Huawei Reveals the Real Trade War with China

https://www.bloomberg.com/news/articles/2018-12-06/huawei-bust-signals-the-real-u-s-trade-war-with-china

by alanwong • 8 years ago

139 146 8 years ago

entity345• 8 years ago

The US are at war with China. Trade is just one aspect.

The issue is that they cannot 'win' that war. They can only delay the rise of China.

At the moment US' actions are uniting the Chinese people behind their government so the Chinese might actually be able to (or forced to) take a harder line on some issues.

zavi• 8 years ago

Or 10 years will pass and China will be stuck with 400 million sick old people slowly turning from the key asset to liability.

projectramo• 8 years ago

Here is my confusion: if the war against China is really about high tech dominance, and Huawei is a particular target because it just surpassed Apple for #2 spot, then why isn't action taken against Samsung instead which is at the #1 spot?

Samsung is not a Chinese company, so this seems to be about national competition and not tech "dominance".

pesmhey2• 8 years ago

We have a large military presence within South Korea. They are an ally. We’ve fought together, and have a common interest in a contained China.

Tech dominance IS national competition.

Mirioron• 8 years ago

I like how we're supposed to have a relatively free market in the west, yet the hands of large companies are always tied by the government, because any company, if large enough, is "a national security concern".

adrianN• 8 years ago

More like the hands of the government are tied by large companies.

ThomPete• 8 years ago

They are korean we share goals and markets.

flexie• 8 years ago

Because even if South Korea joined North Korea and even if they doubled or tripled their wealth, they would still be too small to impose a threat to the US dominance. Australia, Canada or even large European nations are not seen as threats either. But a unified EU is seen as a threat by Trump.

est3• 8 years ago

Samsung is the result of US's stripping of Japan's manufacturing power. Japan used to challenge US's hi-tech status in the 70s and 80s. US forced Japan signing the "Plaza Accord" and immediately Japan entered the "lost decade", and so the chip manufacturing power was strategically moved to Taiwan and S.Korea.

Now it's turn for China.

dukoid• 8 years ago

The "Plaza Accord" was an agreement between the US, France, Germany, Japan, the United Kingdom to depreciate the USD in 1985. USD deprecation was halted by the "Louvre Accord" in 1987

https://en.wikipedia.org/wiki/Plaza_Accord https://en.wikipedia.org/wiki/Louvre_Accord

pkhagah2• 8 years ago

One thing I don't understand is how US, Japan and S.Korea led high-tech outsourced manufacturing efforts in China. As far as I understand everything is hunky dory starting with _Good will_ from Deng, until China became world's manufacuting hub. Only then it became a huge issue. My question is didn't any one consider China's current rise in late 80's and early 90's when they started outsourcing manufacturing?

mc32• 8 years ago

Maybe SamSung is playing fair? Usually the US is okay with others outdoing us, if they play fair, and historically even if they play a little dirty (Japan late 80s early 90s) but probably not okay of they play wholly unfair with gov't backing and support.

luddy2• 8 years ago

It is a money laundering case. HSBC tipped off the US gov't to a transfer that was effectively made using a false identity, to a recipient that was on a sanctions list. The US has banking laws, just like China has. If Tim Cook goes to Bank of China on Nanjing Lu and lies to SAFE so that he can wire a lot of RMB out of China, then the Chinese authorities will apprehend him. It's not as mysterious as it is being made out to be. Maybe she will walk because she's a celebrity executive in China, and because her case has been spun to be all about competition between the US and China, but still: banking laws are banking laws, in the US, China, Hong Kong, Europe, you name it. If you don't want to be in danger of breaking them, don't use the banks in that country.

adgjl• 8 years ago

Reading Michael Pillsbury will help you understand actions by the US admin against China. His book, the hundred year marathon, states the theory it subscribes to according to Bloomberg and Politico (I dont know how true the theory is and some China experts disagree with the book)

"But what if the “China Dream” is to replace us, just as America replaced the British Empire, without firing a shot?

