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The cold war between the US and China shakes the technological market

The inclusion of Huawei in the US blacklist effectively prevents US firms from selling components or 'software'

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Aakash Molpariya
Aakash started in Nov 2018 as a writer at Revyuh.com. Since joining, as writer, he is mainly responsible for Software, Science, programming, system administration and the Technology ecosystem, but due to his versatility he is used for everything possible. He writes about topics ranging from AI to hardware to games, stands in front of and behind the camera, creates creative product images and much more. He is a trained IT systems engineer and has studied computer science. By the way, he is enthusiastic about his own small projects in game development, hardware-handicraft, digital art, gaming and music. Email: aakash (at) revyuh (dot) com

The economic pulse between the two largest world powers has led to a great shake-up in the global technology business. The United States has included the Chinese cellphone and tablet giant Huawei, which it considers a danger to national security, on a blacklist that, in practice, prevents US firms from selling components or software. The first big consequence has come with breakdown of the business with groups like Google or Qualcomm, which leaves millions of consumers restless. When two elephants fight, the grass underneath suffers.

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Nothing like Huawei embodies China’s challenge to the Western economic powers, for the voracious growth that this company represents and also for all its chiaroscuros. Founded 30 years ago, the firm has become the first manufacturer of technological products in the world and the second largest seller of mobile phones, second only to the Korean Samsung. Last year it gained 59.3 billion yuan (about 7,850 million euros), which is an increase over the previous year of 25%, thanks mainly to the push of billing, something very difficult to achieve in a mature company. Success, however, can not be abstracted from habitat. The Chinese Communist Party (CCP) regime, with its open support for local versus foreign companies, is preparing a process of technological self-sufficiency that can now be accelerated.

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Washington also accuses the company of stealing technology, of breaking the sanctions regime with Iran and, especially, of maintaining ties with the Chinese government that make it a danger to its national security. Hence the inclusion in the blacklist last week.
The measure was approved just after the last round of tariff increases, but the battle came from afar and has crystallized with millions of consumers who do not know very well what is going to happen with the devices. Google blocking, sounded because it leaves the devices of the Asian manufacturer without service updates as important as those of Android (except its free version) or Gmail, is followed by other firms such as Qualcomm, Infineon or Intel, according to Bloomberg data. The development of 5G networks, whose throne is also at the bottom of this battle, comes into play with the crisis of one of its main riders.

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The Chinese firm has stepped immediately to indicate that it will guarantee security updates and after-sales services to mobiles and tablets already sold or in storage. In addition, the technological giant of Shenzhen had been warning that it was preparing for a possible cut of American supplies and had been developing its own chips and its own operating system for some time. A new sign that the trade war between Beijing and Washington is posed as a long-distance race and resistance, and that the rivalry has already spread far beyond the mere volume of purchases.

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For Donald Trump, the commercial battle against China is also a good bet in domestic terms. The disloyal competition of the Asian giant – with its consequent damage to the American industry – has been a permanent issue throughout its political journey, and the opposition, the Democratic Party, does not disagree with the merits of the matter, that is, the necessity of the battle, beyond criticizing the forms of the arsonist republican president and his scant misgivings about a tariff escalation.

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It also leaves the European partners in a complicated situation. Although cooling has been evident since Trump’s arrival at the White House, suspicions about Huawei’s ties to the Xi Jinping regime have also taken their toll on the other side of the Atlantic. The Twenty-eight have the Asian firm for the deployment of the 5G network in Europe, without which their development could be delayed for years, but suspicions about their ties with the Chinese state generate concern. On March 25, the Commission announced that it would carry out a risk assessment of the 5G infrastructure network before June 30.

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In parallel, Trump and Xi are trying to reach an agreement that ends the tariff war in which they have been submerged since last year. Those conversations will influence the conflict between Huawei and the United States. Last June, the US Department of Commerce already reached an agreement with Chinese mobile phone maker ZTE, which had had to cease operations when it lost its main market.

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The Chinese government, for the time being, has had a moderate reaction to Huawei. In his daily press conference, Foreign Affairs spokesman Lu Kang said only that Beijing “pays attention to the development of the situation” and “will support Chinese companies to defend their legitimate rights through legal means.”

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The relative moderation has been, up to now, the tone of Beijing’s responses. Perhaps because it does not make the situation worse, perhaps because it helps to gain time while studying alternatives. Or perhaps because, as they have drawn their state media, its strategy is to present itself as a government unwilling to take drastic measures, but will not shy away from adopting them if it sees fit, and is willing to face a long-term confrontation.

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