China's Response Shows Huawei Is A Pawn In Trade War With The US

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China has retaliated after the US banned Huawei from doing business in the country, but not in the way that many expected.

The Chinese government says that it will not negotiate with the US on a trade deal until it undoes its "wrong actions". The "wrong actions" that the Chinese are referring to are, banning Huawei from working with US companies.

China's Commerce Ministry Spokesman Gao Feng said today that "if the United States wants to continue trade talks, they should show sincerity and correct their wrong actions. Negotiations can only continue on the basis of equality and mutual respect." Feng continued by stating that "we will closely monitor relevant developments and prepare necessary responses."

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Last Thursday, President Trump signed an executive order, which was meant to protect US technologies. It put Huawei and a number of other Chinese companies on an "entity list". That list basically means that those companies cannot do business with any US companies, without a permit from the US government.

Following that executive order, it was a trickle-down effect of US companies cutting ties with Huawei. That includes Google, Qualcomm, Intel and Microsoft. Since then, we've seen some other non-US companies also follow suite. Like ARM and Panasonic. Which have essentially killed off Huawei altogether. As it cannot even make chipsets for its smartphones without being able to do business with ARM.

There are theories that Huawei is being used as a pawn in the trade war between China and the US. Given the response from the Chinese, it definitely appears to be that way.

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Huawei has long been targeted by the US, dating back to 2012. The US government believes that Huawei is used by the Chinese government to spy on its customers. That doesn't sit well with the US government, as it wants to be the only one able to spy on its citizens. There have been numerous investigations opened, to look into Huawei and their ties to the Chinese government. But those investigations have found zero evidence.

The government had been pushing Huawei out of the country long before Trump became president. But things intensified once Trump took over at The White House. After forcing carriers to drop Huawei products in early 2018, it has now, outright banned Huawei from even doing business in the US. The ironic thing is, the US is going after Huawei for its networking gear. But these bans are hurting its smartphone business a whole lot more than its networking business.

Huawei is a pretty big company, of course you don't need us to tell you that. While it is now the second largest smartphone maker in the world, that is not where it makes the majority of its money. Huawei also makes networking gear that ISPs and mobile carriers use on their networks. Many rural carriers use Huawei's networking gear because it's cheaper and performs better. So this whole mess is likely more about 5G than anything.

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It's possible that the US will reverse this ban on Huawei, but it likely won't happen until China retaliates and bans a major US company. Though most US companies are already banned in China, so there's not a lot of leverage for the Chinese.