Based on interviews with Chinese defectors and newly declassified, previously undisclosed national security documents, The Hundred-Year Marathon reveals China’s secret strategy to supplant the United States as the world’s dominant power, and to do so by 2049, the one-hundredth anniversary of the founding of the People’s Republic. Michael Pillsbury, a fluent Mandarin speaker who has served in senior national security positions in the U.S. government since the days of Richard Nixon and Henry Kissinger, draws on his decades of contact with the “hawks” in China’s military and intelligence agencies and translates their documents, speeches, and books to show how the teachings of traditional Chinese statecraft underpin their actions. "

https://thehundredyearmarathon.com/

http://www.michaelpillsbury.net/

https://www.bloomberg.com/news/articles/2018-09-27/trump-ide...

https://www.politico.com/story/2018/11/30/trump-china-xi-jin...

Competition to usd, Petroyuan is coming.

"The Rise of the “Petroyuan”

For the past decade, China’s strategy for internationalizing the renminbi has involved greater reliance on the IMF’s Special Drawing Rights as an alternative international reserve currency. But the launch of renminbi-denominated oil trading this year suggests that China will now pursue de-dollarization head-on."

https://www.project-syndicate.org/commentary/rise-of-petroyu...

euroclydon• 8 years ago

If that's the case (which clearly it is), then limiting immigration is a bad move. Historically, the most powerful nations have been those with a free-wheeling economy and open/liberal attitudes. The U.S. needs to continue to attract the world's bright, ambitious, and hard-working people.

Now, I don't think the U.S. can afford to provide much of a safety net, in regards to basic income and healthcare if it's going to have open borders and a great deal of economic freedom. It will be expensive enough just to deal with the enviornmental problems of a dynamic economy.

est3• 8 years ago

China's ambition is to "rejuvenate the nation" to its past glory.

What kind of glory? Who knows. Certainly it's not about simply replacing the USA. China has no wish policing the world. (Maybe dicking around but certainly not busy installing democracy everywhere)

The reason China appears to acting against US is because it looks like the biggest abstacle for China's development is the island chains and the technological gap. Chinese are somehow extremely affirmative of their belief and power structure.

karmasimida3• 8 years ago

What kind of glory?

The envy of the world.

dalbasal2• 8 years ago

Very likely China will view the US' "world police" strategy the same way the US viewed the later period British Empire.

They'll dabble, because of the perceived prestige but probably not really put weight behind it. They'll find something that works (maybe this new silk road) and then rinse-repeat until it doesn't. In time, china will have their own disfunctional, sprawling global dominance machinery..

protonfish3• 8 years ago

They can have whatever plans they want, it doesn't mean they have a remote chance of success.

The natural resource of the information age is not iron or oil, but a populace of free thinkers who are unafraid to fail while working outside of cultural norms. Why does the US dominate the Internet? It's not because our 1s and 0s are better quality, or our technology education is superior or even that we have better funding for tech (it costs almost nothing to create a web site except time, desire and expertise.) It's our culture: we value the pioneer spirit. New frontiers are dove into head first.

China's recent successes can be attributed to intellectual theft from innovative cultures, and brutal oppression of their own people. This does not scale. Until they free the minds of their populace, they will never be able to globally complete in science and technology.

rorykoehler2• 8 years ago

People have been saying China haven't a hope in succeeding since the 80s yet here we are. Smashing everyone out of the water with ease. Doing the unthinkable as a matter of fact. They play to win and they're good at it.

karmasimida3• 8 years ago

China's recent successes can be attributed to intellectual theft from innovative cultures, and brutal oppression of their own people. This does not scale.

It scales pretty well. Reason? Facts. Anyone saying China can't innovate is self-denial.

maxerickson• 8 years ago

Information wants to be a keystone of the US economy?

nopinsight• 8 years ago

The US does have a great innovation-oriented culture but much of it stems from continual immigration of brilliant people from all over the world as well as being the largest single market with largely uniform culture and language, which greatly helps with the scaling of large enterprises.

China's domestic market is coming close to the US size and arguably larger in PPP terms which matters more than in dollars since the costs for R&D are often dominated by domestic salary. Anyone knowledgeable about Chinese domestic market will attest to its vitality and bustling competitive spirits, not to mention intense work ethics that results in rapid experimentation and iteration.

