The Trump administration delivered a massive blow to Huawei a few days ago, placing the biggest China’s smartphone maker on the US Commerce Department “Entity List” that bans the sale of Huawei products in the country. The US government also banned the Chinese vendor from importing technology made in the US, which covers anything from chips and other components from companies like Intel and Qualcomm to software like Android and Windows.
Other international companies have also cut ties with Huawei temporarily, including chip-maker ARM, whose silicon designs are the basis of most mobile chips used in Huawei designs. All this prompted the Chinese government to create its own blacklist, which it’s currently referring to as the “Unreliable Entity List.”
China announced its list on Friday, saying that it will add any foreign firms and individuals who do not play nice with Chinese companies, namely Huawei.
“Foreign enterprises, organizations or individuals that do not comply with market rules, deviate from a contract’s spirit or impose blockades or stop supplies to Chinese enterprises for non-commercial purposes, and seriously damage the legitimate rights and interests of Chinese enterprises, will be included on a list of ‘unreliable entities’,” Chinese commerce ministry spokesman Gao Feng said, per HongKongFP.
The official did not say what companies are on the list, adding that they will be announced at a later date.
“Some foreign entities have violated normal market rules and the spirit of their contracts for non-commercial purposes, blockading and cutting off supplies and taking other discriminatory actions against Chinese companies damaging their legitimate rights and interests, and endangering China’s national security and national interests,” Gao said, according to state-owned Global Times.
China’s response seems to escalate trade-war tensions, but in reality, there’s probably little that China can do to whatever companies end up on its list. That’s because the most important US tech companies that may qualify for that list are in a co-dependency relationship with China. Intel and Qualcomm processors are needed and used by many Chinese smartphone makers. Google, meanwhile, doesn’t have a presence in China, so the risk is small. Microsoft’s Windows is also a critical operating system, one that China can hardly do without. If there’s one company China could punish, it’s probably Apple, but Apple doesn’t have a business relationship with Huawei. Not to mention that China also needs Apple’s business just as much as Apple needs China.
If anything, China is trying to do whatever it can to deescalate the conflict and reach some common ground, as the ban on Huawei will have a severe impact on the smartphone vendor’s bottom line, and even on its ability to conduct business in other markets.