During Trump’s term, the U.S. government had sanctioned Chinese smartphone maker Huawei from any involvement with American technology. The sanction came from perceived national security risk and stripped Huawei of some crucial partnerships with U.S.-based companies.
The Huawei ban meant the company could no longer use integral components, such as Qualcomm SoCs and Google’s Android OS. Last year, prioritizing the survival of its popular sub-brand Honor, the smartphone giant sold the same to another Chinese firm. Consequently, the sale enabled Honor to source American components again as it no longer was a Huawei subsidiary.
However, things could take a bad turn soon as some American officials claim the former Huawei-owned company still poses danger. The authorities are currently debating whether or not to sanction Honor and put it on the entity list, just like its previous parent firm.
As reported by The Washington Post, the decision still hangs in the balance as the U.S. stakeholders struggle to reach an agreement on this issue. While the Pentagon and Energy Department support Honor’s ban, the Commerce Department and State Department consider it uncalled for.
Now, the decisive vote lies with the political appointees of the aforementioned departments. Assuming there’s still no solution, it will move up to the Cabinet. In case still unresolved, President Biden himself would make the decision.
Why The U.S. Wants To Sanction Honor?
The United States’ qualms about Honor are based on its new parent organization’s ties with the Chinese government. Shenzhen Zhixin New Information Technology Co., Ltd. is a state-backed venture with a couple of investors associated with Shenzhen’s municipal government.
Last month, in a letter to the Commerce Secretary, Republican lawmakers remarked, “same concerns about technology exports to Honor when it was part of Huawei should apply under its current state-backed ownership structure.”
Furthermore, they warned, “If we move too slowly and focus only on discrete entities rather than networks and ecosystems, the novel party-state economy can outmaneuver U.S. sanctions.”
Apparently, the fact that Honor retained its old leadership, despite the sale, might also have influenced the lawmakers’ stance.
The Argument Opposing U.S. Sanction On Honor
The famously strained relationship between the U.S. Government and Beijing is nothing new. The cold war has only become more intense in the past few years during Trump Administration’s tenure.
Starting from 2018, this strife seeped into the technology world when a series of sanctions were put on Huawei for illegally sharing U.S. tech and posing a security risk. According to the government’s claims, the primary security concern was related to the network equipment sold by Huawei overseas. But, along with Huawei’s network technology, its other products also fell victim to a blanket ban in the country.
Now, despite the change of owner, Honor possibly faces the same fate. And, this time the reasoning of “national security risk” appears unconvincing because the smartphone brand doesn’t even sell products in the American market. The U.S. presence of Honor is basically limited to the business partnerships it has with American technology providers.
Understandably, certain experts argue that banning Honor wouldn’t make sense without enough evidence supporting the decision. Regarding the call for Honor’s ban, Eurasia Group’s Paul Triolo stated, “it’s pretty hard to make the case.”
National Security Concern Or A Systematic Dismantling Of China’s Global Tech Presence?
While those rooting for Honor’s ban could have a legitimate security concern, the White House’s recent pattern of actions suggests there’s more to it than what meets the eye.
Since the U.S. sanction on Huawei, its allies in the “Five Eyes” clan, such as the UK and Australia, have followed suit and banned the use of Huawei’s 5G network equipment along with ZTE. Among them, Britain’s sanction was more surprising as it marked a complete turnaround from its original position on Huawei.
If you recall, the government also tried unsuccessfully to hamper another Chinese tech titan Xiaomi’s U.S. operations earlier this year. Meanwhile, the UAE ponders ousting Huawei in the hopes of completing a defense deal with the U.S.
Additionally, Washington has also blocked Chinese tech acquisitions over the years citing the same old national security risk. On the flipside, Beijing has blocked American companies from acquiring assets as well. The most recent block came in August, from America’s side, when it stopped China’s Wise Road Capital from purchasing MagnaChip, a South Korean semiconductor manufacturer.
In response to this, a piece in the state-backed Global Times said, “If the U.S. succeeds in blocking the deal this time, it could set a very bad precedent for global high-tech mergers and acquisitions, further consolidating the industrial concentration in the U.S.”
Connecting the dots, it’s hard to argue that the White House is doing everything possible to scupper China’s rapid progress in the tech industry. And clearly, ostracizing Huawei, the world’s biggest telecom equipment provider, is key to the western superpower’s strategy.