The US continues to lead in breakthroughs but rollouts of innovation happen faster in the Chinese market. With more funding and resources, China also starts to lead in fields they focus on including quantum communications, some areas in AI, and a few other engineering fields.

What is clearly lacking for the US is solid education in mathematics. This deficiency leaves the majority of population behind most peers in the developed world. The gap behind East Asian nations including China is especially acute as shown by the PISA result.

The gap in math between US and participating Chinese provinces (200+ million population) in PISA 2015 is about 0.6 SD, or roughly comparable to students with 2.7 vs 3.3 GPA.

The US needs to expend more effort to attract the best people in the world while pushing ahead with education reforms. The latter takes over a decade to bear fruits, however, so attracting and retaining global innovators should be a key current priority.

https://en.m.wikipedia.org/wiki/Programme_for_International_...

pault2• 8 years ago

Political change in China is more plausible than the US suddenly increasing its population by 800 million or so.

cylinder2• 8 years ago

If you really think it's Americans with the pioneer spirit these days you should spend a month driving around the US observing people then do the same for the cities in China.

stewbrew• 8 years ago

Are you talking about free non-military funded thinking outside of Microsoft, Alphabet, Oracle, IBM and other corporations?

bilbo0s6• 8 years ago

what if the “China Dream” is to replace us, just as America replaced the British Empire, without firing a shot?...

Devil's Advocate I know, but what would be so bad about this?

Our position, considering the world is now multi-polar, is really more of a predicament than a privilege. Why would we fight them replacing us? (Or rather, I suppose game theoretically it would be best to make a show of fighting it, and pretend to regret losing it. A la Huck Finn and whitewashing fences.)

I mean, my concern is that they don't WANT to replace us. Which, to my mind, is worse for us.

EGreg3• 8 years ago

I was also wondering, what is so bad about being the consumer nation, when our currency is in great demand around the world? In some weird way, the US has made the dollar itself a sought-after commodity, that is super easy to generate and sell to the rest of the world. An amazing deal, really.

AnimalMuppet• 8 years ago

What's so bad for us? You could argue that. If we stopped trying to run the world, it would be a lot less expensive (in terms of both money and lives). That might not be so bad.

What's so bad for the world? Depends on how China tries to run it. But looking at the Uighurs, I'm kind of concerned that they won't run the world all that well for the rest of the world...

scoot_7182• 8 years ago

Because their ideals are to control everything and disappear dissidents. I don't want that to occur globally thanks.

iliketosleep2• 8 years ago

A Chinese national was talking about this 100 year plan to me just the other day. It's certainly no secret or just a theory. The Chinese Dream is all about "the great rejuvenation of the Chinese nation". This isn't explicitly about overtaking the US, it's more about China taking what it considers to be its rightful place in the world - and that certainly isn't second place. In my view, it's only rational that this would be their goal.

China is definitely no friend of the US, nor an enemy (at this point), but definitely a genuine competitor. If the US does not recognize this and act accordingly, China will indeed replace it as the world superpower. If you're Chinese, this would be great news, if you're American it would be concerning. It's always going to be bad news for one of the parties due to the conflicting ideologies.

yodsanklai• 8 years ago

If you're Chinese, this would be great news, if you're American it would be concerning.

What if you're not American nor Chinese?

bilbo0s6• 8 years ago

China will indeed replace it as the world superpower...

Again, why would this be an issue? I mean, for us here in the USA? Why would we not want to be rid of the "privilege" of being the "super" power in what is clearly a multi-polar world?

sonnyblarney6• 8 years ago

"f you're Chinese, this would be great news"

Why?

When China becomes uber powerful, will the state then stop controlling everyone's thoughts?

Will they have basic rights then?

Or will corruption go away?

Will people still be looking to flee China when it's #1?

bchjam• 8 years ago

The history of reserve currencies suggests a ~100 year arc of dominance, and the US is at the end of that line.

https://azizonomics.com/2012/01/04/a-history-of-reserve-curr...

