Wednesday, 12 Dec 2018
Business

China perceived as trying to prevent the Huawei issue from derailing trade negotiations with the United States

Although upset by the arrest of a top Huawei Technologies executive at the request of the United States, China will try to contain the fallout and prevent it from derailing a negotiated solution to the war commercial, announced analysts Friday.

The unusual arrest has cast a new element of doubt in efforts to resolve the trade war between the two largest economies in the world and has triggered stock market unrest in the United States and Europe.

"The Huawei case will certainly have a negative impact on political confidence between the United States and China," said Wang Yong, a professor at Peking University's School of International Studies.

Meng Wanzhou, chief financial officer of Huawei Technologies and daughter of the company's founder, was arrested in Vancouver on Saturday – the same day that President Trump and his Chinese counterpart, Xi Jinping, agreed to a truce in the trade war .

The United States is seeking to extradite it, apparently as a result of accusations that Huawei, the world's largest maker of telecommunications network equipment, has allegedly violated export penalties imposed by the United States on Iran.

The Chinese government has called for his immediate release, while local newspapers have said that the United States is attacking Chinese technology companies because they are competing with their American rivals.

But analysts do not expect Beijing to allow escalation of the incident.

"The Chinese side should be cautious and should not amplify the problem," and the Huawei case should not be allowed to sabotage wider discussions, Wang said. "I believe that President Trump and US companies, including US investors in China, hope China and the United States will reach an agreement."

Huawei, the world's second largest smartphone maker, is one of the mainstays of Xi's new high-tech economy. But its very survival could now be questioned.

An earlier case against ZTE Corp., another Chinese telecom giant accused of violating the US-imposed export sanctions on Iran, had led it to the brink. from bankruptcy last year. ZTE initially appeared on the US blacklist, but after Trump's intervention, it was fined $ 890 million.

Although the United States has not officially announced charges against Huawei, the cases seem similar.

"China is more incentivized than the US to stop escalation," said Yanmei Xie, an analyst at Gavekal Dragonomics' consulting firm in Beijing. "China's priority is to prevent the United States from applying crippling sanctions against Huawei. If the United States does what it did to ZTE, very little can China do to prevent the collapse of Huawei, and it is not in China's interest. "

For this reason, China will try not to "provoke" the United States, she said.

Some analysts have expressed fears that China may try to retaliate by stopping a US technical framework. But Foreign Ministry spokesman Geng Shuang said on Friday that China would not do it.

"China still protects the legitimate rights and interests of foreigners in China according to law, but I think they should also abide by Chinese laws and regulations," Geng said.

Meng's arrest feeds the more general feeling that the trade war is not just about imports and exports, but also the Trump administration's efforts to contain China and stem its rise.

"The United States is trying to do everything in its power to stem Huawei's expansion into the world simply because the company is the spokesperson for China's competitive technology companies," the China daily newspaper said. Daily in an editorial Friday.

For the good of the world – and the US economy – the United States should "change their minds about China," the paper said.

People's Daily, spokesman for the Communist Party, described Huawei's adventures as part of an epic battle.

"All slings and arrows have not prevented him from growing, nor from becoming a global telecom equipment giant," he said, adding that Chinese companies were gaining in power. "No one can stop the" Made in China "from bringing benefits to the world."

Wang, at Peking University, witnessed another conspiracy during the arrest of Huawei. He added that the "Chinese hawks" in the United States seemed to be trying to prevent the conclusion of an agreement.

"The goal of these tough guys is to" decouple "the Chinese and American economies," he said, "or at least cause a" partial decoupling "in the high-tech sector."

In addition, Japan should become the last country to exclude Huawei and ZTE Corp. public procurement. The Tokyo government is expected to ban these companies during a meeting on Monday, Japanese newspapers reported. In August, Trump signed a bill banning US government agencies from using Huawei and ZTE hardware, from smartphones to routers to network devices.

Three of the other members of the Five Eyes intelligence-sharing network – Britain, Australia and New Zealand – have effectively blocked Huawei from their networks for security reasons. Canada is the only MP who has not taken any action against Huawei, although that may change.

Yang Liu and Lyric Li contributed to this report.

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