Chinese officials and state-run media condemned President Donald Trump’s executive order effectively blocking Chinese telecom giant Huawei from U.S. markets, deriding it as an example of Trump’s “Cold War mentality” and vowing to protect Chinese business interests by any means necessary.
The order President Trump signed on Wednesday declared a national emergency “to deal with the threat posed by the unrestricted acquisition or use in the United States of information and communications technology or services designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries.”
The White House warned these foreign adversaries are exploiting and deliberately creating vulnerabilities in their information technology products to “commit malicious cyber-enabled actions, including economic and industrial espionage against the United States and its people.”
The executive order authorized the Secretary of Commerce to consult with other Cabinet secretaries, law enforcement, and intelligence officials to prohibit transactions that pose a risk to American information security.
The order did not name any specific foreign adversary or country but was universally understood to focus on the risks presented by Chinese technology. On the same day President Trump signed the order, the Commerce Department added Huawei to a list of entities that can be prevented from buying American technology if the sale would “harm U.S. national security or foreign policy interests.”
The Chinese government and its media outlets responded with fury. Chinese Foreign Ministry spokesman Lu Kang on Thursday condemned the U.S. actions as an “abuse of export control measures.”
“We urge the United States to stop the wrong approach. China will take further necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises,” Lu threatened, echoing a warning from the Chinese Ministry of Commerce.
“China has emphasized many times that the concept of national security should not be abused and that it should not be used as a tool for trade protectionism,” Commerce Ministry spokesman Gao Feng said on Thursday, repeating a common Chinese accusation that concerns about the security of Huawei products were manufactured as an excuse to protect American and European suppliers from competition.
Huawei, which insists its products are safe and will not be corrupted by Chinese intelligence services, warned that cutting it off from the U.S. market will “do significant economic harm to American companies” and possibly cost “tens of thousands of American jobs.”
The company also warned the U.S. will fall behind in the rollout of 5G wireless networking because its products are cheaper and better than 5G equipment provided by its competitors.
China’s state-run Global Times complained on Thursday that the Huawei ban “reflects Washington’s dangerous Cold War mentality that will lead to further U.S.-China decoupling.”
“Decoupling” is now a popular buzzword in both Washington and Beijing, although it is interpreted very differently in the two capitals. The Trump administration stresses the importance of separating U.S. companies from Chinese supply chains because the Chinese products could pose security risks, doing business with brutal authoritarian China is morally questionable, dependence on hostile China for vital goods is inherently dangerous, and those supply chains were built on bad trade deals that left American companies at a disadvantage.
Beijing is unsettled by the growing realization among its business class that it is heavily dependent on access to American markets for their wealth – and for the income needed by the Chinese Communist Party to realize its strategic goals in the coming decades. Contrary to popular mythology in both East and West, authoritarian rulers do have to worry about popular discontent and losing the support of their financial elites.
“It’s a dangerous escalation. The worst-case scenario is to forbid US companies from supplying Huawei, as US authorities will have the final say on tech exports. And that signals the decoupling of the US and China in high-tech,” Fang Xingdong of the ChinaLabs think tank told the Global Times.
The Chinese paper was careful to balance these apprehensions by quoting other analysts who said Huawei is not as dependent on the U.S. market as another Chinese telecom giant, ZTE, pushed to the brink of destruction by a ban on its products for several months in 2018.
“China-U.S. decoupling will hurt US companies more considering their large presence in the Chinese market,” the Global Times asserted, citing Qualcomm, Apple, and Intel as examples. Wall Street, however, seemed relatively unfazed by President Trump’s executive order.
Another editorial from the Global Times on Thursday insisted Huawei is too powerful, and too far advanced in 5G technology, for the United States to “contain” it with “hooligan actions” that are “immoral and against the logic of the market”:
In recent years, the US has not stopped spitefully threatening Huawei. Huawei has been developing itself in an international environment way worse than that of Western companies. But special crisis awareness has thus been fostered. Huawei puts a high value on independent research and development of key technologies and attaches great importance to supply chain backups of components and parts. Hence Huawei cannot be shocked if the US cuts off key component supply.
Huawei doesn’t sell a lot of devices in the US. Its main business is helping some non-central areas of the US build their communications network. These areas will suffer economic losses if they abandon Huawei equipment. The networks there will operate at a poorer quality and cost more.
The US has publicly mobilized national power and resources to contain Huawei. This is unprecedented. However, the crackdown isn’t going smoothly. It remains to be seen to what extent Washington can persuade its allies to exclude Huawei from their 5G construction.
The US, as the most powerful country in the world and a leader of the West, has spared no efforts in suppressing a private company but yielded little results.
Much of this message is intended for U.S. media, which the Chinese know despises President Trump and is eager to write ominous stories about the dangers of the trade war to weaken Trump’s immense advantage on the economy in the 2020 election. The Chinese would very much like to see U.S. media filled with dire warnings about jobs that could be lost because of Washington’s resistance to Beijing’s agenda. American reporters would very much like to write those stories after months of chronicling Trump’s record-breaking job and wage growth numbers.
The Global Times concluded with a message more clearly intended for Chinese audiences, a bid to rally them around Communist leadership with nationalist appeals:
Chinese society should fully support Huawei, including offering it moral encouragement and supporting Huawei products. China should also use diplomatic resources to hedge against US suppression of Huawei. The US cannot strangle Huawei, nor will it be able to contain the development of China and deprive the 1.4 billion Chinese people of their development rights.
This messaging has the triple purpose of quelling Chinese discontent with the flagging economy, silencing questions about how Communist Party leader Xi Jinping and his advisers miscalculated the trade war with America so badly, and reminding the West that Xi can easily organize massive “consumer boycotts” of foreign products – a plausibly deniable economic weapon that can be presented as spontaneous outbursts of offensive foreign companies by outraged citizens.