Chinese government officials summoned representatives from major tech companies both from the US and elsewhere this week to warn them of "dire consequences" if they go along with the Trump administration's prohibition on sales of certain U.S. technology to number of Chinese companies, the New York Times reported on Saturday, citing two "people familiar with the meetings."
The White House has moved in recent weeks to effectively prohibit U.S. is from doing business with tech giant Huawei about corporations posing at national security risk and allegations of trade at adding a so-called "entity list" – which follows months of other efforts to effectively prevent Huawei from working on telecommunications projects throughout the country. It has also targeted Chinese firms, more generally amid ongoing US-China trade, which appears to be rapidly ramping back up. Numerous companies including Google, Intel and Qualcomm have been acting as suppliers to Huawei.
In response, the Chinese government has raised the threat of retaliatory measures such as the creation of an "unreliable entities list" or companies it believes are acting in an anticompetitive manner. Huawei has also argued that the national security and trade is a pretext to prevent the company from becoming more powerful and to sabotage China's efforts to rapidly roll out next-generation 5G technology.
According to the Times, the meetings earlier this week involved China's economic planning agency, the National Development and Reform Commission, as well as members of its Ministry of Commerce and Ministry of Industry and Information Technology. A specific list of indications was not published beyond mentions of U.S. Pat. Dell and Microsoft and South Korea-based companies. But the remarks were directed to a broad range of companies that export goods to China, including the number of the world's most important semiconductor companies, as well as other tech giants, the Times wrote.
The Chinese officials allegedly warned US companies not to move their supply chains outside of China and not to comply with the orders banning business with specific companies, as well as urged them to lobby against the Trump administration's efforts to restrict trade:
In the meetings this week, Chinese Officials explicitly warned companies that any move to pull production from China that seemed to go beyond standard diversification for security purposes could lead to punishment, according to the two people … The Chinese officials appeared to have differing messages for the companies, depending on whether they were American or not, the people added.
To those from the United States, they warned that the Trump administration move to cut off Chinese companies from American technology had disrupted the global supply chain, adding that companies that followed the policy could face permanent consequences. The Chinese authorities also have to use lobbying to push back against the government's moves.
Officially said failure to do so could lead to "permanent" problems for the companies involved, in the Times' count, with Huawei going unmentioned but obviously at the top of their minds. The officials also customs non-US. companies that they would face as long as they maintained normal business relationships with their Chinese counterparts, the paper added.
China is one of the world's largest suppliers of an incredible range of materials and components used in the technology industry, and it builds numerous products (such as the iPhone) for foreign firms. As the Times noted, the prospect of permanent disruption of those supply chains could be disastrous, but even so it is unlikely that There is a trade-off between the Chinese demands, and the trade disputes triggered by big selloff or chipmaker stocks in May, as well as estimated to be around $ 20 billion in semiconductors annually. (The Times noted that consulting firm KPMG estimates around 60 percent of all semiconductors are in some way linked to China.) has granted some mobile phone and internet broadband providers 90-day licenses to continue working with Huawei, but if the bans become permanent, Wall Street analysts predict the stocks will not recover, CNBC wrote.
Update: 6/8/2019 at 5:50 pm ET: This article has been updated to the Times mentioned by Dell, Microsoft, and Samsung in its report.
[New York Times]