China warns major tech giants of great consequences if they go on with Trump

straitstimes: The Chinese government this past week summoned major tech companies, including Microsoft and Dell from the United States and Samsung of South Korea, to warn that they could face dire consequences if they cooperate with the Trump administration’s ban on sales of key American technology to Chinese companies, according to people familiar with the meetings.

Held last Tuesday and Wednesday (June 4 and 5), the meetings came soon after Beijing’s announcement that it was assembling a list of “unreliable” companies and individuals. That list was widely seen as a way of hitting back at the Trump administration for its decision to cut off Huawei, the Chinese electronics giant, from sales of American technology.

Details about the meetings, the latest move in two weeks of high-stakes economic brinkmanship between the US and China, were shared by two people familiar with them, who asked not to be named because they were not authorised to discuss them and could face retribution. The meetings also included semiconductor makers Arm Holdings of Britain and SK Hynix of South Korea.

The unravelling of the world’s most important trade relationship has left companies and governments around the world scrambling.

“This is now extremely delicate because the Trump administration, through its brinkmanship tactics, has destabilised the entire relationship, commercial and otherwise,” said Mr Scott Kennedy, a senior adviser at the Washington-based Centre for Strategic and International Studies.

The meetings were led by China’s central economic planning agency, the National Development and Reform Commission, and attended by representatives from its Ministry of Commerce and Ministry of Industry and Information Technology, who addressed their remarks to a broad range of companies that export goods to China, according to the two people familiar with the gatherings.

The involvement of three government bodies suggested a high level of coordination and likely approval from the very top of China’s opaque leadership structure. The intervention seemed designed to rally support for Huawei, though the company was not specifically mentioned, the two people said.

“There is a strong perception in Beijing that the US government is intent on blunting China’s technology rise, and that if this process is not slowed or stopped, the future of China’s entire digital economy is at risk,” said Mr Paul Triolo of the consultancy Eurasia Group.

More broadly, the warnings also seemed to be an attempt to forestall a fast breakup of the sophisticated supply chains that connect China’s economy to the rest of the world.

In the meetings, Chinese officials explicitly warned companies that any move to pull production from China could lead to punishment, according to the two people.

Source: Published by straitstimes

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