China-US tech crackdown

US tech firms, including Google, Intel and Qualcomm and Xilinx have reportedly cut off their supply deals with Huawei. There is no doubt that the Chinese tech giant is under pressure, but it has shown a strong will to resist the pressure, rather than throwing in the towel.

Things have gone beyond predictions that once a technologically advanced country imposes sanctions on a backward one, the less advanced side will have no choice but to surrender immediately.

Huawei has two sets of responses. First, it has a backup plan and all its “spare tires” – extra components that Huawei has prepared in case of a US supply cut-off – will be used. Second, Huawei’s stockpiling of components and supply chain resilience would enable it to get through roughly six to 12 months. During this period, companies that suspend supplies to Huawei will also suffer financial losses.

Cutting off supplies to Huawei would have a catastrophic impact on global 5G network building. The US is dragging down global 5G networks for its own interests, to safeguard its so-called security.

Hegemony is the biggest threat to the global supply chain. In the era of globalization, any modern industry has to rely on a global supply chain, which is based on maximizing benefit.

To ensure that a supply chain runs smoothly, everyone must have a tacit understanding that no one can threaten the safety and stability of a global supply chain for their own ends – a default rule of the game. If the US breaks the rule, how can any US company be trusted? Do other countries still dare to use advanced American technology products? Which country can ensure that it will never pose a threat to the US? At present, it’s not that Beijing has posed any real threats to Washington, but US President Donald Trump’s administration believes it has.

The global 5G industry, and all the nations, are facing a common issue – how to ensure the safety of the global supply chain.

There are two choices. First, never go against the US. Second, try to exclude such an irresponsible country from the industry.

To some extent, in the context of 5G, the US moves make it an enemy of the rest of the world. What the US is doing is posing a threat to the world.

Halting supplies to Huawei would have a negative influence on the US. It would suffer a financial loss, as doing business with Huawei can bring benefits that cannot be matched by other companies.

Furthermore, US business reputation would be damaged, which would lead to an unfavorable position for it in future. For example, choosing between a more advanced US company or a less advanced non-US one, the non-US enterprise would be selected because of its reliability – it will never cut off supplies.

The US has been abusing its strategic capital accumulated by its soft power for decades. Trump’s moves may create troubles for America’s descendants: How could they convince the rest of world that innovation from the US is safe?

In the near future, Washington may continue to crack down on Huawei, but the Chinese tech giant is not a company the US can suppress willfully. The US cannot crush Huawei. But if Huawei collapses, no one benefits.

If the US continues such actions, some people, not China, but the real owners of the US – capitalists – would interfere. Don’t forget that the US is a capitalist country. If suppressing the Chinese company leads to a severe fall in technology stocks, US capitalists would not be indifferent.

But it needs a lot of time. During this process, China cannot avoid paying a price and will have a difficult time. But Huawei still has a domestic market of more than a billion Chinese people and the market of the Third World countries. When the Trump administration cracks down on Huawei, the US also goes through hard times. The final victory will certainly be China’s, but China must have adequate determination and endurance.

The author is the director of the Research Center for Cyberspace Governance, Fudan University. 

(In association with Global Times)