After holding Kovrig and Spavor in undisclosed locations since December, China confirmed the formal charges just as the US government all but banned American companies from doing business with Chinese tech giant Huawei, a move that could badly cripple a firm considered by China to be a national symbol of industrial prowess.
Former MI6 chief Sir Richard Dearlove said yesterday that giving Huawei a role in building the UK's 5G network could give the Chinese government a "potentially advantageous exploitative position".
The Netherlands' largest telecom firm, KPN, has already made clear that it would not allow Huawei to build its "core" 5G infrastructure, but it could supply other equipment considered less sensitive.
Huawei has said the U.S. "unreasonable restrictions" will infringe upon its rights.
If Huawei "can't get the widget or the part or the software update to keep functioning, then those systems go down", he said.
The Trump administration on Wednesday effectively blocked Huawei products from being used in U.S. networks. Credit: Joy Dantong Ma.
But at least one United States operator is already taking steps to replace Huawei. "There are Japanese firms that supply parts to Huawei, and supply chains are intertwined in complex ways", Japanese Finance Minister Taro Aso said yesterday after a regular Cabinet meeting.
Yesterday, the US Department of Commerce announced on its official website that Huawei Technologies Co., Ltd. and its subsidiaries were included in the "list of entities".
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There was broad confusion, though, on exactly how the restrictions on Huawei might work. In the past, CFIUS as the governing body of worldwide inbound investments, they looked closely at deals that could pose national security threats, meaning the stuff you are investing into is too close to a military base or the company you are trying to acquire is a defense contractor.
But recent developments, especially the modernization act, has expanded the definition, the scope of scrutiny, to competitive technology, including 5G, including artificial intelligence.
The Chinese company and a top executive are also being prosecuted for allegedly violating the US sanctions on Iran and for stealing trade secrets from competitors and partners. The Department of Commerce found that steel and aluminum imports are a threat to U.S. national security and recommended tariffs. Huawei is considered the most important aim of the measure.
The US-China trade is going to be something exciting as China for sure make some changes in their trading scheme too.
ENERGY: Benchmark U.S. crude advanced 70 cents to $62.73 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the global standard, added 64 cents to trade at $72.41 per barrel. NeoPhotonics, one of those vendors, derived 46% of its revenues from sales to Huawei previous year, according to Michael Genovese, an equity analyst with MKM Partners. If the U.S. -China trade negotiations don't result in a deal and all of China's goods are subject to additional U.S. tariffs, Beijing may have no choice but to increase pressure on the United States and respond in kind.
The Huawei issue cuts to the heart of tensions between security and economic interests when it comes to China and Chinese influence. Last year, Trump acted on the report and imposed a 25% tariff on steel and a 10% tariff on U.S. aluminum imports.
The US has pressured allies to shun Huawei in their next generation 5G mobile networks.
However, it made no direct reference to China, with whom Washington is engaged in a bitter trade dispute. Let us know and a selection will be answered by a BBC journalist.
Shares in Shanghai and Hong Kong fell after the Communist Party's People's Daily used a front page commentary to evoke the patriotic spirit of past wars, saying that the trade war would never bring China down.
The second issue centers on the additional volume of US goods that China will agree to buy, Vice Premier Liu He, China's lead trade negotiator, said last week without giving details.