Trade War with China

China on Tuesday called on relevant sides to "comprehensively" and "accurately" understand its National Intelligence Law, instead of making a one-sided out-of-context interpretation.

Some Western media have voiced concerns over Article 7 of the law and suggested their countries adopt restrictive measures on Huawei's technologies and devices.

Chinese Foreign Ministry Spokesperson Geng Shuang dismissed such concerns at a routine press briefing.

He said Article 7 stipulated the obligations of organizations and individuals to lawfully support, assist and cooperate with the country's intelligence service, but Article 8 clearly stipulated the national intelligence service should carry out its work according to law, respect and protect human rights, and safeguard the legal rights and interests of individuals and organizations.

"I'm wondering whether those who accused the law have carefully read its articles. I hope they can look at it comprehensively and understand it accurately, instead of making one-sided interpretation that is out of context," Geng said.

Meanwhile, there are many provisions in other laws to protect the legitimate rights and interests of organizations and individuals, including data security and the right to privacy. Those stipulations also apply to intelligence-related work, he said.

"We hope relevant sides will abandon prejudice and the presumption of guilt, and view the normal business activities of Chinese enterprises in an objective and fair way."

China hopes related countries can truly follow the market principle of fair competition and provide a fair, just and non-discriminatory environment for Chinese enterprises to conduct legitimate business, Geng said.

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Hendrik_2000 said:

The US effort to deny China the high tech machinery is going to fail because as I said before China will pay 2 or 3 X the average salary of Taiwanese, Korean or even retired Japanese engineer
Chinese chipmakers lure Taiwanese engineers with fat pay packets
China's cash-rich companies can offer '2 to 3 times' the salary of their rivals

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KENSAKU IHARA, Nikkei staff writerFEBRUARY 19, 2019 15:12 JST

Taiwanese contract chipmaker TSMC is growing more dependent on Chinese customers as demand from others, such as Apple, wanes. © Reuters
TAIPEI -- The battle for technological supremacy between the U.S. and China is a hot topic among Taiwanese semiconductor engineers in Hsinchu, Taiwan's answer to Silicon Valley. Several predict that China will use its enormous financial muscle to develop its chip industry and fend off restrictions imposed by the U.S.

"Chipmaking technology is concentrated in the hands of cash-rich companies, which are now mostly Chinese," said one engineer in his 40s who has worked for both Chinese and Taiwanese companies.

"For U.S. semiconductor equipment makers, Chinese tech companies are the most important customer, and the U.S. is doing what it can to pressure China to gain the upper hand in trade talks, rather than trying to deliver a fatal blow to Chinese companies," he said.


The U.S. has criticized Chinese companies for stealing technology from their American counterparts. Last year, Chinese telecommunications equipment maker

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ran into financial trouble after it was temporarily blocked from supplying chips to U.S. companies. In October of that year, U.S. authorities added Fujian Jinhua Integrated Circuit to a list of organizations prohibited from buying components, software or technology goods from U.S. companies.

Beijing is determined to foster its own chipmaking technology, dismissing complaints from Washington. "Chinese companies are offering two to three times [Taiwanese engineers'] current salaries to work for them," said another engineer.

In the face of political pressure from Beijing, Taiwanese President Tsai Ing-wen has drawn closer to Washington and is coordinating with the U.S. in its sanctions against China. According to one industry insider, Taiwan's

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last year terminated a technology cooperation deal with Fujian Jinhua Integrated Circuit in response to behind-the-scenes pressure from Taipei. The island's government in January also purged

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equipment from public research institutions.

But Taiwanese manufacturers are starting to chafe under the get-tough policy. They feel it is unwise to antagonize China, with its huge market.

Last November, a local newspaper reported that ASE Technology Holding Management Director Bough Lin had criticized the government for restricting the operations of Taiwanese companies, saying authorities should not spank their "sons" in order to help a "foreigner." His company is the world leader in semiconductor sealing and testing.

As demand for Apple smartphones slows, Chinese customers are looming larger for suppliers such as

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. The chipmaker's share of sales going to Chinese customers rose 6 percentage points to 17% in the year ended December 2018. C.C. Wei, TSMC's CEO, said in January that China is still important and that the company remains a contract manufacturer "for all customers."

But as they come to rely more heavily on the Chinese market, Taiwanese companies face greater risks should Beijing's policies change unexpectedly. They must weigh those risks against the handsome profits they stand to make from Chinese customers.

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• Respect and cooperation is the ‘right choice’, foreign minister says
• Vice-Premier Liu He expected in Washington for two more days of talks

Chinese State Councillor and Foreign Minister Wang Yi called on the United States to respect China’s right to development, adding that economic and trade ties could stabilise relations between the two countries locked in a trade war.

In a meeting in Beijing on Tuesday with a delegation led by US Chamber of Commerce executive vice-president Myron Brilliant, Wang said the US should see China’s development as beneficial to its own interests.

“Considering China’s development as an opportunity for the US should be conducive to solving some problems, including trade, between the two countries,” Wang was quoted by state news agency Xinhua as saying on Wednesday.

The foreign minister’s comments came as China’s Vice-Premier Liu He was expected to enter another round of trade talks with the US in Washington on Thursday and Friday before a trade war truce ends on March 1.