JumpCrisscross• 8 years ago

The history of reserve currencies suggests a ~100 year arc of dominance

You’re extrapolating from a 200-year history with N=2.

pesmhey2• 8 years ago

Those are all western countries. Do you think Americans could be amenable to a European-based reserve currency? They share our values.

gwbas1c• 8 years ago

America replaced the British Empire, without firing a shot

Uhm, our dominance has a lot to do with WWII. Our economy boomed while Europe, including the UK, rebuilt itself.

So we definitely fired lots of shots to get on top, but we can probably assume those shots are defensive.

cylinder2• 8 years ago

Wow people other than Americans want to succeed and compete. This is devastating news /s

Perhaps Americans should stop blaming others and look inwards. Break up all the corporate monopolies and duopolies to trigger innovation again. Build functional affordable sustainable cities. Switch to renewable power as soon as possible. Welcome the brightest and most motivated people instead of banning them from the country. Invest your trillions of borrowed money into infrastructure and the health of your population instead of killing civilians abroad for no reason. Do all these things and more and America will succeed and people will always want the USD. Be humble and competitive rather than arrogant and convinced of your own exceptionalism on the basis of mere existence.

But nah, rather sit in front of the TV and yell about China.

zabana2• 8 years ago

I find the intensity of the anti China sentiment in this forum to be quite puzzling to be honest.

Do all these things and more and America will succeed and people will always want the USD.

From my limited understanding of the issue (emphasis on "limited"), it seems that Most countries in the world don't want the USD to be their currency of reference but are forced to out of fear of being invaded.

I may be wrong but from the oustide looking in it seems to me that a lot of people in the US live in denial and don't necessarily want to come to terms with the fact that the show is almost over.

coldtea10• 8 years ago

Based on interviews with Chinese defectors and newly declassified, previously undisclosed national security documents, The Hundred-Year Marathon reveals China’s secret strategy to supplant the United States as the world’s dominant power, and to do so by 2049, the one-hundredth anniversary of the founding of the People’s Republic.

Why would it have to be a "secret strategy"? Of course they'd like to replace the US as the world's dominant power...

andor• 8 years ago

"The U.S. still makes — or at least, designs — the best computer chips in the world. China assembles lots of electronics, but without those crucial inputs of U.S. technology, products made by companies such as Huawei would be of much lower-quality."

The accusations against Huawei are coming at a time where this is simply not true anymore. Huawei are making their own chips under the HiSilicon brand. Just like Qualcomm chips, their CPU part is based on ARM IP, and ARM are based in the UK and owned by SoftBank. The current Kirin 980 is the fastest non-Apple SoC available on the market and as power efficient as the A12.

https://www.anandtech.com/show/13503/the-mate-20-mate-20-pro...

fisherjeff• 8 years ago

Minor nitpick: As highlighted in the article, power consumption is on par with A12, not efficiency. A12 still (somehow!) leads by ~50-100% there.

throwawayFive• 8 years ago

The Kirin 980 SoC uses the Cortex-A76 which was designed in Austin, TX, United States of America.

The statement "The U.S. still makes — or at least, designs — the best computer chips in the world" is accurate in the context of a manufacturer attempting to build a high-performance microprocessor-based device.

StudentStuff5• 8 years ago

Exactly, thus far China doesn't have the technology to do sub-14nm foundry work at any notable scale, and as we saw with Dhyana, they apparently don't have the internal talent to improve AMD's Zen cores. The foundry issue isn't apt to change anytime soon, as newer nodes are extremely expensive and take years to bring up (see Global Foundries & Intel's troubles with newer processes).

zorronimous• 8 years ago

I feel the need to suggest the USA is not making chips. It are corporations doing it. The technology is, as if high priests guarding the sacret knowledge, kept secret. From the perspective of human progress it's a sad afair.

cauldron2• 8 years ago

So, you think all phones and wireless base stations and telecom equipment ever need is just some mobile phone SoC?

This narative is so so similar to Chinese netizens'，I couldn't help but cringe when I saw so uninformed and forced arguments, this myth has to stop.

