The collapse of a deal in which Huawei Technologies was to distribute its smartphones through US carrier AT&T will threaten Sino-US trade ties – and Beijing should consider “countermeasures” if the situation escalates, experts and a former Chinese commerce official said.
It was called off because of “political pressure”, US-based online tech news site The Information reported, citing sources. AT&T was pressured to cancel the deal after members of the US Senate and House Intelligence committees sent a letter on December 20 to the Federal Communications Commission, citing concerns about Huawei’s plans to launch consumer products through a major US telecoms carrier, the report said.
The abrupt cancellation of the deal is the latest sign of tensions between China and the US over trade and investment, with Washington calling for trade actions against China and tightening screening of Chinese companies, especially in the hi-tech sector.
Huawei is the second Chinese company facing a serious setback in the United States in a week, after the US Committee on Foreign Investment rejected Chinese firm Ant Financial’s takeover bid for US-based money transfer firm MoneyGram, citing national security concerns. Ant Financial is an affiliate of Alibaba, which owns the South China Morning Post.
He Weiwen, a former business counsellor at the Chinese consulate in New York, said the failure of the Huawei deal reflected heightened worries in the United States about Chinese investment.
“Investment cooperation between China and the US will be squeezed,” He said. “The US is very worried about the impact in the US from the growth of China’s hi-tech industry. It is worried that Chinese companies will transfer US technology through mergers and acquisitions.
US President Donald Trump in December labelled China and Russia as competitors in his national security strategy.
Paul Haswell, tech-focused partner at international law firm Pinsent Masons, said the cancellation of the deal was not a surprise because US concerns about market restrictions in China and misuse of intellectual property made it difficult for Chinese companies to succeed.
“America’s concerns as to the security of Huawei’s products, whether valid or not, have not gone away and are likely intensifying in the current political climate,” he said.
“That said, given the restrictions that US firms face when doing business in China and the potential impact of China’s cybersecurity law on foreign firms in China, there’s little hope of any improvement in the situation.
“I expect things to get significantly worse as the US and China markets – not just the tech markets – become more polarised.”
“随着美国和中国市场 - 而不仅仅是科技市场 - 变得更加两极化，我预计情况会变得更糟。”
The AT&T decision is another blow for Huawei’s business strategy in the US after the House Intelligence Committee released a report in 2012 urging US telecoms companies not to do business with Huawei and another Shenzhen-based firm, ZTE, citing potential Chinese state influence on these companies that could threaten US security.
A year later, the US Congress pushed for a cyberespionage review to restrict government purchases of information technology equipment from Chinese vendors.
Economic relations between China and the US have become tense in recent months, with Washington demanding Beijing take action to balance bilateral trade and launching an investigation into alleged intellectual property theft by Chinese companies.
State-run Xinhua news agency in a commentary last week criticised Washington’s “zero-sum mentality” with regards to Sino-US trade and threatened to retaliate.
Lu Xiang, a US affairs expert at the Chinese Academy of Social Sciences, said the Huawei decision showed the US was increasing scrutiny of Chinese investments, even though the two nations had agreed on business deals worth more than US$250 billion during Trump’s trip to Beijing in November.
simond23 18 min 36 sec ago The question to ask is why do China and Chinese cos are always at the receiving end from others?? It is not only USA or AT&T in particular but Chinese High Speed railways have also faced many problems other countries. EU too has similar concerns. China needs introspection.
liben 27 min 24 sec ago Without even knowing about it ,Trump is actually doing China a big favor , to devote more and concentrate even harder on R&D to make better products with better profit margins. In fact Chinese companies have invested a lot on R&D already except this new ban imposition will accelerates China R&D even faster . The Americans and the world will soon realise that China for the past 2 decades has been so kind and benevolent in subsidizing poor Americans and others around the world by offering cheap and very affordable and beautiful products. Many are deluded to think it is so easy to shift a industrial and manufacturing juggernaut from China to elsewhere.Those new countries are so backward , bureaucratic,corrupted and important infrastructure so lacking and ancient. China are already one step ahead and are in transition from manufacturing and construction to a consumer and service economy. All this trade ban, It wont cause much if any pain at all in fact can easily be counter productive. China have cleverly invested tens of trillions of US dollars on infrastructure serving its citizens,investments and manufacturing convenience and it all come good and useful now and in the future as well. China has been the hand that feeds poor Americans and Trump is doing his best to hit that hand. Bring it on baby and let the trade war begins.
