The growing tension between the U.S. and China will probably not end anytime soon. The U.S. has been ditching out bans and restrictions on Chinese entities like a plague. However, it is surprising that the Chinese government is not reciprocating. In a recent report, Apple said that it has 9 factories and 70 physical stores in China. The same can not be said of Huawei in the U.S. After banning Huawei’s 5G from the U.S. network, the American government wants more.
According to a Reuters report, the U.S. Department of Defense Deputy Secretary for Procurement, Ellen Lord stated there is a ban on companies that use products or services from five specific Chinese companies. This ban comes into effect from August 13th. The companies include Huawei, Hikvision, Dahua, Hytera, and ZTE. This means that if you are an American government contractor, you can not use any equipment from these companies.
Recall that the U.S. included Huawei, Hikvision, and other companies in the entity list last year. These companies can not do business with American firms without the approval of the US government.
It appears that the U.S. is trying to eliminate “China” from its system. However, how possible is this? A recent report shows that 70% of the smartphones in the U.S. are “Made in China”. In fact, due to the pandemic, Americans are now turning to cheaper goods and services. Well, American companies do not really know how to offer “cheap” services. This means that the purchase of Chinese goods is increasing.
Not just Huawei, TikTok and WeChat are also facing a ban
The latest in Donald Trump’s latest banning spree, the U.S. will ban TikTok and WeChat. However, the ban on the latter is not going well with American companies.
While the TikTok ban is simple and straight forward, WeChat ban has a lot of implications. Presently, WeChat is one of the few viable financial platforms between the U.S. and China. If you take away WeChat, you will technically be “killing” many American businesses in China. Chinese companies in the U.S. have multiple options in terms of payment. However, American companies in China have just WeChat as a viable option.
In a recent conference call with the White House, over a dozen American companies kick against the ban. They say that it undermines the competitiveness of US companies in China, the world’s second-largest economy. Participants in the conference call include representatives from Apple, Ford, Goldman Sachs, Intel, Morgan Slidan, Procter & Gamble and other companies.