Collapse of Huawei-AT&T smartphone deal set to escalate Sino-US trade tensions

[TaiShang]

Collapse of Huawei-AT&T smartphone deal set to escalate Sino-US trade tensions

By Wang Jiamei Source:Global Times Published: 2018/1/10 23:13:40

Richard Yu Chengdong, CEO of Huawei Technologies Co, holds the Mate 10 Pro smartphone while speaking during the company’s keynote event at the 2018 Consumer Electronics Show (CES) in Las Vegas, US, on Wednesday. Although a deal between Huawei and US telecom carrier AT&T fell through on Tuesday, the Chinese firm said it is still committed to the US market. Electric and driverless cars will remain a big part of this year’s CES. Photo: VCG


The collapse of Chinese technology giant Huawei Technologies Co's planned deal with US carrier AT&T Inc is more of a political issue than a business one, and it will escalate tensions between China and the US over trade and global competition.

The deal to sell Huawei's smartphones through AT&T was called off right before the partnership was set to be announced at the Consumer Electronics Show in Las Vegas, Nevada on Tuesday (US time). According to media reports, AT&T was pressured to cancel the deal after 18 lawmakers wrote a letter in December 2017 to the US Federal Communications Commission citing longstanding concerns about "Chinese espionage in general, and Huawei's role in that espionage in particular."

Since more than 90 percent of US consumers buy smartphones through carriers and none of the four major US carriers has a smartphone deal with Huawei, the Chinese company can only sell its devices through retailers and online stores in the US, even though it has become the world's No.3 smartphone maker.

Huawei's setback is not just a business issue. US lawmakers have not only blocked Huawei and other Chinese technology companies from entering the US market, they have also overstated and linked some simple commercial cases to national competition, which is obviously misleading.

There is no way that US political opposition to Chinese technology companies will stifle their development. Instead, the tensions caused by any blockage will only intensify the already fierce bilateral competition in the global market.

Despite its small market share in the US, Huawei operates in about 170 countries and regions, and it has cooperation agreements with 45 of the 50 leading global carriers.

It is also one of the world's top providers of telecom equipment, with a business covering not only emerging markets in Africa and the Middle East but also developed markets in Europe.

Specifically, Huawei, which is committed to exploring developed markets, has made significant progress in Europe with its premium devices and rapid technical innovation in recent years.

In September 2017, German operator Deutsche Telekom, in partnership with Huawei, launched Europe's first fifth-generation connection in Berlin.

Huawei's fast-growing share in the global telecom equipment market may be the reason that US lawmakers and security experts want to shut the company out of their market. But its success in Europe and other markets can only show how ridiculous the country's national security concern is.

***

The US is trying to protect its one of the few remaining dominant brand because Huawei was set to kill off Apple in its own turf. So far so good, but, it may get even more interesting for the US if they think they can come out of this unpunished.

***

China clarifies reports on possible slowing of US debt purchases
Source:Xinhua Published: 2018/1/11 14:45:47

China's top forex regulator responded Thursday to reports that the country is considering slowing or halting the purchase of US Treasuries.

The report might have quoted the wrong source or just one piece of misinformation, according to a statement released by the State Administration of Foreign Exchange.

A foreign media outlet reported Wednesday that China, the biggest buyer of US sovereign bonds, is considering slowing down or even halting its purchases as US debt is becoming less attractive.

Prices of US Treasuries and the dollar fell, while gold rose shortly after the report.

China's forex reserves have been invested in a diverse and decentralized manner to keep assets safe and ensure they grow in value steadily, and like other investment moves, the purchase of US Treasuries is market-based behavior and is subject to professional management based on market conditions and investment targets, the statement said.

The Chinese forex managers are responsible investors whose investments have helped stabilize the international financial market and the value preservation and growth of China's forex reserves, the statement added.

http://www.globaltimes.cn/content/1084354.shtml

 

[Dungeness]

Maybe Chinese government should ban iPhones in China.

