In my last post, I have posted about a potential trade war between US and China. The recent ban resulting ZTE may longer purchase American hardware and software for the next 7 years. This ban will definitely mean that even if ZTE manages to source parts of the phone from non-us manufacturers, they may no longer sell Android phones in the west because google has the monopoly on their Android app store.
While the punishment by the US’ commerce dept is harsh, China’s State-owned Assets Supervision and Administration Commission (SASAC) has been equally critical of how ZTE handling this situation. However, this ban is really about the deployment of 5g technology that is coming soon. Huawei and ZTE has been the primary targets of western governments and are blamed for ‘spying,’ despite there is lack of proof. In fact, in one of Edward Snowden leaks, it was revealed NSA’s operation “ShotGiant” used an exploit in Huawei’s networking equipment and spied on the Chinese.
Between Huawei and ZTE, Huawei was more cautious in entering the American market, they concentrate in European and Asian markets. ZTE was more foolhardy and decided to put most of their eggs in the US market and now is punished horribly. At least for now I do not believe that other Chinese phone makers like Motorola, Alcatel, and Oneplus are not the target of US’ wrath because they don’t produce telecom equipment.
But should China be worried? Many in China pointed yes and it is not the first time that the US government try to stop China leapfroging the US over technology. In 2015, the US government banned the Chinese government from buying Intel Xeon Processors so it can prevent China supercomputer effort. The result? China has produced the TaihuLight Supercomputer and created a supercomputer without American technology. Recently, Alibaba and Tencent announced a similar effort to wean away from American Technology.
What will happen in the next few years? I will guarantee that we will see less “Made in America” parts in Chinese technology. This will certainly be very interesting over the next few years.
N.M.Cheung says
Well the penalty against ZTE is devastating yet might be beneficial to China in forcing the speed up of “China 2025” in reaching independence in key technologies. If ZTE files for bankruptcy then it will hurt those stock owners and some employees. Some state enterprise might come in and scoop up the company and reorganize it and retain key employees and push forward on 5G. China is a bigger market in internet and telecom than U.S.. I don’t believe a reorganized ZTE will not thrive without U.S. market, based in China and 3rd world countries. For those components it’s a commodity which China can obtain in the world market. After all, China has survives those sanctions for a long time, so did Cuba or Iran.
pug_ster says
One thing interesting is that it was sanctions against ZTE and recent allegations against Huawei are because of Iran and not North Korea. Not to mention Trump pulled out against Iran’s nuclear deal means that the US is trying to drive a wedge between China and Iran. Ironically, recently Iran decides to trade its oil using Euros instead of dollars, a coincidence that both France’s Macron and Germany’s Merkel wants the US to stick to its deal with the nuclear ban. Definitely a sign that the US is losing its influence over world.