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China vs. the USA: Huawei is not yet out of the woods

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Finally quiet for Huawei. At the G20 summit in Japan, US President Donald Trump and China's top statesman Xi Jinping agreed that trade between Huawei and its US partners like Google can continue. Proceed with caution, because the matter is far from over!

A brief summary: In April, Donald Trump blacklisted Huawei and made it virtually impossible for US companies to trade with the Chinese telecommunications giant. Huawei has been fighting for its reputation and sales ever since, and US companies are anything but happy with the spell Trump has cast on Huawei. The 90-day grace period is not over yet, but now Huawei seems pardoned by the agreement between the two governments. That's not quite the full story though.

It is not always easy to follow the statements of politicians in general and Donald Trump is particularly incomprehensible. But the agreement reached in Japan is in fact not an agreement at all. The USA and China only want to resume the negotiations on new conditions for bilateral trade, which had previously been interrupted. There will be no new punitive tariffs as long as the talks continue. The door is open again for Huawei as well. But, these are only negotiations, and there is no result yet. That's gonna take some time, maybe quite a long time. Until then, the uncertainty remains.

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Trump also explicitly addressed the question of Huawei. This matter must remain open "to the end". No wonder, after all, the US president outed the Chinese company citing a threat to national security. By definition, such problems cannot simply be solved with a trade agreement - unless, of course, the threat to security was only a pretext.

A headwind from Democrats and Republicans

Donald Trump also has to drill thick boards on the home front in the Causa Huawei if he is really serious about the pardon. Both Democratic politicians and Trump's own party, the Republicans, have voiced criticisms about the end of the Huawei ban: "Huawei is one of few potent levers we have to make China play fair on trade," wrote Democratic Senator Chuck Schumer on Twitter. Republican Marco Rubio continues to see Huawei as a "threat to national security". His party colleague Tim Cotton from Arkansas even calls Huawei a "close partner of the People's Liberation Army" in a tweet.

Clemens Fuest, President of the Ifo Institute for Economic Research in Munich, told German Newspaper, Handelsblatt: "The resumption of trade talks between China and the USA is a ceasefire, but not yet peace. There is much to suggest that the US sees China as a competitor for its geopolitical supremacy and therefore wants to hamper China's economic rise." Fuest, therefore, expected "a continuation of the trade conflict".

Considering these points and the general fickleness Donald Trump has shown in his political actions so far, the matter does not seem to be over for Huawei. The company - and its customers - should not feel really safe until the ink on the corresponding papers is dry.

Do you think Huawei is already worried about what is yet to come?

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  • 49
    storm Jul 4, 2019 Link to comment

    I think Huawei sees the flaws in their business dependencies and is laying new foundations towards greater independence.