The US still monopolizes most telecom related chips and components, Huawei does make a few other chips along with some Chinese companies, but they are generally low-end in performance, couldn't compete at high-end market.

And let's be realistic, free of those marketing frills, Huawei's chips are impressive but still modified ARM products, and they buy a lot other licensed IPs for their chips.

StudentStuff5• 8 years ago

Ditto for Allwinner and other Chinese ARM licensees. They buy the majority of IP blocks from ARM and perhaps a HDMI PHY & WiFi chip from some small company (also not Chinese) cause its cheaper, send the mostly vanilla design to TSMC, and when it doesn't work immediately run back to ARM asking them to fix it (which they do).

Apple & Qualcomm comparatively tweak or redesign most of the IP they license from ARM, which is what gives them such a significant performance advantage over the 300 other ARM licensees.

Another example of this is AMD's recent JV in China, essentially passing a holding company the IP to build an original Zen core. While this is sketchy AF, I think we can expect brutal embargoes if China attempts to sell these chips outside their domestic market, and despite having a year and a half to improve Zen, it appears Dhyana is nearly identical to Zen.

Meanwhile Zen 2 has already started sampling in useful quantities on a newer process node that Chinese foundries likely won't replicate anytime soon, seeing as Global Foundries gave up, Intel is running years behind and massively over budget, with TSMC having the only working sub-14nm process. Even if AMD licenses this architecture, it will take years (even with process theft from TSMC) to make those chips on 7nm in China.

coldtea10• 8 years ago

Plus they said the same about Japan and Korean electronics and cars, and look how that turned out...

WhitneyLand• 8 years ago

This is a pretty a uncompellling example.

Without citing Huawei specifically, consider some government backed company with tons of cash no practically no IP.

I bet we could go from you and me in a garage, to a pretty high performance ARM compatible SOC in not that many years.

How? First think of how far you can get just by buying everything ARM has to offer including licensing all IP options and technical consulting service options. Instant prettty decent reference implementation.

In parallel we’ve hired 1,000 engineers and scientists to start working on improvements and novel ideas, let by a team on the the best architects on the planet we can woo away by offering each 7 or 8 figure contracts, unlimited first class air travel for family and friends, whatever is necessary based on strategic value.

Competently managed that would provide high probability of a pretty fast ARM chip.

The problem? You can’t win and sustain competitive advantage with just that. It’s performance balanced with so many other factors including power, effificency, overall effecrivenesss of your SOC for given applications etc.

Besides the enormous challenge of all things adding up at once to win, there’s also no guarantee we’d end up with any especially huge amount of novell IP, not just stuff licensed from someone else, that would allow this win advantage to be comfortably sustained for any susbstantial period of time.

They have a lot of smart people doing some interesting stuff, but that particular example I wouldn’t consider very threatening, even if other examples do exist the better make the point.

Tor3• 8 years ago

ZTE was close to breaking point while they were blocked from US components, until that sanction was lifted (after the big fine). According to the Bloomberg article there may be a similar deal for Huawei - pay a huge fine or get locked out. What will obviously happen is that the Chinese will not, can not, accept that they're depending on US components when they could get locked out from them at any moment. They will therefore accelerate, by whatever means (research, hack, steal, invent, anything) their own ability to produce all the parts themselves. In short, putting the squeeze on China will only hold back the tide for a moment, and then backfire.

burfog• 8 years ago

This is awfully similar to when China refused to sell rare-earth element metals, causing the USA to restart production.

Lio3• 8 years ago

How will putting the squeeze on China for market parity backfire?

The Chinese have the goal of dominating Western markets already.

They are pretty unlikely stop the state sponsored industrial espionage, the skirting of sanctions or to open up their own markets with or without import tariffs.

forrestbrazeal3• 8 years ago

The article alludes to, but doesn't expand on, the US's lost lead in furniture manufacturing. For more on this fascinating story, I recommend Beth Macy's "Factory Man" [0], the story of the systematic destruction of the North Carolina and Virginia-based wooden furniture industry by Chinese imports.

