China is considering retaliating against telecommunication equipment manufacturers, Nokia and Ericsson. This retaliation could come into effect if the EU follows the decision of the United States and Britain in banning Huawei Technologies from 5G networks.
To recall, Britain has already left the EU earlier this year. And now it has ordered its telecom operators to remove all the gears made by Huawei from their 5G networks by 2027. The UK has also ordered all its wireless carriers to stop buying any 5G equipment from Huawei by the end of 2020.
Wall Street Journal reports that the Chinese Ministry of Commerce is eyeing to place export controls on Sweden's Ericsson and Finland's Nokia. This will halt the export of products manufactured by these two companies in China to other countries.
As of now, the EU has imposed no restrictions on using Huawei's equipment on its 5G networks. However, it has taken a soft step by issuing a security standard. Member states should follow the standards while choosing suppliers to build 5G networks.
Note that the security standards by the EU did not name Huawei specifically. However, it gives the states the power to limit Huawei's presence in their networks. A detailed report on how the 27 member states have implemented these standards is expected to be published soon.
Beijing's retaliation would be a step in the worst-case scenario
The Commerce Ministry of China has stated that it will take all the measures to safeguard the rights of Chinese companies. This statement comes after the ban by the UK government. 5G cellular network will be almost 100 times faster than the current 4G network. This will be highly beneficial for future technologies in various sectors.
As tempting as it may sound for China, it will not such a harsh step until the situation arises. Note that China is already facing the wrath of major economies of the world for the spread of COVID-19.
Jim McGregor, the Greater China chairman of consulting firm APCO Worldwide, said that the action could backfire China. The reason is simple as these foreign tech companies have the liberty of moving out of China. Besides, the manufacturing plants of Nokia and Ericsson in China gives employment to thousands of people.
If we go by a person familiar with this matter, Nokia as already started reviewing contingency plans to shift global production. These steps are taken to dodge the restrictions if imposed by China. And any negative step can cause a huge impact on China itself.