 

[Beast]

Collapse of Huawei-AT&T smartphone deal set to escalate Sino-US trade tensions

By Wang Jiamei Source:Global Times Published: 2018/1/10 23:13:40

Richard Yu Chengdong, CEO of Huawei Technologies Co, holds the Mate 10 Pro smartphone while speaking during the company’s keynote event at the 2018 Consumer Electronics Show (CES) in Las Vegas, US, on Wednesday. Although a deal between Huawei and US telecom carrier AT&T fell through on Tuesday, the Chinese firm said it is still committed to the US market. Electric and driverless cars will remain a big part of this year’s CES. Photo: VCG


The collapse of Chinese technology giant Huawei Technologies Co's planned deal with US carrier AT&T Inc is more of a political issue than a business one, and it will escalate tensions between China and the US over trade and global competition.

The deal to sell Huawei's smartphones through AT&T was called off right before the partnership was set to be announced at the Consumer Electronics Show in Las Vegas, Nevada on Tuesday (US time). According to media reports, AT&T was pressured to cancel the deal after 18 lawmakers wrote a letter in December 2017 to the US Federal Communications Commission citing longstanding concerns about "Chinese espionage in general, and Huawei's role in that espionage in particular."

Since more than 90 percent of US consumers buy smartphones through carriers and none of the four major US carriers has a smartphone deal with Huawei, the Chinese company can only sell its devices through retailers and online stores in the US, even though it has become the world's No.3 smartphone maker.

Huawei's setback is not just a business issue. US lawmakers have not only blocked Huawei and other Chinese technology companies from entering the US market, they have also overstated and linked some simple commercial cases to national competition, which is obviously misleading.

There is no way that US political opposition to Chinese technology companies will stifle their development. Instead, the tensions caused by any blockage will only intensify the already fierce bilateral competition in the global market.

Despite its small market share in the US, Huawei operates in about 170 countries and regions, and it has cooperation agreements with 45 of the 50 leading global carriers.

It is also one of the world's top providers of telecom equipment, with a business covering not only emerging markets in Africa and the Middle East but also developed markets in Europe.

Specifically, Huawei, which is committed to exploring developed markets, has made significant progress in Europe with its premium devices and rapid technical innovation in recent years.

In September 2017, German operator Deutsche Telekom, in partnership with Huawei, launched Europe's first fifth-generation connection in Berlin.

Huawei's fast-growing share in the global telecom equipment market may be the reason that US lawmakers and security experts want to shut the company out of their market. But its success in Europe and other markets can only show how ridiculous the country's national security concern is.

***

The US is trying to protect its one of the few remaining dominant brand because Huawei was set to kill off Apple in its own turf. So far so good, but, it may get even more interesting for the US if they think they can come out of this unpunished.

***

China clarifies reports on possible slowing of US debt purchases
Source:Xinhua Published: 2018/1/11 14:45:47

China's top forex regulator responded Thursday to reports that the country is considering slowing or halting the purchase of US Treasuries.

The report might have quoted the wrong source or just one piece of misinformation, according to a statement released by the State Administration of Foreign Exchange.

A foreign media outlet reported Wednesday that China, the biggest buyer of US sovereign bonds, is considering slowing down or even halting its purchases as US debt is becoming less attractive.

Prices of US Treasuries and the dollar fell, while gold rose shortly after the report.

China's forex reserves have been invested in a diverse and decentralized manner to keep assets safe and ensure they grow in value steadily, and like other investment moves, the purchase of US Treasuries is market-based behavior and is subject to professional management based on market conditions and investment targets, the statement said.

The Chinese forex managers are responsible investors whose investments have helped stabilize the international financial market and the value preservation and growth of China's forex reserves, the statement added.

http://www.globaltimes.cn/content/1084354.shtml

China will tie US forex purchase to huawei sales in US. This is called immediate retaliation

 

[TaiShang]

Maybe Chinese government should ban iPhones in China.

I was also thinking about potential retaliation because this ban is entirely hostile and cannot be explained under any phony national security grounds.

It is 16th century mercantilism. If they want to play that sort of a game, then China needs to respond proactively. China's options may include:

1. Let this pass and watch US behavior in the near future
2. Retaliate in kind against a prominent US company
3. Respond disproportionately, including spreading rumors of slow down in US debt purchases

But these are very general observations. I wonder what would be specific policies in response.