It's the exact same playbook as Huawei -- govt-backed "dumping" of loss-priced goods in an attempt for total market dominance. And US companies have historically been way too willing to expose trade secrets to Chinese manufacturers in exchange for temporarily cheaper supplies -- a Faustian bargain.

[0] https://www.amazon.com/Factory-Man-Furniture-Offshoring-Amer...

sct2022• 8 years ago

In the case of furniture and other lower tech industries (clothing & textiles too), when Chinese products got slapped with tariffs production shifted to a different off-shore countries (Vietnam, Bangladesh, etc). The structural disadvantages that American manufacturing has doesn't go away, and honestly how many trade secrets are there to producing furniture. It's not like they don't have furniture already in the rest of the world.

gman83• 8 years ago

But presumably they won't be sold at a loss in a bid for market dominance.

forrestbrazeal3• 8 years ago

"Factory Man" actually addresses these questions in considerable detail. You might be surprised how difficult it is to produce good-looking finishes, veneers, etc -- especially at scale. There was a time when the American manufacturers thought their competition would never catch up (and then they explicitly trained their competition so they could outsource production, which backfired when retailers realized they could cut out the middleman and order directly from China/Vietnam/wherever the cheap labor currently is.)

American furniture manufacturing does have one significant advantage in the US compared to its offshore competitors: proximity. Furniture is bulky to store and time-consuming to ship. The one manufacturer who realized this, John Basset, is the titular "Factory Man" who has kept his factories running by doubling down on just-in-time delivery, etc.

dalbasal2• 8 years ago

Anyone know of big, marquee examples of "trade secrets & technologies" handed over to chinese affiliates. I hear reference to this all the time, but have a hard time "putting meat on it."

Any nice clean examples where a chinese company gets IP/secrets that a French company would not have got?

patrickg_zill• 8 years ago

Qualcomm deal with ARM cpu development that they recently canceled (ip stays with the Chinese joint venture) :

https://www.pcworld.com/article/3163189/components-processor...

chadAnon692• 8 years ago

Everyone trashed Trump for the solar tariffs but I liked it for this reason. Sure, temporarily they get more expensive but what happens in 20+ years when the world is reliant on solar power and China has a complete monopoly because they played the long game and subsidized it until all competitors died out?

China is playing the long game, the west plays quarter to quarter because of the stock market

java-man3• 8 years ago

and of course we don't want the free market to punish the incompetent and reward the smart ones, do we?

djohnston• 8 years ago

we want to position ourselves for not being steam rolled in the next half century. that is what being competent demands.

chadAnon692• 8 years ago

In what free market does a government subsidize a company and force competitors to give their native companies their IP to do business?

China never cared about free trade, they use it like a weapon to beat idealists like yourself over the head

What happens in 20 years when China has complete dominance of the solar market and those "cheap" solar panels get tripled in price because there is no competition left and the rest of the world can only grit their teeth?

specialist• 8 years ago

Not an expert, so please forgive overgeneralization.

The USA (and the West) has played the long game. Very successfully. We somehow avoided WWIII.

Nixon thru Obama, the USA engaged with China with the goal of normalization (with the West). This has been standard procedure. For whatever reason, this strategy hasn't worked. (Yet?) Further, some have concluded China is becoming less likely to normalize.

Every successfully developing country has bootstrapped itself thru some measure of theft, cheating, protectionism. Recognizing the power imbalance, some proponents of active engagement in the West have let it slide, for a period.

I am unhappy with the stalled relationship between USA and China. While I do not support Trump's actions (tempting a trade war, weird rhetoric), I understand the impulse to do something. In truth, I do not know if there is any satisfactory path forward.

I grew up during the anti-Japanese hysteria of the Reagan years. I hated it then. I hate such rhetoric now.

Happily, it passed. I'd like cooler heads to prevail again. We'll see.

shanghaiaway• 8 years ago

What you call normalization is submission to US values and power. No nation wants to do that. The difference is that China is powerful enough to go their own way.

As long as you call it normalization you will remain unhappy.

sonnyblarney6• 8 years ago

She created a subsidiary company in Hong Kong, bought products made in the US and sold them to Iran.

