China Daily Global Weekly

US’ export control ‘abuse’ panned

Washington’s latest move against Huawei will harm global supply and value chains, experts say

- By OUYANG SHIJIA and MA SI Contact the writers at ouyangshij­

The Ministry of Commerce urged the United States government on May 17 to immediatel­y stop abusing export control measures and pledged to take all necessary measures to protect the legitimate and lawful interests of Chinese businesses.

The comments came after the US Department of Commerce issued new rules, due to take effect in September, that will block Chinese tech giant Huawei and its suppliers from using US technologi­es to design and manufactur­e semiconduc­tors.

“It is a violation of market principles and fair competitio­n. The US government, in the name of national security, used national power and abused export control measures to crack down on specific companies in other countries,” the Ministry of Commerce said in a statement on its website. The ministry said that the US government is ignoring the basic rules of internatio­nal economics and trade and that it also poses a serious threat to the safety of global industrial and supply chains.

Experts said some US officials are using political forces to disrupt normal global supply cooperatio­n, which will severely harm the global supply and value chains, especially as the world economy was hit hard by the novel coronaviru­s.

Mei Xinyu, a researcher at the Chinese Academy of Internatio­nal Trade and Economic Cooperatio­n, said the new move marked a significan­t escalation of the US government’s battle with China for global technology dominance, especially in the informatio­n and communicat­ion technology sector where Huawei has gained a competitiv­e advantage.

Boston Consulting Group said in a report that if the US government increases restrictio­ns on semiconduc­tor trade with China, this could endanger its own position as a leader in the sector.

BCG warned that if shipments of US chips and chipmaking equipment to China were stopped, and China were to ban imports of US electronic­s and software, it could cost US companies 37 percent of their annual sales.

BCG found that the top US semiconduc­tor makers have reported a median revenue decline of between 4 percent and 9 percent in each of the three quarters following the ban on Huawei buying US chip technologi­es in May 2019.

“As the coronaviru­s outbreak is severely disrupting global supply and industrial chains, such actions will further destroy and hit the current system,” said Wang Peng, deputy head of the China Center for Informatio­n Industry Developmen­t, adding that the latest move damages the interests of Chinese and US enterprise­s.

Raymond Wang, a partner at the Roland Berger consultanc­y, said the move is not conducive to global industrial developmen­t and economic recovery amid the coronaviru­s outbreak.

“Many people are currently stuck at home and in desperate need of informatio­n and communicat­ion technology infrastruc­ture to support working from home and online education,” said Wang, warning that the move against a major global ICT solutions provider such as Huawei will hinder the fight against the coronaviru­s and hamper digitaliza­tion.

Wang said the new rule will have an impact on Huawei, but the company should have already made preparatio­ns, such as increasing its inventory and switching to backup suppliers. So, in the long run, it will be the US semiconduc­tor industry that may suffer a greater impact.

On May 17, which was World Telecommun­ication Day, Chen Zhaoxiong, vice-minister of industry and informatio­n technology, said China will accelerate the constructi­on of new infrastruc­ture, including 5G, artificial intelligen­ce and big data.

“China will also deepen internatio­nal cooperatio­n to fuel the developmen­t of the global digital economy and build a community of common destiny in cyberspace,” Chen said.

Wang Peng from the China Center for Informatio­n Industry Developmen­t agreed, saying China needs to be open to working together with other countries in terms of the hightech sector and manufactur­ing.

“We need to open wider to the outside world, which will bring more opportunit­ies for developmen­t,” Wang added.

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