@Martian2

 

[MrSato1]

I was also thinking about potential retaliation because this ban is entirely hostile and cannot be explained under any phony national security grounds.

It is 16th century mercantilism. If they want to play that sort of a game, then China needs to respond proactively. China's options may include:

1. Let this pass and watch US behavior in the near future
2. Retaliate in kind against a prominent US company
3. Respond disproportionately, including spreading rumors of slow down in US debt purchases

But these are very general observations. I wonder what would be specific policies in response.

@Martian2

Last week they also banned Ant Financial (alibaba) from ourchasing money gram on so called security concerns yet they will allow a european company to purchase money gram. At this point the US will always use politics as a issue and China really needs to start oulling its weight, stop actng like some banana republic and regardless of the consequences protect their domestic market from these vulture ameican companies as well. They need to ban or restrict iphone slaes on security concerns especially the Iphone 8 and facial scanning

 

[cloud4000]

I was also thinking about potential retaliation because this ban is entirely hostile and cannot be explained under any phony national security grounds.

Because there's no ban on Huawei smartphones in US, it just won't be sold through mobile phone companies like AT&T and Verizon. Consumers are free to buy the phone directly from Huawei instead.

Maybe Chinese government should ban iPhones in China.

The iPhone is manufactured in China after all...

 

[+4vsgorillas-Apebane]

China needs to covertly ban or restrict the IPhone in China in retaliation.

Same tactics used against the Koreans where they discreetly but unofficially restricted tour groups going there.

Or delay IPhone sales pending trumped up long security and safety checks. If they are released 8-12 months late in each cycle/iteration, demand will plummet.

 

[Martian2]

I was also thinking about potential retaliation because this ban is entirely hostile and cannot be explained under any phony national security grounds.

It is 16th century mercantilism. If they want to play that sort of a game, then China needs to respond proactively. China's options may include:

1. Let this pass and watch US behavior in the near future
2. Retaliate in kind against a prominent US company
3. Respond disproportionately, including spreading rumors of slow down in US debt purchases

But these are very general observations. I wonder what would be specific policies in response.

@Martian2

The United States is targeting Huawei, DJI, and Alibaba's Ant Financial.

What is the US strongest in? Financial services.

How do you retaliate? Maintain Chinese barriers to US financial services.

The US is picking selective battles. China should not lower its barriers to US financial companies.

We are heading towards a comprehensive free-trade-agreement between China and the United States. The US wants to keep some parts of its market closed. China should keep its services market closed. Both countries can open up after signing a free-trade-agreement.

These trade frictions (such as the Huawei incident) are caused by the Trump administration's dissatisfaction with the imbalance in China-US trade. This problem is difficult to solve. Free trade rarely guarantees balanced-trade. Trade becomes balanced over decades with the process of convergence.

Since China is a developing country and the US is a developed country, we have about 30 more years to go before convergence occurs.

The problem right now is that as China imports more US goods, it is being offset by US consumers buying EVEN MORE Chinese goods. The China-US trade deficit grows NOT because China is being mercantile and restricting US imports; it is growing because of unlimited demand for affordable-technology Chinese products from US consumers.

Only a free-trade-agreement can solve this problem; where the two countries essentially agree to merge their economies under a formal set of rules.

 

[cloud4000]

The United States is targeting Huawei, DJI, and Alibaba's Ant Financial.

What is the US strongest in? Financial services.

How do you retaliate? Maintain Chinese barriers to US financial services.

The US is picking selective battles. China should not lower its barriers to US financial companies.

We are heading towards a comprehensive free-trade-agreement between China and the United States. The US wants to keep some parts of its market closed. China should keep its services market closed. Both countries can open up after signing a free-trade-agreement.

These trade frictions (such as the Huawei incident) are caused by the Trump administration's dissatisfaction with the imbalance in China-US trade. This problem is difficult to solve. Free trade rarely guarantees balanced-trade. Trade becomes balanced over decades with the process of convergence.

