in broadband.

However, the British government has said it will ban Huawei from Britain’s 5G networks by ordering telecommunications companies to remove its equipment by 2027. This follows extensive pressure from the US government.

US economist Jeffrey Sachs has said that the US was in violation of the existing trade deal with China when it imposed restrictions on China’s US business.

“The Trump Administration wants China to continue to purchase US goods according to the trade deal, but at the same time the US imposes new punitive restrictions on China, such as the ban on international exports of semiconductors to Huawei,” said Sachs, an economics professor at Columbia University.

“These new punitive restrictions break the agreement by unilaterally imposing new economic burdens on China. The US has overstepped the agreement, and should agree to put on hold any new punitive measures,” he said.

Bolton further claims that Trump made personal overtures to Chinese leader Xi Jinping, and offered to reverse criminal prosecutions against Huawei if it would help to secure a new trade deal with China.

There is also the case of Huawei CFO Meng Wanzhou, currently being held in Canada on extradition charges based on a US arrest warrant. The warrant pertains to alleged violations of the US sanctions against Iran.

However, Trump has stated that he would be prepared to get involved in Meng’s case if it would help to secure a trade deal with China.

Asked about it in a 2018 Reuters interview, he said, “If I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security – I would certainly intervene if I thought it was necessary.”

The challenge for US lawmakers and regulators is to distinguish politics from substance, as they try to shape the critical next phase of technological evolution following the global pandemic.

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Is Huawei a bargaining chip in the US-China trade war?