China warns foreign technology companies not to abide by merciless trade bans

Representatives of the Chinese government this week convened representatives of major US and foreign technology companies to warn of the "disastrous consequences" of the Trump government's ban on the sale of certain US technologies to a number of US companies. Chinese enterprises, New York. Times reported on Saturday, citing two "people familiar with meetings".

In recent weeks, the White House has effectively banned US companies from dealing with technology giant Huawei, fearing that this poses a risk to national security and allegations of commercial theft by adding it to a "list of entities", which follows months of other efforts to effectively prevent Huawei from working on telecommunications projects all over the country. He has also targeted Chinese companies more generally in the context of an ongoing trade war between the United States and China, which appears to be rapidly gaining momentum. Many companies, including Google, Intel and Qualcomm, have ceased to act as Huawei's suppliers.

In response, the Chinese government has raised the threat of retaliatory measures such as the creation of a "list of unreliable entities" of companies that, in its view, are acting in an anti-competitive manner. Huawei also argued that the national security and commercial theft complaints were a pretext to prevent the company from becoming more powerful and to sabotage China's efforts to rapidly deploy next-generation 5G technology.

According to the Times, meetings held earlier this week involved the Chinese Economic Planning Agency, the National Development and Reform Commission, as well as members of its Ministry of Commerce and Ministry of Industry and Trade. Information Technology. A specific list of participants has not been published beyond the mentions of US companies Dell, Microsoft and Samsung, based in South Korea. But the remarks were directed at "a wide range of goods-exporting companies in China", including "many of the world's largest semiconductor manufacturers, as well as other technology giants." ", writes the Times.

The Chinese authorities have urged US companies not to move their supply chains out of China and to abide by orders prohibiting trade relations with specific companies, and have urged them to put pressure on the Trump administration to restrict trade:

In their talks this week, Chinese officials have explicitly warned companies that any attempt to remove a production from China that seems to go beyond traditional diversification for security reasons could lead to sanctions, according to the two people. .. Chinese officials seemed to have different messages for companies, depending on whether they are American or not, people have added.

In the United States, they warned that the Trump administration's decision to cut Chinese companies from US technology had disrupted the global supply chain, adding that companies that follow this policy could suffer permanent consequences. The Chinese authorities have also suggested that companies should lobby to counter the government's measures.

Officials said that failure to do so could lead to "permanent" problems for the companies involved, according to the Times, that Huawei is not mentioned but obviously remains at the center of their concerns. Officials also told non-US companies that they would not suffer any consequences if they maintained normal business relations with their Chinese counterparts, the newspaper added.

China is one of the world's largest suppliers of an incredible range of materials and components used in the technology sector. It manufactures many products (such as the iPhone) for foreign companies. As the Times noted, the prospect of a permanent disruption of these supply chains could be disastrous, but it is unlikely that US companies will choose to violate the law instead of complying with Chinese requirements.

According to CNBC, trade disputes led to a large sale of chip makers in May, with Huawei alone expected to buy about $ 20 billion worth of semiconductors a year. (The Times reported that the KPMG consulting firm estimates that about 60% of all semiconductors are related to China.) The United States has granted 90-day licenses to some telephony service providers mobile and Internet access in order to continue working with Huawei. Wall Street analysts predict that stocks will not recover, CNBC wrote.

Update: 08/06/2019 at 17:50 ET: This article was updated to note that the Times mentioned Dell, Microsoft and Samsung in its report.

[New York Times]