China warns retaliation as US bans Huawei

President Trump signed an executive order on Wednesday barring American companies from installing foreign-made telecom equipment that pose a national security threat, a move apparently aimed at banning Huawei from US networks.

The Bureau of Industry and Security (BIS) of the US Department of Commerce followed it up by announcing that it will be adding Huawei Technologies Co and its affiliates to the Bureau’s Entity List.

The Bureau said it has sufficient information that provides a reasonable basis to conclude that Huawei is engaged in activities that are contrary to US national security or foreign policy interest. 

The Bureau said these included the activities alleged in the Department of Justice’s public superseding indictment of Huawei such as alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of US sanctions.

The sale or transfer of American technology to a company or person on the Entity List requires a licence issued by BIS, and a licence may be denied if the sale or transfer would harm US national security or foreign policy interests. The listing will be effective when published in the Federal Register.

“This action by the Commerce Department’s Bureau of Industry and Security, with the support of the President of the United States, places Huawei, a Chinese owned company that is the largest telecommunications equipment producer in the world, on the Entity List. This will prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests,” said Secretary of Commerce Wilbur Ross. 

“President Trump has directed the Commerce Department to be vigilant in its protection of national security activities. Since the beginning of the Administration, the Department has added 190 persons or organizations to the Entity List, as well as instituted five investigations of the effect of imports on national security under Section 232 of the Trade Act of 1962.”

The US decision that Huawei, the world’s largest provider of telecommunication equipment, poses a spying risk to Western infrastructure networks, risked an escalation of tensions with China.

The US and China are already locked in a trade battle that has seen mounting tariffs, sparking fears the conflict will damage the global economy.

Reacting sharply to Trump’s move, Chinese foreign ministry spokesman Lu Kang told a media briefing here that China will take measures to defend the interests of Chinese companies.

“We have noted the US department of Commerce decision. China always asks its business to comply with laws and regulations in export control and fulfil their international obligations. We always ask them to abide by other country’s laws regulations in their overseas business,” Lu said.

“But we are against other countries’ unilateral sanctions based on domestic law and practices that abuses export control measures. We urge the US to stop such practice and create favourable conditions for business cooperation. China will take necessary measures to safeguard Chinese business’ legitimate rights and interests,” he said.

He, however, parried questions over what measures China would take, saying the commerce ministry would come out with a response.

Asked whether China would now target US firms in retaliation, Lu said, “as for the foreign firms, so long their operations are lawful, they should not be concerned. In international trade, the basis is mutual respect and mutual benefit“.

Separately, Huawei in a statement said that “unreasonable restrictions” by the US infringed on its rights.

“Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives,” the telecom giant said.

“In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues,” it said.

Huawei is already fighting a major legal battle against US to stave off the extradition of its CFO Meng Wanzhou, who has been arrested in Canada, to face prosecution for violations of American sanctions against Iran.

Meng, the daughter of Huawei owner Ren Zhengfei, has been accused of misleading banks about the company’s business dealings there.