After the latest round of negotiations last week in Beijing, both sides expressed optimism about progress towards a deal, which would probably be outlined by a memorandum of understanding.

On Tuesday, US President Donald Trump said talks with China were “going very well” but that negotiations were “very complex”.

“Mutual respect and cooperation is not only the right choice for us but also the common hope of the international community,” Wang told the US delegation, which consisted of former US government officials.

Members of the US delegation said people in the US were paying great attention to the trade talks, Xinhua reported.

The US delegates voiced hope that the sides would reach a “comprehensive, bold and significant trade agreement that will have long-lasting and positive influence on relations”.

The current trade talks in Washington are likely to be the last between the two nations as they work to beat the March deadline for more tariff increases.

The White House wants China to keep its currency from depreciating against the US dollar, Bloomberg reported, citing two sources.

A key enforcement tool would be US tariffs, and the Trump administration has been clear in its talks with Beijing that any attempt to depreciate the yuan – a strategy to offset existing US duties on Chinese imports – would be met with more or higher American tariffs, the sources said.

While the precise wording remains unresolved, a pledge of yuan stability has been discussed in many rounds of talks in recent months and both sides have tentatively agreed it will be part of the framework of any final deal.

China and the US agreed to suspend further tariff increases on December 1, following a meeting between Trump and Chinese President Xi Jinping. The US said it would raise tariffs on US$200 billion of Chinese imports from 10 to 25 per cent if a deal cannot be reached by the March deadline.

Liu travelled as Xi’s special envoy – a higher status that demonstrated China’s eagerness to reach a deal.

The last time Liu travelled as special envoy was last May, when he went to Washington for trade talks before a first round of tariffs was imposed by the US.

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In an interview with the BBC, Huawei's founder CEO Ren Zhengfei defied America's pressure and its attempted isolation of Huawei. “There's no way the U.S. can crush us," he said. "The world cannot leave us because we are more advanced. Even if they persuade more countries not to use us temporarily, we can always scale things down a bit."

Mr. Ren is not boasting in his claim. After British intelligence's conclusion that the security risk posed by Huawei could be

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, it is reported that Germany is also considering letting Huawei in despite U.S. warnings.

This is a huge blow to America's efforts in uniting its close allies in blocking Huawei. Last week, U.S. Secretary of State Mike Pompeo failed in his trip to Central Europe when he tried to persuade Hungary to end business with Huawei, saying it might be questionable for the U.S. to “partner alongside with them.”

But against the storm of America's pressure, Huawei still has enough

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in its development of 5G.

5G has more than 100 times capacity than 4G and will enable us to download a film in less than five seconds. Essentially, it represents the future of a transformed Internet that could be used in settings such as self-driving cars, Internet of Things, and remote medical operation. According to a report by IHS, the 5G value chain could generate a whopping 3.5 trillion U.S. dollars in output and 22 million jobs by 2035.

Thus, the rollout of 5G would greatly promote the world's mobility and digitalization, helping the key players in the field earn a VIP seat in the global competition for technology advancement. It is no wonder that Trump is pressuring companies to accelerate the deployment of 5G nationwide.

And racing alongside the U.S. is China. Europe has already lost a battle in 5G coding due to a lack of investment and resources.

Perhaps that's why Europe has been taking a diplomatic approach towards Huawei. Even for the purpose of balance, Europe perhaps would not ban Huawei due to its long tradition of valuing competition after tasting the bitterness of the monopoly of American social media giants.

The anti-Huawei rhetoric from the U.S. will not only face suspicion from Europe, but most likely its own companies as well. In November last year, Huawei disclosed the list of its 92 key suppliers, of which 33 are American companies. In a world where countries' economies are closely intertwined, even the U.S. could not develop on its own.

According to the WSJ reports, tech companies including Intel and Cisco have already complained to the U.S. Trade Representatives that tariffs against China would raise the cost of routers and switches, which in turn will slow down the deployment of 5G.

As an article from Huxiu, a famous Chinese business and technology media outlet, points out that with Huawei's breakthrough in core 5G technology, it has accumulated enough patents which American operators simply could not avoid using in the Enhanced Mobile Broadband setting, the primary use case for 5G.

In a more practical sense, Huawei is now able to lower the cost of the base station to gain enough of an edge in the foreign market, as the deployment of 5G requires much more base stations than 4G. By the end of 2018, it sent more than 10,000 5G base stations to operators in Europe, the Middle East and the Republic of Korea.

In June last year, British Telecom launched a collaborative research center on 5G. Gavin Patterson, CEO of BT expressed his excitement and said: “collaborative research has a key role to play as the technology develops.” Perhaps instead of leveraging non-market tools to hit Huawei, the U.S. could also take a more collaborative approach.

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advill said:

Where there is a "Crisis there is Opportunity" Wei Ji (a Chinese saying). China & most sensible countries need global markets. If there are problems between countries or if difficult to solve consider an unbias mediator then. For Peace & Progress in the World particularly in the Asia-Pacific region let's hope that the 2 Major Countries US & China would be realistic in their approaches to Trade, Investments & Cooperation in all possible fields. If NO progress, we have to wait till 2020 when a new sensible US President is elected by the American people. In the meantime China should carry on with BRI initiatives with countries who are receptive to its proposals.

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