Saturday , July 2 2022

Huawei's Trump attack is a serious mistake



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Donald Trump

In his battle with China for trade and national security, the US has many legitimate complaints, and a variety of tools for seeking right. That doesn't mean it should use all of them.

The nuclear missile launched in Huawei Technologies is actually a case. Last week, the US trade department Huawei placed nearly 70 contacts on the “Entity List”, which means that US suppliers may need a license to do business with them. Huawei's mobile phones and network equipment depend on American components, including advanced semiconductors. If the ban is strictly applied, it could drive one of China's most prominent companies – employing over 180 000 people – out of business.

That would be a serious mistake. The United States has long argued that Huawei is a threat of national security. And there are certainly legitimate reasons for worrying that the inclusion of Huawei tools for American networks will leave them open to spying and, in the event of conflict, damage. But the US is already taking other wise steps to prevent Huawei equipment from being used at home. Trying to put the company out of business is also disproportionate and very wise.

For one thing, it will install collateral damage. Faultless companies worldwide – including Huawei's American suppliers – could lose business, face disruption and incur significant new costs. Allies who have resisted US pressure for Shun Huawei's equipment will be angry to be supported to a corner: even if President Donald Trump releases the little nose, they can hardly take the chance that restrictions will not be reset later. China will only double its efforts to produce advanced technologies domestically.

As a negotiating strategy, the decision makes even less sense. US officials claim they had nothing to do with trade conversations having stopped, but surely it looks like Trump wants to use Huawei as leverage, just as he did last year with ZTE. Trump has already used national security far too often in pursuit of its dispersed trade battles. Doing so here would set another terrible precedent while definitely post-allocation: it will exacerbate the current distress and give Beijing some incentive to stick to any agreement in the long run.

Likely to fail

Worse, the decision undermines the implied point of any trade agreement between the United States and China: not only to increase trade but to stabilize relations between the world's two most powerful generations. While tensions are inevitable, in principle healthy trading relationships should restore ballast, reminding both parties of the benefits of collaboration and strengthening constituencies with a reason to favor peace for war. In contrast, targeting Huawei as naked will only marginalize further the few moderation in the Chinese leadership and incorporate falcons that see conflict inevitable. For ordinary Chinese, it will be difficult to avoid the impression that the US is trying to limit their economic possibilities.

Even on his own terms, finally, this gambling is likely to fail. To be effective, an attack on Huawei would need to be rooted in a larger strategy with a clearer later thinking. There is no evidence of that. Is the goal of the countless technological industry in China the goal? Teaching the country its place? Boost non-Chinese suppliers? Stimulating conflict? End one? Without a more tangible goal, Trump risks alienating US allies, cutting average Chinese and raising the chances of conflict, all of which are not obvious.

What the US needs is a bigger scheme that seeks healthier coexistence with China. That means building American defenses, stimulating its competitive strengths, working with allies to put pressure on China to comply with global norms and taking the lead in writing new rules that can limit its more disruptive behavior. In contrast, Huawei's grinding looks like a strategic mismatch – and one with potentially disastrous consequences. – (c) 2019 LP Bloomberg

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