The investigation started long ago.

This may just be a case of bad timing.

Who knew that an exec of a US competitor just also happened to be corrupt?

It doesn't make sense in the context of the trade deal, the better reality is that it's actually just the US locking down on people breaking the sanctions.

majia• 8 years ago

Based on available public information, the case happened about eight years ago, and Meng was not a top executive at Huawei. At that time there were many companies in China and elsewhere selling US products to Iran. Huawei allegedly sold about 1 million dollar goods for civilian use. The selective law enforcement in this case is rather curious:

Why would the US persecute this particular case so vigorously? Extradition is not very common for crimes of this level of severity.

Why would the US want to have someone physically arrested instead of to punish Huawei with fine and export ban, which are more common for companies violating sanctions?

Why would the US choose to arrest the daughter of Huawei's founder, instead of someone who is more directly involved in the Iran deal?

It is hard to believe this is a case of bad timing. There has been lots of infighting within the Trump administration. Most likely, the hawk fraction intentionally chose to arrest Meng at the time of Trump-Xi meeting in order to undermine a possible trade deal by embarrassing China. Think about what happens if China arrests Tim Cook because Apple didn't pay the right amount of tax in China eight years ago.

coldtea10• 8 years ago

Why would the US persecute this particular case so vigorously? Extradition is not very common for crimes of this level of severity.

To send a signal "we can go tough if you don't sit back and take it on our trade terms (which have nothing to do with Iran)"

sonnyblarney6• 8 years ago

The case is directed at her specifically: "Meng is accused of committing fraud in 2013 by telling U.S. financial institutions that Huawei had no connection to Skycom, which was reportedly selling goods manufactured in the United States to Iran in violation of American sanctions on Tehran. Meng has contended Huawei sold Skycom in 2009." [1]

As far as selective enforcement - can you give any examples?

Also - even though you're probably right on some level, and I fully agree there's 'relevance' to the current situation in China, I would argue it's not acutely relevant.

A lot of law enforcement doesn't happen until there's some people getting bold about it. For example, the Hells Angels get away with a lot until there is real violence, or super hardcore drugs start appearing - then the cops focus their attention more on the situation. Organized crime knows this, which is why they choose to keep the equilibrium by staying quiet, generally.

Since America has general competitive concerns with China, it makes sense that a large international firm that is flagrantly violating US law would be targeted by a body in the justice system.

But it doesn't mean that Trump's hawkish team is behind this as a part of the negotiations.

In fact, I really don't think it's part of the negotiation, and I even bet that Trump et. al. were caught maybe off guard by it.

So yes, politicized, but more in general, not acutely.

Moreover, if there is law being broken it should be prosecuted, and to your point, hopefully more evenly.

FYI - sometimes these things are also done to 'send a signal'. Just like if a Hells Angel dude steps out of line and maybe does something violent, and the cops rush down on all members of that chapter, it's a 'signal' to HA leadership that if they step out of line, that's what's going to happen, i.e. part of keeping the equilibrium. Otherwise, if the HA chapter got away with something, others might try as well.

[1] https://www.ndtv.com/world-news/meng-wanzhou-huawei-cfo-meng...

linkregister• 8 years ago

Agreed, it's comforting to people to think that the universe has order and that everything has a simple explanation. But it does not. The unit of the U.S. government that started this investigation started it long ago.

This is why the seemingly schizophrenic behavior of the government confounds so many people. Various leaders in agencies in the executive branch can't possibly have alternate incentives to the Commander in Chief, therefore it must be a Deep State Conspiracy. The dramatic coincidence of three airplanes crashing into buildings couldn't have been extremely lucky terrorist cells, it had to have been Bush doing 9/11.

People like to consider the U.S. government as a monolith, but this is a poor model. It's more akin to a 1 million core computer, chugging away at parallel tasks, many of which generate race conditions.

It may seems strange to many observers, but the President of the United States has limited power to stop federal prosecutors from doing their job. Just look at the current situation with the attorneys general and the special investigator.

coldtea10• 8 years ago

She created a subsidiary company in Hong Kong, bought products made in the US and sold them to Iran.

