Trump declares ‘NATIONAL EMERGENCY’ and blacklists Huawei - global stocks ON EDGE

Sergio Conner
May 18, 2019

The United States will certainly consider issuing new regulations that aim to limit the amount of sensitive US technology that makes its way to China and helps Chinese companies - indeed, it's still rolling out new export control rules on emerging technologies - but Washington can not unravel the dense network of the global tech sector on its own.

Trump stepped up the U.S. battle against Huawei on Wednesday when he signed an executive order prohibiting the purchase or use of equipment from companies that pose "an unacceptable risk to the national security of the United States" or the safety of the American people. The order aims to clamp down on the "unrestricted acquisition or use" of equipment made by "foreign adversaries" by U.S. technology companies.

Following the executive order, the U.S. Department of Commerce declared the addition of Huawei Technologies and its affiliates to the Bureau of Industry and Security (BIS) entity list.

"China has said many times national security issues should not be abused".

China is strongly against other countries imposing unilateral sanctions on Chinese entities, a Commerce Ministry spokesman said, stressing that the United States should avoid further damaging Sino-U.S. trade relations.

Huawei now claims to have almost 190,000 employees, operates in 170 countries, and reported revenue of more than US$100 billion in 2018.

The toughening stance against Huawei hurt the stocks of some US companies that supply it on Thursday. Indeed, in recent weeks China's state media has ramped up nationalist sentiment, raising the possibility that Beijing may be closer to acting against US assets or citizens in China.

The US leader has banned the Chinese firm from buying US technology without seeking special approval, while also effectively barring its equipment from being used by US telecom networks.

In March 2016, the US Commerce Department added ZTE Corporation to the entity list over allegations it organised an elaborate scheme to hide its re-export of US items to sanctioned countries in violation of US law.

For instance, Gao Feng, a spokesperson for the Ministry of Commerce, told reporters, "The two sides had open and constructive communication during the 11th round of the China-U.S. high-level economic and trade consultations".

On the other hand, US companies like Apple face the risk of severe retaliation from China, a key market.

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But Dearlove said since China conducts aggressive intelligence gathering operations on a global scale, and since no part of the Chinese state is ultimately able to operate outside of the control of its Communist Party, "Therefore, we must conclude the engagement of Huawei presents a potential security risk to the United Kingdom".

The US has pressured allies to shun Huawei in their next generation 5G mobile networks.

"Assuming the USA export ban on Huawei remains unresolved for the next 12-24 months, we highly doubt if China would stick to its timetable of building 5G aggressively", Jeffries wrote in a note seen by Reuters.

Huawei says company shares are owned by employees and Mr Ren insists it enjoys no favour from Beijing, but analysts dispute that.

Canada has also been dragged into the spat after arresting Huawei's chief financial officer Meng Wanzhou in December on a USA extradition warrant related to Iran sanctions violations.

In response, Huawei, which denies its products pose a security threat, said it was "ready and willing to engage with the U.S. government and come up with effective measures to ensure product security".

The company reported first-quarter revenue of $27bn last month and said it had shipped 59 million smartphones in the first quarter.

The other big backdrop to this week's measures is the ever-escalating trade war. This list is reportedly for companies that the USA government deems to be undermining US interests.

"We were beginning to ramp up our efforts [over a year ago] to increase the diversity of our suppliers so we don't have to rely so much on this problematic USA market", he said.

The core issue with Huawei has been concerns over its coziness with the Chinese government and fears that its equipment could be used to spy on other countries and companies.

As negotiations towards resolving the U.S.

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