Huawei retaliation? China draws up list of ‘unreliables’

In an ominous but vague warning, China said Friday that it was drawing up a list of “unreliable” companies, organizations and individuals for targeting in what could signal retaliation for U.S. sanctions on the Chinese tech powerhouse Huawei.

“We think it may be the beginning of Beijing’s attempt to roll out a retaliatory framework,” said Paul Triolo of the global risk assessment firm Eurasia Group. “That could include a number of other elements, such as restrictions on rare earth shipments” — minerals that are crucial in many mobile devices and electric cars made by U.S. companies.

The move follows additional measures this week that deepen the bite of U.S. sanctions imposed on Huawei in mid-May amid an escalating trade war, whose backdrop is the two powers’ struggle for long-term technological and economic dominance.

Several leading U.S.-based global technology standards-setting groups announced restrictions on Huawei’s participation in their activities under the U.S. Commerce Department restrictions, which bar the sale and transfer of U.S. technology to Huawei without government approval.

Such groups are vital battlegrounds for industry players, who use them to try to influence the development of next-generation technologies in their favour. Excluding Huawei would put the company at serious disadvantage against rivals outside China.

Also Friday, The Financial Times said the company had ordered employees to cancel technical meetings with Americans and sent home U.S. employees working at its Chinese headquarters.

Huawei is the world’s No. 1 network equipment provider and second-largest smartphone maker. U.S. officials claim Huawei is legally beholden to China’s ruling Communists, which could use the company’s products for cyberespionage, though the U.S. has presented no evidence of intentional spying.

In blacklisting Huawei, the Commerce Department cited the company’s theft of intellectual property and evading of Iran sanctions. A 90-day grace period allows continued support of existing Huawei equipment. But under the export restrictions, U.S. suppliers including Qualcomm, Intel, Google and Microsoft cannot ship computer chips, software and other components for new Huawei equipment.

In apparent response, a spokesman for China’s commerce ministry said Friday in Beijing that it was establishing a list of foreign enterprises, organizations and individuals deemed to be “unreliable entities.”

Entities are “unreliable” if they “fail to comply with market rules, break from the spirit of contracts and block or stop supplying Chinese enterprise for non-commercial reasons, seriously damaging the legitimate rights and interests of Chinese enterprises,” ministry spokesman Gao Feng told a news briefing. Gao said “necessary measures” against the transgressors would be announced “in the near future.”

He said the creation of China’s list is justified by national security concerns and Beijing’s opposition to trade protection and “unilateralism” — a likely reference to the Trump administration’s go-it-alone approach to global trade and security policy.

But China’s options are limited.

Triolo of Eurasia Group said China doesn’t have any retaliatory options that don’t also hurt China’s business climate. Cutting exports of rare earth minerals to the U.S., for instance, could also hurt China, as the country is the leading exporter of such materials.

In the latest blow to Huawei, the world’s largest association of technical professionals, IEEE, moved this week to restrict employees of the Chinese company from peer-reviewing research papers , citing the U.S. sanctions.

The New Jersey-based IEEE is a leading developer of telecommunications, information technology and power generation standards and claims 422,000 members in more than 160 countries , more than half of them outside the United States. It has about 200 different publications.

IEEE media officials did not return phone calls and emails seeking clarification on a leaked email widely circulated online . The email advises editors-in-chief of IEEE journals of potential “severe legal implications” if Huawei employees aren’t removed from the peer-review process on scientific papers.

Huawei had no comment on the IEEE action. But China’s state news agency Xinhua said Chinese scientists have no choice but to leave IEEE, calling the decision a “smear” that will damage the scientific organization’s objectivity and authority.

“We all believe that IEEE is an international society, not just one belonging to the U.S,” Zhang Haixia, a nanotechnology scientist at Peking University, posted on her lab’s social media account. She said she was leaving two IEEE editorial boards .

Also this week, two major international standards organizations — the Wi-Fi Alliance and SD Association — said they were temporarily restricting Huawei participation in activities covered by the U.S. restrictions.

Austin, Texas-based Wi-Fi Alliance, which has more than 550 members and certifies wireless network products, did not respond to questions seeking clarification on what activities it was restricting.

Kevin Schader, spokesman for the San Ramon, California-based SD Association , said Huawei is unable to participate in developing standards for memory cards. The group has 900 members worldwide.

The development of standards for next-generation 5G wireless equipment — in which Huawei has played a central role — is exempt from the U.S. restrictions until the grace period ends on Aug. 21. That exemption could be extended.

Many analysts consider the restrictions a pressure tactic by Washington to encourage a wholesale ban by European allies on Huawei equipment in their 5G rollouts, which countries including Britain, France and Germany have resisted.

The Financial Times, meantime, quoted Huawei’s chief strategy architect, Dang Wenshuan, as saying that U.S. citizens working in research and development at the company’s Shenzhen headquarters were sent home two weeks ago.

It said a workshop underway at Huawei at the time was “hastily disbanded, and American delegates were asked to remove their laptops, isolate their networks and leave the Huawei premises.”

The paper quoted Dang as saying that Huawei was also limiting interactions between its employees and American citizens.

Huawei declined to comment on the FT report.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Trudeau says Wet’suwet’en crisis, rail blockades a critical moment for country

First Nations leaders suggest it may be time to peacefully end the blockades

Four people charged in drug trafficking investigation

Rocky Mountain House RCMP execute search warrant

Drive-by shooting in Wetaskiwin on Sunday

Two people injured in shooting

Trudeau caught in middle of clash over energy, environment, Indigenous demands

OTTAWA — The competing demands of natural resource development, environmental protection and… Continue reading

A rare miss for Walmart to end the year

NEW YORK — Walmart reported disappointing fourth-quarter profits and sales after a… Continue reading

Your community calendar

Feb. 19 A Liberation of Holland event is being held at the… Continue reading

New highway to B.C. proposed

The Howse Pass shortcut to British Columbia is worth taking another look… Continue reading

Red Deer flag raising to mark 100 years of Kin Clubs

Mayor Tara Veer and the Kin Clubs of Red Deer will gather… Continue reading

Red Deerians will walk Saturday in bid to end poverty

Red Deerians will brave the chill to raise funds for The Mustard… Continue reading

Reader’s opinion: Here’s how Premier Kenney can build a stronger Alberta

Apparently, the UPC government has decided that most seniors should pay more… Continue reading

Rail blockades present PM with a complex problem

Justin Trudeau has been hit by three large-scale communications crises since the… Continue reading

Popping pills can be just the start

I’m sitting at my desk looking at a flyer. You can save… Continue reading

United We Roll convoy cruises through central Alberta

It has been one year since the United We Roll convoy made its way from Alberta to Ottawa

Most Read