US military bill a protectionist move in disguise: analysts

Huawei, ZTE blocked by buried regulation

Chinese experts slammed on Friday the passing of a US defense bill that hits Chinese telecommunications products and investment in the hightech sector, saying the protectionist move will reduce mutual trust on trade.

The US House of Representatives on Thursday passed a $716 billion defense authorization act, according to a document on the website of the House on Wednesday. House Speaker Paul Ryan said on his Facebook account that the vote was 359-54.

The bill contained a provision requiring that no later than January 2021, no government agency may purchase certain telecommunications equipment from ZTE Corp and Huawei Technologies Co, said the document.

The bill has yet to be passed by the Senate before US President Donald Trump signs it into law.

“This is another typical protectionist move by the US. It’s unreasonable for the US to include such provisions in its defense authorization bill,” Song Guoyou, director of Fudan University’s Center for Economic Diplomacy, told the Global Times on Friday.

The bill will reduce mutual trust between the two nations and aggravate bilateral trade tensions and impact economic relations, Song said, adding that the security function of China’s IT hardware products can be guaranteed and Chinese companies are open to inspection.

Only a very small proportion of the telecommunications products and services used by the US government are from China, but the US keeps suggesting Chinese companies leak its national secrets, Fu Liang, an independent Chinese telecom industry expert based in Beijing, said on Friday.

Excluding ZTE and Huawei from US government procurement programs means US telecom carriers will have to buy telecommunications products and services at higher costs, Fu told the Global Times on Friday.

Chinese companies have prepared for the bill’s passing and have put contingency plans in place so their operations are not likely to be interrupted, Song noted, adding the companies will have to diversify their exports.

Restricting investment

The bill also gives more power to the Committee on Foreign Investment in the United States (CFIUS) to review foreign investments to determine if they are a threat to US national security.

The bill also requires the US president to submit a report by 2019 on how to cope with Chinese companies’ access to sensitive US industries.

“As part of the defense authorization act, the regulation seems to address US’ national security concerns, but in fact it is motivated by protectionism,” Bai Ming, deputy director of the International Market Research Institute under the Ministry of Commerce, told the Global Times on Friday.

According to a document on House’s website on July 19, US politicians have suggested using defensive tools such as the CFIUS reform and more investment in science and technology to win the technology race with China.

“This reveals that the US’ real purpose is to contain the growth of China’s high-end manufacturing instead of only protecting its national security,” Bai said.

The investment environment in the US for Chinese companies has deteriorated recently. According to a report by US research provider Rhodium Group in June, Chinese direct investment in the US slumped 92 percent year-on-year to $1.8 billion in the first five months of 2018.

Despite US restrictions on Chinese investment in the US technology sector, China will step up efforts to develop advanced technologies and catch up with the US in the future, Bai said.

“As for foreign companies, China encourages them to invest in the domestic market and promote mutual benefits,” he noted.