According to a report in The New York Times, tech companies are warned by the Chinese governmental officials reportedly of “dire consequences”, on their cooperation with a US ban against doing business with Chinese tech firm Huawei. Some of the companies which are cooperating with US ban includes Microsoft and Dell from the United States and Samsung of South Korea.
The meetings held on Tuesday and Wednesday, came soon after Beijing’s announcement that it was assembling a list of “unreliable” companies and individuals. According to a pair of individuals who were familiar with the talks, these meetings included members of China’s National Development and Reform Commission, along with members of the Ministry of Commerce and Ministry of Industry and Information Technology before a “broad range of companies that export goods to China,” What companies were present at the meetings is not yet clear, other than that they
“included a number of the world’s most important semiconductor firms, as well as other tech giants.”
US firms were warned by the China officials against relocating their production lines to other countries,also from following orders against doing business with specific companies. The warning also includes that they should lobby against the Trump Administration’s efforts, saying that their actions could have permanent consequences. Non-US companies were reportedly told that they wouldn’t face such consequences, if they continued to supply Chinese firms. US firms will likely won’t be effective, as noted by the Times as such companies won’t want to incur legal trouble from breaking the law. An executive order was issued by the White House, in May. This law allows federal government to ban US companies from purchasing equipment from companies deemed a risk to national security.
This is now extremely delicate because the Trump administration, through its brinkmanship tactics, has destabilized the entire relationship, commercial and otherwise,” said Scott Kennedy, a senior adviser at the Washington-based Center for Strategic and International Studies who studies Chinese economic policy.
Tech companies like Google, Microsoft, ARM, and others are prompted by the orders to stop selling supplies to Huawei.
There is a strong perception in Beijing that the U.S. government is intent on blunting China’s technology rise, and that if this process is not slowed or stopped, the future of China’s entire digital economy is at risk,” said Paul Triolo, the head of geotechnology at the consultancy Eurasia Group, adding that the spat had major political implications for Xi Jinping, China’s president and the head of its ruling Communist Party.
“Mr. Xi and the party will be seen as unable to defend China’s economic future” if the confrontation with the United States does major damage to Huawei and throws off China’s rollout of the next generation of wireless technology, called 5G, Mr. Triolo added.
As the two countries have leveled tariffs against one another as part of the ongoing trade war, this move come amidst growing tensions between Washington and Beijing. Lately, talks have stalled, however, later this month President Donald Trump and Chinese President Xi Jingping are expected to meet at the G20 summit in Japan.