Which is within their rights to do. US sanctions against Iran are not approved by UN or the EU. It's just a one-sided US whimsy.

Not to mention how many times US companies sold stuff to countries that they are supposedly at odds with, including Iran.

https://en.wikipedia.org/wiki/Iran%E2%80%93Contra_affair

sonnyblarney6• 8 years ago

"US sanctions against Iran are not approved by UN or the EU."

It doesn't matter.

She sold US made goods to Iran, and so she broke US law.

As though she assaulted a US official or something, it's not so much EU laws that matter.

Also - if your example of 'US selling stuff to Iran' is the 'Iran contra affair' then maybe you made my point, because this was a massive scandal, and it's 30 years ago. If that's the extent of it, then it's not bad.

Also - the sales to Iran were part of a government sanctioned geostrategic initiative, much like the sanctions in the first place. I don't consider that problematic: if the US is the one making sanctions, and the US wants to adapt those sanctions for geostrategic reasons that makes sense.

luddy2• 8 years ago

There are news reports suggesting that she was arrested for arranging bank transfers from banks in the US to Iran, using false identify for the sender of the funds. The further suggestion has been made that these transfers caused several US banks to be subjected to fines under the sanctions laws of the US. The timing makes it seems as though this is all about the trade war and Chinese technology, but it sounds to me as though it is a violation of US money laundering laws, and pertains to money transfers that originated on US soil. We will see, as details emerge.

ezVoodoo• 8 years ago

So China's only choice is to stay as a cheap supplier of the US forever? That sounds fair...

peter_retief2• 8 years ago

I find the term trade war misleading, its really just countries trying to protect their intellectual property from theft by China. Money made in the skewed trade deals is used to swop debt for equity in failing economies in Africa, South America and Asia. Further, buying of technology companies in developed economies is another way to duplicate the technology in China to achieve global dominance. Don't forget that China has a political objective, its not all trade and fair play

zabana2• 8 years ago

China has a political objective

And the US doesn't ?

peter_retief2• 8 years ago

I often hear that China is a victim of a US trade war, in fact its often framed as Trumps trade war. China is a very aggressive protagonist and we should be wary of the politically correct narrative that is being used to mollify the west. So of course the US is political and it needs to stand up for its own society

mark_l_watson• 8 years ago

“‘U.S. moves against Huawei and ZTE may be intended to force China to remain a cheap supplier instead of a threatening competitor.“‘

This is what I also first thought when hearing about the arrest. This is all about economic warfare. Long term, I think this will be bad for my country (USA) because this will induce China to continue a huge national program to develop home grown tech.

Lio3• 8 years ago

On the other hand China is already committed to undermining US market dominance anyway.

So maybe this just buys US industry a little more time.

Allowing a foreign competitor to grow to a dominant position by skirting sanctions or from profiting from state-sponsored industrial espionage is not good either.

ramblerouser2• 8 years ago

The US should ban export of all high tech related IP to China as a national security concern. The wholesale outsourcing of decades worth of our hard earned technological innovation is treasonous. China would never give us access to that kind of tech if it were developed in China.

cyphar• 8 years ago

Can you explain how it is a national security problem (I didn't understand that phrasing in the article either)? But you also might be forgetting that almost all hardware is manufactured in China (and thus they could easily reciprocate such actions).

ramblerouser2• 8 years ago

The ease with which China can disrupt our supply chain (in the short term) is precisely the point. Their theft of millitary and comercial secrets is another.

China requires american companies selling or manufacturing in china to divulge secrets and implant chinese nationals (agents of the communist party) into said american companies so they can copy our technology and use state funds to begin competing chinese owned companies. This has hollowed out the American manufacturing base. Fewer qualified American engineers and workers means less military readiness, especially against threats China doesnt want us engaged with. Think Russia.

This process also means that their military will both have a larger industrial base to support it, and better technology to arm it.

The USA is not a tool for the Chinese to extract reasources and knowledge from. We worked hard to get where we are, and they are illegally piggybacking on us by stealing our intellectual property.

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