c777 2 hours 35 min ago Chinese companies have been getting free ride in US and European countries. Now, Americans and Europeans wised up and giving dose of its own treatment to Chinese. More countermeasures coming ahead unless China treats foreign firms in China fairly.
robynhoodnice@****** 1 hour 26 min ago While most American companies are by no means completely dependent on China to make money, any trade war that introduced new tariffs on US goods sold in China or made it more difficult for US companies to do business there would hurt some profoundly. In the aggregate, US soybeans farmers, auto makers, and aircraft companies export the most to China. -Research JP Morgan compiled in 2015 tracking revenue dependency on China of S&P 500 companies by sector suggests that tech firms most reliant on China specifically are overwhelmingly in the semi-conductor industry, involved in the manufacture, sale, or licensing of chips to other hardware vendors. Twelve of the top fifteen companies with the highest “revenue exposure” in China are involved in chips, and some of them earned the vast majority of their overall revenue in China. -Companies outside of tech component makers would also be affected. Casino company Wynn Resorts is the non-technology component company most dependent on sales to China, JP Morgan Chase said, with 77% of its revenue from China. Yum! Brands (which operates KFC), Tiffany & Co., and Apple, are also vulnerable. -Qualcomm, for example, earns money not by exporting chips to China, but by collecting patent royalties from chips made by other semiconductor firms, and China is its biggest market.
虽然大多数美国公司绝不依赖中国来赚钱，但是引入新关税或使在华经商更困难的贸易战争会严重伤害一些企业。总体而言，美国大豆农民，汽车制造商和飞机公司向中国出口最多。 - 摩根大通在2015年编制的报告显示，按行业分类标准普尔500公司对中国收入的依赖程度表明，最依赖中国的高科技公司绝大部分在半导体行业，涉及芯片向其他硬件的制造，销售或授权供应商。在中国，收入最高的前十五家公司中有十二家参与了芯片业务，其中一些在中国的整体收入中占了绝大部分。 技术组件制造商之外的公司也将受到影响。摩根大通（JP Morgan Chase）表示，赌场公司永利度假村（Wynn Resorts）是一家非常依赖向中国销售的非技术组件公司，其收入中有77％来自中国。百胜品牌（经营肯德基），蒂凡尼（Tiffany＆Co.）和苹果（Apple）也很脆弱。 例如，高通赚钱不是通过向中国出口芯片，而是通过从其他半导体公司获得的芯片收取专利使用费，中国是其最大的市场。
robynhoodnice@****** 1 hour 43 min ago ---WTO; The goal is to ensure that trade flows as smoothly, predictably and freely as possible. As of today, trade flows hit protectionism barrier. The free trade and market democracy is getting smaller and smaller. Western powers used to enjoy free trade when it was in their advantage back in the day. Industrial revolution has long been gone. There are many western powers companies that were outdated and unable to compete squarely on international stage. These same companies are blaming China for their demise. China fast technological advancement and manufacturing base prowess has totally made these western powers companies look weak, inefficient and incompetent. ---To be fair, foreign powers have every right to protect its weak, inefficient and incompetent companies as much as possible. --Western Anti-dumping its just a disguise for trade protectionism. ---As long as China does not go around hunting for regime change and dropping bombs and wasting resources. China still has a bright future.
robynhoodnice@****** 1 hour 50 min ago China incurred the highest trade deficits with the following countries: deficit in 2016) -- South Korea: -$64.5 billion Switzerland: -$36.8 billion Australia: -$32.6 billion Brazil: -$23.5 billion Germany: -$20.3 billion Japan: -$16.3 billion -- ---Why does china have trade deficits? US is not the only one in this category, why is that? ******* Put China aside, the United States incurred trade deficits with the following countries: deficit in 2016) ---Mexico - $525 billion traded with a $63 billion deficit. ---Japan - $196 billion traded with a $69 billion deficit. ---Germany - $164 billion traded with a $65 billion deficit. ---Both China and the US have trade deficits with Japan and Germany. Why is that?