Since China is a developing country and the US is a developed country, we have about 30 more years to go before convergence occurs.

The problem right now is that as China imports more US goods, it is being offset by US consumers buying EVEN MORE Chinese goods. The China-US trade deficit grows NOT because China is being mercantile and restricting US imports; it is growing because of unlimited demand for affordable-technology Chinese products from US consumers.

Only a free-trade-agreement can solve this problem; where the two countries essentially agree to merge their economies under a formal set of rules.

All I can say about this post is that China wants its cake and eat it too. There will never be a free trade agreement between China or US. This is just a dream you are having. Please wake up.

 

[Martian2]

All I can say about this post is that China wants its cake and eat it too. There will never be a free trade agreement between China or US. This is just a dream you are having. Please wake up.

The Peterson Institute published a report on the benefits of a Free Trade Area Asia Pacific (FTAAP).

After full implementation, China would benefit by $1.6 trillion per year. The US would benefit by $626 billion per year.

Both countries would benefit under an FTAAP. In the aggregate, China benefits more. However, on a per-capita basis, the US would derive almost twice the benefit.

The FTAAP benefits both China and the United States. It is only a matter of time before a US president decides that a win-win FTAAP is better than a lose-lose trade war.

 

[cloud4000]

The Peterson Institute published a report on the benefits of a Free Trade Area Asia Pacific (FTAAP).

After full implementation, China would benefit by $1.6 trillion per year. The US would benefit by $626 billion per year.

Both countries would benefit under an FTAAP. In the aggregate, China benefits more. However, on a per-capita basis, the US would derive almost twice the benefit.

The FTAAP benefits both China and the United States. It is only a matter of time before a US president decides that a win-win FTAAP is better than a lose-lose trade war.

US has withdrawn from TPP, so why would it pursue FTAAP? There will be no FTA between China and US until the former sheds its mercantile ways.

 

[Martian2]

US has withdrawn from TPP, so why would it pursue FTAAP? There will be no FTA between China and US until the former sheds its mercantile ways.

The next US election is in three years.

If there is a new president, the FTAAP would be back on the table.
----------

In contrast, the TPP is probably permanently dead.

Under the TPP, the US gave very advantageous market access to other TPP members in exchange for their international political support of the United States.

Strictly on an economic basis, the TPP was probably a net negative for the United States and is unlikely to be revived.
----------

China is not mercantile. US companies sell four million cars in the Chinese market every year. If there is a complaint, the WTO resolution process is available.

 

[cloud4000]

The next US election is in three years.

If there is a new president, the FTAAP would be back on the table.

Both Democrats and Republicans are on the same page as far as trade with China is concerned.

https://www.reuters.com/article/us-...back-trump-on-china-trade-probe-idUSKBN1AI2JI

Don't know where you get this idea that FTAAP will be on any table between China and US. Like I said before, this is wishful thinking.

China is not mercantile. US companies sell four million cars in the Chinese market every year. If there is a complaint, the WTO resolution process is available.

US is not the only country complaining about China's mercantile ways. It's a lot of countries. And, yes, expect an increase in cases filed in WTO against China in the coming years.

 

[Martian2]

Both Democrats and Republicans are on the same page as far as trade with China is concerned.

https://www.reuters.com/article/us-...back-trump-on-china-trade-probe-idUSKBN1AI2JI

Don't know where you get this idea that FTAAP will be on any table between China and US. Like I said before, this is wishful thinking.



US is not the only country complaining about China's mercantile ways. It's a lot of countries. And, yes, expect an increase in cases filed in WTO against China in the coming years.

Did you bother reading my post?

I said if Trump leaves office.
----------

Allegations of mercantilism are meaningless. It has to be proven at the WTO. The US has lost its fair share of WTO complaints. There is no objective indication that China is any more mercantile than the United States.

 

[cloud4000]

Did you bother reading my post?

I said if Trump leaves office.

And did you bother understanding mine? This has nothing do with Trump. US trade issues with China predate Trump and will exist long after he's gone. Both Democrats and Republicans are on the same page on this issue. Neither party will agree to a FTA with China.