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Easing Huawei ban does not indicate U.S. policy shift (Interview)

中国国际电视台 2019-07-31

Following U.S. President Donald Trump's late last month announcement that he would relax the ban on Huawei, Commerce Secretary Wilbur Ross said on Tuesday that the U.S. government will issue licenses to U.S. companies that would allow them to continue trading with Huawei provided there is no security threat in such dealings.

It's not clear yet which companies would secure the approvals; given the volatility in Trump administration's policymaking as well as the President's nagging suspicion about the Chinese tech giant, nor does the announcement offer any more certainty in terms of Huawei's future operation in the U.S.

According to Wu Xinbo, director of the Center for American Studies at China's Fudan University in Shanghai, even though the move is welcome news, it does not in any way signal the beginning of the end of China-U.S. disputes over Huawei as the Shenzhen-based company is still on the U.S.' "Entity List.

Moreover, he pointed out that in Wilbur Ross' announcement, it was explicitly stated that licenses will only be given to companies where national security is not a concern. "Therefore, this could only be seen as a minor adjustment and would not boost the Chinese government's confidence walking into future negotiations. It has to be something more substantial," Wu said.

This is a sentiment shared by Cheng Dawei, a professor at the School of Economics at Renmin University, who also believes that how China-U.S. relations and trade negotiations will go is still very much surrounded by uncertainty. She said if Huawei was used as leverage in the trade negotiations, which so far has appeared to be the case, this easing does not indicate a fundamental change in Trump administration's policy towards Huawei or the future trajectory of China-U.S. relations. "We will only get more clarity and certainty when a trade deal is reached," she said.

Both Professor Wu and Cheng agreed that domestic pressure from U.S. companies that have deep commercial links with Huawei had prompted the relaxation of such restrictions, given the severe damage that would be inflicted upon these companies if the ban was implemented.

The Chinese tech giant is highly dependent on U.S. software and semiconductors, with the most prominent suppliers being Google, Intel, and Qualcomm. Reuters reported in June that since the fight against Huawei was dialed up yet another notch with the announcement of a ban in May, the company's leading American chip suppliers, including Qualcomm and Intel, were quietly pressing the government to reconsider its decision on sales to Huawei.

Some believe the scenario of being removed from the U.S. market would be equally damaging for Huawei, if not more. SupChina, a digital media organization that reports extensively on China, suggests that even though the company can find ways to replace components currently acquired from U.S. companies – for example, it could switch to Taiwan's Mediatek for radio frequency (RF) chipsets – given the scope of its purchases from American firms as well as the availability of alternatives with regards to specific products, the company would undoubtedly find it scrambling to get out of the situation, at least in the short term.

While this scenario has sparked worry among some Chinese, Song Hefa, deputy head of the Institute of Intellectual Property at the Chinese Academy of Sciences is much more optimistic about Huawei's future.

While the ban will certainly adversely impact the company's growing momentum, he believes that, eventually, the company will be able to see the light at the end of the tunnel. Huawei's devotion to innovation is one major source of confidence. The company's spending on research and development is equal to about 15 percent of its sales in 2018, ranking 5th in the world, which also explains Huawei's global success, Song said.

He also holds the view, which has been prevalent in the country since U.S. blockade of Chinese technology, that the U.S.' attempt to thwart Huawei's global ascendancy will only strengthen China's will to develop its own high technology, which the country deems essential to secure its future economic growth.

He said that China's development of military technology is one of the best examples, because, according to him, was developed at a time when the country was cut off of external assistance in developing such technology.

"Given our current innovation ability as well as our complete industrial system, I am confident that we will be able to build the software and components we need and Huawei can overcome the hardships. Moreover, it can find Chinese-made products to replace those currently purchased from America, including chips. Our chips may not be as good as those produced by AMD and Intel yet, but at least they can be readily used now and will be perfected in the future," he concluded.

(Source: CGTN, Correspondent: Xu Sicong)