China Warns Tech Companies Against Cooperating With US Trade Ban

Last month, the US government imposed a trade ban which prohibited companies within its country from doing business with some Chinese telecoms, including Huawei and ZTE.

As a result, tech companies such as Google, Microsoft, and Qualcomm announced that they would no longer support Huawei products.

However, recent reports reveal that China intends to fight this ban through any means necessary. Alongside its “unreliable entities list,” the country is now trying to scare the US companies from honoring the ban.

According to the New York Times, the Chinese government summoned tech firms to warn them of the dire consequences they could face if they cooperate with the trade restrictions.

In attendance at the Tuesday and Wednesday meeting were Microsoft and Dell from the United States and Samsung from South Korea. Also, semiconductor makers SK Hynix of South Korea, and Arm of Britain were said to be present.

Since other non-American companies attended the meeting, the Chinese officials had differing messages.

Dire Consequence For Companies That Honor the Trade Ban

For those from the US, they warned that the current trade ban has disrupted the global supply chain. As such, companies that follow that policy could face “permanent consequences.”

In addition, the Chinese officials subtly suggested that the tech companies fight the government’s move through lobbying, said NYT.

Does the threat hold any weight, you ask? Maybe.

Speaking to the New York Times on the issue, senior adviser at the Washington-based Center for Strategic and International Studies and expert at Chinese economic policy, Scott Kennedy said:

“The Chinese government has regularly resorted to jawboning multinationals to try to keep them in line when there are disputes between China and others that could lead these companies to reduce their business in China.”

Simply put, China expects tech firms to risk violating US laws. And in return, the companies could keep their Chinese factory and maintain their supplier relationship.

While American companies are still free to use Chinese products right now, things can quickly escalate as the trade war progresses. With the dire warning, the officials hope to extract some form of compromise from the American companies in attendance.

However, this tactic is unlikely to be effective. According to Kennedy:

“American companies aren’t going to violate American laws, especially in such a high-profile context where their actions are scrutinized. The companies are between a rock and a hard place, but that hard place will win out.”

For the non-American companies, the Chinese officials stressed their commitment to open trade, says NYT.

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