Huawei ban: China threatens to ban foreign companies

ByZim Yang 2019-06-03 127

They were late. It was rare that the Chinese government did not react to the veto of Huawei that has intensified this trade war between the two countries.

This response has just come with the announcement of the creation of a list of "unreliable entities" that could harm the commercial interests of Chinese companies. The decision could affect a multitude of foreign companies, but the magnitude of the decision is unknown since the type of measures that would be taken against the companies included in that list have not been detailed.

China will also have commercial blacklist

The spokesman of the Ministry of Commerce, Gao Feng, explained how China will introduce a mechanism that will include companies, organizations and people who do not obey the rules of the market, violate contracts and - here the thing becomes interesting - block, cut supply for non-commercial reasons or significantly damage the legitimate interests of Chinese companies.

That is precisely the case of all the companies that have announced various vetoes to Huawei in recent weeks. Google, Toshiba, Qualcomm, ARM or Intel are the most prominent, but there are many more although in some cases companies and associations have backed down and have re-established business relations with Huawei.

Gao did not provide details on the type of measures they would implement, but did indicate that "the necessary measures will be taken" against the listed entities and that more specific information would be announced soon.

China returns the ball to the U.S.

The measure would raise a situation similar to the one that the Trump government has created with its 'Entity List', which is exactly the same and that with the inclusion of Huawei has caused all this situation.

As Bloomberg indicates, the first effects of the announcement have already begun to be felt on the US stock market: Apple, Qualcomm or Intel shares have fallen more than 1% before the start of the trading day.

The spokesman for the Ministry of Commerce reminded us again of Trump's words when he assured us that this Chinese blacklist will also be aimed at companies that "pose a threat or potential threat to national security".

For the Chinese government, this list "will protect the rules of international trade and economy and the multilateral trading system to oppose unilateralism and trade protectionism, and to safeguard China's national security and social and public interests.

The discourse joins more and more threats from one country and another in this trade war. The United States is considering the inclusion in the list of more Chinese companies - Zhejiang Dahua Technology Co. and Hangzhou Hikvision Digital Technology Co. - while China is preparing a plan to restrict exports of rare earths, essential materials in certain fields of electronics and technology.

This announcement increases tension again in a trade war that may nevertheless have a solution. This is what Donald Trump pointed out a few days ago, opening the doors to a potential agreement. The agreement could be discussed at the end of June at the G-20 meeting in Japan.

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