US federal ban to have little impact on Chinese firms
China urged the US to stop its unfair and discriminatory treatment of Chinese firms following the US government moves to ban on Wednesday federal purchases of telecommunications equipment from five Chinese companies amid the protracted China-US trade war.
The latest move targeting top Chinese firms including telecommunications giant Huawei, will inflict no real impact on the companies and will only act as a bargaining chip in future trade negotiations, analysts told the Global Times Thursday.
The US Congress approved the ban as part of a broader defense bill in the National Defense Authorization Act (NDAA) in 2018.
In August 2018, US President Donald Trump signed a bill that barred the US government from using
equipment from Huawei and another Chinese provider, ZTE. The ban has expanded to other Chinese firms, including surveillance camera suppliers Hikvision and Dahua, and radio systems manufacturer Hytera.
The interim rule is scheduled to take effect on Tuesday.
Chinese Foreign Ministry spokesperson Hua Chunying said on Thursday that the US’ wanton use of its national power to smear and crack down on specific Chinese firms has seriously tarnished the US’ image, and that the global industrial chain and supply chain will only suffer more.
Huawei said in a statement sent to the Global Times Thursday that it will continue to challenge the constitutionality of the ban in federal court.
“Ultimately, it will be rural citizens across the US that will be most negatively impacted as the networks they use for digital connectivity rely on Huawei,” the Chinese firm said.
A spokesman for Hikvision said it is committed to complying with laws and regulations in countries where it operates. Hikvision has made efforts to ensure that the security of its products adhere to US government standards.
ZTE and Dahua had no comment on the ban, while Hytera said it will release a statement later.
No more new cards
“The ban has no genuine impact on Huawei since the company has largely downsized its businesses in the US,” said Ma Jihua, a Beijing-based analyst in the telecommunications sector.
“The Trump administration has no more fresh cards to play in putting maximum pressure on Chinese high-tech firms,” Ma said.
Ma noted that the US government’s move is only meant to increase its bargaining power at future China-US trade negotiations.
“A slew of US moves before new negotiations have obviously shown its intentions in cracking down on China before the talks,” Ma said. Such moves have a lesser effect, Ma said. A huge domestic market, rare earths and a complete industrial chain give China more aces when sticking to its development path amid external chaos, analysts said.
Technology decoupling between China and the US will bring much harm to both countries, but China has been preparing to survive either through self-reliance or by expanding cooperation with other countries, they said.
Since announcing its plan-B of HiSilicon in May, Huawei has become more confident, industry insiders noted.
HiSilicon can provide enough supplies to major Huawei products such as smartphones, and its Balong 5000 chipset has also passed network tests and can now operate in both standalone and non-standalone 5G-network environments.
Huawei has been diversifying its supply chain in recent months while continuously investing in core technologies such as chipsets and an operating system. And the company has been preparing for the worst-case scenario for some years and is capable of designing and producing chipsets such as the Balong 5000.
“Huawei still needs to work with its US counterparts for the supply of some components, but it has been working very hard in strengthening self-reliance in core chipsets and components for long-term growth,” Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times Thursday.
China still has advantages in the full-scale supply chain on which the US companies rely on, and the decoupling of the industries is unlikely in the near future, he said.