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How damaging will the Huawei ban affect China and the United States?

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Guidance: The United States is intensifying its conflict with China, putting its economic and diplomatic relations at risk. Shortly after the resurgence of trade wars and tariff increases, it has begun to limit Huawei's ability to trade with American companies. And what impact will this Huawei ban have on China and the United States?

The United States is intensifying its conflict with China, putting its economic and diplomatic relations at risk. Shortly after the resurgence of trade wars and tariff increases, it has begun to limit Huawei’s ability to trade with American companies. The latest crackdown on China’s telecom giants marks a serious escalation of the power struggle between the United States and China. With the expansion of the trade war into a “technological cold war”, the prospects for trade are becoming more and more distant. Michael Hirson, head of Asia at Eurasia Group, said: “The U.S. action against Huawei is a watershed moment, and tensions have escalated dramatically.”

“Trade agreements are not doomed, but they seem unlikely, especially in the short term.” The crackdown on Huawei has become a central part of Washington’s relationship with Beijing, which has been dominated by trade wars over the past year.

Huawei has been listed as a non-tradable company in the United States

Just recently, Trump said Huawei could become part of a trade agreement between the world’s two largest economies. The United States has placed Huawei on the list of companies that U.S. companies cannot trade unless they have a license. Meanwhile, Trump signed an executive order effectively prohibiting American companies from using foreign telecommunications companies deemed to pose a national security risk. “Among the two initiatives put forward by Trump – the executive order and the inclusion of Huawei in the entity list – the latter has greater impact,” Mr. Hillson said. Huawei is the world’s second largest smartphone manufacturer and a key player in the next generation of 5G technology. Song Liuping, its chief legal officer, said that more than 3 billion consumers could be hit by the U.S. decision to add Huawei to the list of entities. The U.S. initiative has triggered ripples in technology. Google banned Huawei from updating its Android operating system. Huawei’s new smartphone design will not be able to access certain Google applications. Yan Liang, an associate professor of economics at Willamette University, said: “If Huawei’s mobile phone is weakened by the lack of Android operating system, it will hurt consumers by limiting competition in the mobile phone market and leading to price increases.”

Analysts said the crackdown on Huawei could also undermine the development of 5G. “Huawei has more than a dozen patents in the development of 5G. Limiting Huawei will delay 5G technology and make it more expensive to implement, “added Professor Liang.

The Damage of Huawei’s Ban to the United States

Washington’s restrictions on Huawei could also hurt American companies. Mr. Song of Huawei said more than 1,200 American companies would be hit “directly”. Ren Zhengfei, the company’s founder, recently told Bloomberg that if there were further restrictions in the United States, Huawei would use more of its own chips and would buy fewer products from the United States.

Half of the chips Huawei uses come from American companies and half come from American companies, he said. In fact, some analysts say the U.S. government may also hurt itself. “You punish Huawei, but you also punish yourself: you lose market share and all sales to Huawei,” said Wang Huiyao, president of Beijing China and the Center for Globalization. “And you may also force China to develop for itself – which is not a wise move for the United States.”

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