Xiaogu Xu | July 12, 2019
Responding To: The Future of U.S.-China Relations: Friend or Foe?
The Other Side of the Huawei Ban
Since early May, the tension between China and United States has risen to a new peak amid new tariffs and broken negotiation. Instead of talking about my feelings from a broad perspective, this time I want to start from a single issue in the U.S.-China relationship that has caught much attention recently: the U.S. ban on Huawei. Contrary to the general feeling, despite all these issues, I still feel optimistic about the future of U.S.-China relations over the coming decade.
In May, the White House and US Department of Justice effectively banned Huawei with national security order, which not only prohibit Huawei from operating in the United States, but also banned all companies whose product consisting of over 25% American intellectual properties from doing business with Huawei. On one hand, the outcome of the ban is disastrous, the biggest Chinese player in 5G and telecom equipment has been slaughtered, dozens of U.S. suppliers like Micron or Broadcom have lost one of their largest customer, and consumers around the world cannot buy phones from the second largest mobile manufacturer anymore. On the other hand, the actual consequences of the ban on Huawei may also be alarming for both China and United States, especially at the time when they seem to forget how interwoven and interdependent they have become. Before the ban, I think both countries were inclined to believe disengagement was not a big problem, and ordinary people in both countries did not think a trade war would affect their life standard. But this ban on Huawei has brought the topic to public discussion, and the effect is being felt by the majority in the society.
I’m a huge tech fan, and for the first time ever, the YouTubers in the tech section are seriously discussing if the ban on Huawei is fair and what it means for the tech industry. Take MKBHD’s video on the Huawei ban which got 5 million views on YouTube for instance, he feels sad about the ban because the consumers now have less choice in the market and face possible higher prices from other smartphone manufacturers. Even more surprisingly, the majority of the over 37,000 comments were mainly sarcastic about the U.S. government’s move. Meanwhile, on the Chinese internet world, a huge debate on whether China should ban Apple in retaliation started, and the mainstream of the voice is no, for that benefits neither the customer nor Huawei. Moreover, more practical questions follows: can companies like TSMC or Samsung sell products to Huawei? And would the European court rule that the ban should not affect costumers in Europe? The butterfly effect will only remind leadership from both sides the importance and power of global supply chain and the danger of disengagement, which would possibly bring them back to the conference table. In fact, the ban on Huawei did not show U.S.’s capability to win this so-called trade war, instead it proves that there might be no winner in any kind of trade war between the United States and China.
Besides the Huawei situation, the effects of a trade war on ordinary people has now gradually emerged, affecting people ranging from farmers in the American Midwest to small factory owners on the coast of China. Even my grandfather now dislikes the trade war, because the factories that produce abrasive paper in his village no longer have orders, leaving a lot of people unemployed. If there is a hundred villages like my grandpa’s become unemployed, then there will be a lot of pressure to push the government for more negotiation than disengagement.
It’s easy to talk about tariffs on soybeans, LNG or iron ore, because the invisible costs are mainly undertaken by the corporations, but the tariffs on consumer goods has now posed the question to everyone in both countries that whether the trade war should go on. These pressures from the silent majority will eventually be delivered to both sides of the conference table, and I would assume that it will cause some changes in the negotiation. It’s dangerous to consider US and China two people arm wrestling without considering the complexity within both countries. I still believe, if not convinced by the Huawei ban, that the two countries are connected tightly together from every perspective that no country can simply block out the other without severely hurting its own interests. Engagement is not a choice, but a necessity given the enormous sunk cost in the current mutual relationship, and this is why I still firmly feel optimistic about the future of this bilateral relations between the United States and China.
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