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China warns U.S. to move against Huawei could hurt trade negotiations

WASHINGTON/BEIJING (Reuters) – The Trump administration’s decision to sanction and potentially cripple the Chinese telecom giant Huawei Technologies Co Ltd has garnered a sharp rebuke on Thursday from Beijing, which warned that the move could damage trade relations.

A Huawei logo is seen at an exhibition during the World Intelligence Congress in Tianjin, China-May 16, 2019. REUTERS/Jason Lee

Shares of Huawei is the U.S. suppliers also fell on the fear of the major client of the AMERICAN chips, software, and other components would be forced to stop purchases after the U.S. Department of Commerce prohibited the purchase of AMERICAN technology without special permission.

Huawei said in a statement that the loss of access to the AMERICAN suppliers “will do significant economic damage for Us companies” and the effect on the “tens of thousands of American jobs.”

“Huawei will seek their salvation immediately a solution for this issue,” the company said.

The U.S. patents, announced on Wednesday, was the latest shot fired in an escalating U.S.-China trade war, which is rattling financial markets and threatening to derail of a slowing global economy.

Chinese officials said that the U.S. aggressiveness can be harmful for the negotiations, which seemed to have reached a deadlock in the past week in the United States hiked tariffs on Chinese goods, and Beijing retaliated with higher tariffs on AMERICAN products.

Chinese Ministry of Commerce spokesman Gao Feng stressed that the United States should avoid further damage of Sino-U.S. trade relations. “China will take all necessary measures to resolutely protect the legitimate rights of Chinese companies,” Gao told reporters.

China’s Ministry of Foreign affairs also announced the formal arrest of two Canadian citizens who were detained shortly after Canada arrested Huawei Chief Financial Officer Meng Wanzhou in December.

Mix faces extradition to the United States on charges that they conspired to defraud global banks about Huawei’s relationship with a company that active in Iran. They and the company denies the allegations.

While Canada says China has no specific link between the arrest of the two men and Mix the arrest of experts and ex-diplomats say they have no doubt it is their business to press Canada. (few.rs/2LJKxoS)

POLITICAL SUPPORT

On Wednesday, the Commerce Department said that the add of Huawei and 70 stores to its “Entity List,” which bars to buy components and technology from U.S. companies without the approval of the government. (few.rs/2w0dVMT) The sanctions are not in force yet.

Lawmakers in the U.S. Congress have long feared that Huawei equipment could be used by the Chinese government to spy on Americans, and the Trumpet administration has won bipartisan support in the Congress.

Senator Roger Wicker, the Republican chairman of the senate committee on Commerce, Science and Transportation, said on Wednesday it was “a necessary step to prevent the use of communications equipment that poses a threat to the United States.”

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Senator Mark Warner, a Democrat and vice-chairman of the Senate Select Committee on Intelligence, supported by the cain U.S. telecommunications companies from buying from Huawei, just like other Democrats.

Warner called the decision “a necessary step”, but expressed concern about the prospect of other nations rebuffing AMERICAN efforts to convince them to not use Huawei equipment for 5G, the next generation of wireless.

Warner also expressed concern about how the move would affect small U.s. rural carriers, which are used for the cheaper Chinese equipment maker. He called a plan for the replacement of the equipment “a potential multi-billion dollar effort.”

ECONOMIC CONSEQUENCES

Chipmakers Qualcomm Inc. and Xilinx Inc. were between 3% to slightly more than 4% on Thursday and were the biggest drag on the Philadelphia SE Semiconductor Index.

Shares of optical component maker NeoPhotonics Corp fell, and fell by 14.7%.

Other vendors such as Analog Devices and Finisar Corp were both down about 2%, while Skyworks Solutions was 4.4%, Qorvo 5%, with a laser-sensor maker Lumentum Investments decreased by 7.7%, and the memory chipmaker Micron Technology 2.1%.

If the signs come that consumers can feel the weight of the trade war with China, Walmart said that the US prices will rise as a result of higher tariffs on Chinese goods, even as the world’s largest retailer reported its best comparable sales growth in the first quarter in nine years.

Walmart Chief Financial Officer Brett Biggs told Reuters that the company will seek to ease the pain, by trying to buy from other countries.

If the negotiations in the direction of solving the U.S.-China trade war to a halt last week, the United States increases the pressure by increasing the tariffs on a list of 200 billion dollars worth of Chinese imports to 25% from 10%.

China retaliated with higher tariffs on a revised list of $60 billion in AMERICAN products.

The AMERICAN President Donald Trump has threatened, 25% of the rates at another $300 billion of Chinese goods.

“The rate hike by the United States will only lead to more problems to the talks,” Gao said.

Three differences remain between the two countries, according to China.

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China is of the opinion rates were the genesis of the trade in dispute, and that all rates must be eliminated to come to a deal.

The second problem centres on the extra volume of AMERICAN goods that China is willing to buy, and Vice-Premier Liu He, China’s lead trade negotiator, said last week, without giving details.

The third is about how balanced the text of the draft agreement on the trade deal should be, ” he said.

Reporting by Yawen Chen and Se-Young Lee and Diane Bartz; Additional reporting by Arjuna Panchadar in Bengaluru; Editing by Chris Sanders and Paul Commented

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