Huawei looms large as Trump, Xi meet
DONGGUAN, China — President Donald Trump and this nation’s leader, Xi Jinping, are expected to try again to resolve their tariff war when they meet Saturday in Japan.
First, they’ll need to figure out what to do about Huawei.
The Trump administration has squeezed the Chinese technology giant with nearly the full might of the U.S. government, choking off the firm’s access to vital U.S. suppliers, barring it from the country’s telecom market and filing sweeping criminal charges against it.
Though Washington officials say those moves arose from national security concerns and are separate from the trade fight, few expect China to accept a deal to lift punishing tariffs that does not include relief for its biggest, most internationally successful tech firm.
“It is almost impossible for the Chinese to agree to almost anything while the Huawei action looms,” said Samm Sacks, a China expert at the think tank New America. “Even if this is walked back, the Chinese fundamentally mistrust this administration. At this point, there’s no walking back this mistrust.”
Beijing on Thursday again called on Washington to end its restrictions on Huawei, and Chinese officials have complained about the harm they said the administration’s moves against Chinese firms had done.
“We hope, in the spirit of free trade and the principles of WTO, that the U.S. will remove these inappropriate unilateral measures against Chinese companies,” said Wang Shouwen, China’s vice minister of commerce, referring to the World Trade Organization, this week. “This is good for both sides.”
Washington’s blunt-force approach to curbing China’s technological aspirations has split the business world, forcing tech firms on both sides of the Pacific to adapt at warp speed. Restricted from selling to Huawei, Silicon Valley is slashing revenue forecasts, although some firms have resumed certain sales they don’t believe are covered by Washington’s ban. U.S. businesses of all kinds are bracing for retaliation from Beijing.
Huawei in ‘war mode’
Huawei has moved into what employees call “war mode” to survive Washington’s fusillade. At the company’s campuses in the southern Chinese cities of Dongguan and Shenzhen, projects have been accelerated and working hours have ballooned, according to half a dozen Huawei workers who requested anonymity.
Trump has dangled the possibility of easing up on the company, saying last month that “it’s possible that Huawei even would be included in some kind of a trade deal.”
But any clemency for Huawei would face pushback in Washington. Hawkish officials and lawmakers see technology as an important front in a generational threat posed by China’s rise. And they see Huawei as the apex of all that is threatening about that rise.
Washington has gone after Huawei on multiple fronts in the past year. The Justice Department in January filed criminal charges against the company, related to alleged violations of sanctions against Iran. Huawei denies wrongdoing and says its products do not threaten any nation’s security — another allegation made by American officials, who say the company could spy on China’s behalf.
After trade talks went off the rails last month, the Commerce Department ordered what once was seen as the nuclear option against Huawei: No more parts and equipment could be purchased from U.S. suppliers without special waivers.
Last week, the department gave the same treatment to one of China’s leading makers of supercomputers. The Trump administration also has set other Chinese firms, including the surveillance giant Hikvision, in its sights.
In response, China’s Ministry of Commerce has threatened to make a list of “unreliable” companies and people who could be punished for disrupting Chinese supply chains.
Chinese officials have echoed the threat in meetings with U.S. tech companies. Beijing also has proposed new cybersecurity regulations experts say could impair the operations of foreign companies in China.
China on U.S. policy
Still, Arthur Kroeber, a founding partner at the research firm Gavekal, said China would hurt itself as much as it hurt the United States if it took more steps to disconnect itself from the global economy.
“China’s only hope of influencing U.S. policy in a more positive (from its standpoint) direction is to keep the business community as some kind of an ally,” Kroeber wrote in an email. “This limits its ability to target U.S. firms for retaliation.”
The company appears to understand its fate is entwined with larger political discussions, which it can influence only indirectly. Huawei officials have avoided high-level contact with Washington ahead of this week’s Group of 20 meeting in Osaka, Japan, according to a person familiar with the company’s activities who wasn’t authorized to speak with the media.
China’s government has helped to keep Huawei afloat. The company had been poised to become a major provider of equipment for 5G, the next generation of mobile internet.
That’s why some industry observers believe Washington’s restrictions on Huawei will delay the construction of 5G networks in China and around the world.