US Eases Up on Huawei as Taiwan Boosts China-Linked Trade, Media Penalties

2019-05-21
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People attend a speech by Huawei Chief Representative to the European Institutions Abraham Liu at Huawei Cybersecurity Center in Brussels, May 21, 2019
People attend a speech by Huawei Chief Representative to the European Institutions Abraham Liu at Huawei Cybersecurity Center in Brussels, May 21, 2019
AFP

Washington on Tuesday moved to temporarily dial back trade restrictions on Chinese telecoms giant Huawei in a bid to limit disruption to its customers, extending the company's license to buy U.S.-made goods until August.

Huawei was banned from buying U.S. goods by the Commerce Department last week over national security concerns, while Google on Monday announced it was terminating some updates to its Android operating system supplied to the company.

The administration of President Donald Trump had earlier added Huawei, the second-biggest manufacturer of smartphones, to a list of banned companies.

U.S. companies can only sell to or buy from those companies if they are granted a special license to do so.

Google said on Monday it was "complying with the order and reviewing the implications," amid fears that users of Huawei smartphones would experience a loss of functionality and access to Google apps.

Huawei has been awarded a license to buy U.S. goods until Aug. 19, in a bid to maintain existing telecoms networks and provide software updates to Huawei smartphones.

However, the company is still barred from buying U.S.-made hardware and software to make new products.

The move against Huawei came amid an ongoing trade war between Beijing and Washington.

Huawei founder Ren Zhengfei said his company had been making preparations for such a scenario anyway.

"The U.S. government's actions at the moment underestimate our capabilities," Ren said in an interview with state broadcaster CCTV.

He said Huawei wouldn't change its mission as a result of the U.S. sanctions, however.

"Huawei won't reject the United States or pursue narrow and self-centered development," Ren said. "We still need to grow together."

Supply claims questioned

But he said Huawei has everything it needs.

"Even if we do run into supply problems, we won't be in difficulty, because we already have all of the high-end chips we need," he said.

A government insider in China said Ren's words were mostly addressed to the ruling Chinese Communist Party leadership in Beijing.

"Ren Zhengfei's comments spring from the situation he finds himself in, and they're aimed at the party; at the people who control him," the source said. "There are many layers of meaning here."

And a U.S.-based industry insider said there are doubts about Ren's claim to have plenty of supply options.

"This isn't very likely," the source said. "However, it does have another option, if Google refuses to collaborate with Huawei any more, and that is to develop the Android open source operating system."

"They could take the open source version of Android and develop that," he said.

Meanwhile, Taiwan's government is likely to approve draft amendments to the democratic island's Foreign Trade Act that would prevent companies from shipping products made in China with a "Made in Taiwan" certificate of origin.

Chinese exporters have been routing their products, transferring them to new containers, and sending to the U.S. under Taiwan certificates of origin, Taiwan's Ministry of Economic Affairs has said.

Companies found guilty of illegally exporting “strategic high-tech goods” or using false certificates of origin for transshipped goods could be fined up to U.S.$96,000, under the newly amended law.

Lawmakers also outlined plans to tighten restrictions on Chinese media and lobbying activities ahead of the 2020 presidential elections in Taiwan, a sovereign state known as the Republic of China.

'Red media' controversy

New Power Party convenor Hsu Yung-ming said the goal is to prevent the Chinese Communist Party government or military from interfering with Taiwan's democracy through advertising and political lobbying.

"There has been quite a lot of controversy around the 'red media' lately," Hsu told journalists. "We believe that, this close to the elections, [the Chinese threat isn't just about] an actual warship...actually, media penetration is more powerful than that."

The China Times media group was cited as having received Chinese funds and blurred the line between advertising and news, lawmaker Huang Kuo-chang said, but was only sanctioned with a small fine.

"It is clear from these violations that the regulations, penalties and implementation have proved inadequate for dealing with serious problems in the past ... [the penalties are] too lenient," Hwang said.

Taiwan's Mainland Affairs Council has warned that media outlets ultimately controlled by the Chinese Communist Party often "disseminate misinformation" among the island's 23 million residents.

It has warned that the ultimate goal of Chinese President Xi Jinping is to destroy the 1911 Republic of China, which retreated to the islands of Taiwan, Penghu, Kinmen and Matsu after the then-ruling Kuomintang (KMT) lost a civil war to Mao Zedong's communists in 1949.

In a Jan. 2 speech titled "Letter to our Taiwan compatriots," Xi said Taiwan must be "unified" with China, and refused to rule out the use of military force to annex the island.

President Tsai Ing-wen replied that Taiwan would never give up its sovereignty to be "unified" with China under the "one country, two systems" framework applied to the former colonial cities of Hong Kong and Macau.

Taiwan was ruled as a Japanese colony in the 50 years prior to the end of World War II, but was handed back to the 1911 Republic of China under the Kuomintang (KMT) government as part of Tokyo's post-war reparation deal.

It has never been controlled by the Chinese Communist Party, nor formed part of the People's Republic of China.

The country began a transition to democracy following the death of Chiang Kai-shek's son, President Chiang Ching-kuo, in January 1988, starting with direct elections to the legislature in the early 1990s and culminating in the first direct election of a president, Lee Teng-hui, in 1996.

Reported by Qiao Long for RFA's Mandarin Service, and by Chung Kuang-cheng and Ma Lap-hak for the Cantonese Service. Translated and edited by Luisetta Mudie.

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