The United States is delaying some restrictions on U.S. technology sales to Chinese tech powerhouse Huawei in what it calls an effort to ease the blow on Huawei smartphone owners and smaller U.S. telecoms providers that rely on its networking equipment.
President Donald Trump's administration insists the sanctions are unrelated to its escalating trade war with China, and many analysts see it as aimed at pressuring U.S. allies in Europe to accede to Washington's entreaties to exclude Huawei equipment from their next-generation wireless networks, known as 5G.
The U.S. government says the ban on selling technology to Huawei, the world's biggest maker of mobile network gear and the No. 2 smartphone brand, will be delayed by 90 days as it applies to existing hardware and software. Shares in tech companies rose Tuesday on the news.
The U.S. claims Huawei is a cybersecurity risk and has targeted it against the backdrop of a wider battle with China over economic and technological pre-eminence that has included tariffs on billions worth of trade and limits on business.
Huawei founder Ren Zhengfei sought to put a brave face on the situation, saying Tuesday that the company has "supply backups" if it loses access to American components. Huawei Technologies Ltd. relies on Google's Android operating system and U.S. components suppliers for its smartphones.
"I should say this impact will be very big, but Google is an extremely good company," Ren told Chinese reporters. "We are discussing emergency relief measures," he added, without giving details.
Industry analysts say Huawei might struggle to compete if it cannot line up replacements for Google services that run afoul of the U.S. curbs.
Google says its basic services still will work on existing Huawei smartphones. However, the company would be barred from transferring hardware or software directly to Huawei. That would affect maps or other services that require the American company's support.
In Brussels, a senior Huawei European representative lashed out at the actions of the Trump administration and warned that other companies around the world should be worried, too.
"This is dangerous. Now it is happening to Huawei. Tomorrow it can happen to any other international company," Abraham Liu, Huawei chief representative to the European Union's institutions, told reporters.
China's government repeated its promise to defend Chinese companies abroad but gave no details of what Beijing might do.
The 90-day grace period announced Monday by Washington exempts from U.S. licensing requirements any technology needed to maintain and support existing networking equipment and smartphones. It also authorizes U.S. providers to alert Huawei to security vulnerabilities and engage the Chinese company in research on standards for next-generation 5G wireless networks.
However, last week's ban applied to new equipment, and Monday's order does not address exemptions for that. Even before Monday's order, Google said it would support existing devices.
The Commerce Department said that would allow rural U.S. telecom operators that depend on Huawei equipment for "critical services" time to make other arrangements. Companies including Google that supply software -- Huawei's smartphones run on its Android operating system -- can continue to provide updates.
Britain's cybersecurity agency issued guidance saying the temporary reprieve means "people should be able to update their handsets as normal."
"This license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks," Secretary of Commerce Wilbur Ross said in a statement.
In a report, the global risk assessment firm Eurasia Group said that if the sanction process helps persuade European network carriers to also shun Huawei equipment, a full ban on purchases of U.S. technology products and services could be avoided.
The move to delay the ban on Huawei may follow a familiar script with the Trump administration, which in its attempt to change the U.S.' trade relations with major economies like China and Europe has often announced restrictions or tariffs only to delay their implementation. That increases pressure on the other side but also gives them an incentive to negotiate.
It hasn't always worked. The U.S. has announced new tariffs on European and Chinese goods several times, only to see them retaliate with tariffs on U.S. goods. That has raised the stakes in the trade wars, hurting global commerce and economic growth.
As China looks to respond to Trump's move against Huawei, Apple makes a prominent potential target for retaliation.
Apple is Huawei's main American rival in smartphones and its iPhones are assembled in China. The country is also Apple's No. 2 market after the United States.
Attacking Apple might be politically awkward for Chinese leaders who have accused Washington of mistreating Huawei. Business groups say Chinese officials are trying to reassure American companies they are welcome despite the tariffs war.
But Chinese regulators have an array of tools including tax and safety inspections that can hamper a company with no official acknowledgment it is targeted.
Information for this article was contributed by Shanshan Wang and Lorne Cook of The Associated Press.
Business on 05/22/2019
Print Headline: U.S. delays sales ban on China's Huawei