An interesting perspective on the Tradewar situation and how America’s treatment of Huawei may actually play in the CCP favour!
Chris Kanthan
Sott.net
Sat, 25 May 2019 19:59 UTC
SaveTrump and the entire group of US political and corporate elites are doing Xi Jinping and the Chinese Communist Party (CCP) an incredible favor. Trump and his team are obviously thinking that signing a death sentence for Huawei and arresting its CFO will give him a “huge” advantage when he meets Xi Jinping at the G20 summit in a month.
However, the US actions are going to backfire horribly.
Average Chinese Citizen
The relentless and ruthless assault on Huawei – and now on many other Chinese tech companies – show clearly that America is not a friend of China.
Consider the arrest of Huawei’s CFO. She’s not an American citizen and HSBC bank is not an American bank. So, how can she be arrested for what she said to the bank seven years ago? As for dealing with Iran, even western banks violated the US sanctions, but none of their executives were arrested – when they got caught, the corporations simply paid fines.
As for banning all US corporations from supplying hardware or software to Huawei, the Chinese people are wondering, “Where is the supposed due process in America?” Huawei has not been charged or convicted for spying. Even European countries have refused to ban Huawei for lack of evidence. Without adherence to the rule of law, Huawei is being crucified by the US.
The US is perfectly justified in banning Huawei from government networks; and it may even be partially justified in banning Huawei from private telecom networks. However, to stop all US private corporations from doing any business with Huawei is ridiculous and probably unconstitutional.
Huawei is the world’s #1 telecom infrastructure provider and #2 smartphone vendor (having overtaken Apple in 2018) and operates in 170 countries. Huawei has more essential 5G patents than all US corporations combined! It has 80,000 engineers and spends $15 billion a year on R&D. It’s founder – Ren Zhengfei – is intensely admired by the Chinese people, and his daughter is known as the “Princess of China.”
The Chinese are realizing that, yes, Americans will generously allow you to assemble their phones for $1/hour. But if you make your own phones and start competing, America will crush you!
Finally, Chinese people living and traveling abroad see how the US politicians, military and pundits regularly portray China as a rival and an enemy. Also, ordinary Chinese students and scholars are being denied visas to come to the US, evoking the Chinese Exclusion Act of 1882.
All these must be shocking to the average Chinese person, who usually has nothing but admiration for the USA.
Chinese Elites and Reformers
Chinese millionaires & billionaires had grown too cocky over the past decade and started to believe in the God of “the free market.” These people, along with the so-called reformers in the communist party, have been demanding that China open up more to the West.
Now they know that the West actually hates competition and a free market.
The Chinese elite class also now sees the hypocrisy of Americans who express shock that Huawei may be too close to the Chinese government, while simultaneously cheering the fact that every US corporation is cooperating with the US government to kill Huawei. Chinese reformers now probably see the wisdom of the CCP in not opening up China too much to the US. Imagine if all of China were using Google, Twitter and Facebook, and one day all those services simply vanished because the US wanted some leverage in negotiations.
Every Chinese hi-tech executive now knows that his company can be crushed by the US at any moment, without warning.
Thus, the entire Chinese society – from the factory worker to the startup billionaire – knows that only CCP and Xi Jinping can save them from western aggression. The USA took its mask off, frightened 1.4 billion Chinese, and drove them into the arms of the CCP!
Xi Jinping and The CCP – The Saviors
Who’s going to save Huawei, the pride and joy of China? Who’s going to save all the innovative unicorns and global corporations like iFlytek, Fujian Jinhua, DJI & Hikvision? Who’s going to provide billions of dollars to speed-up the semiconductor, 5G, AI and other industries? Who’s going to save China from another hundred years of humiliation? Not the free market or capitalism. It’s going to be CCP.
Perhaps this is why Xi Jinping hasn’t immediately retaliated against the US. The more Trump and the US Congress viciously attack and ban Chinese enterprises, the more the Chinese are going to rally behind Xi Jinping and seek his protection. However, blinded by their own hubris and not comprehending these dynamics, the US Senate is now trying to pass a bill that further fuels the tension in the South China Sea. Such US actions will only stir up more nationalism and patriotism in China.
Finally, to let Trump know that his shock-and-awe tactics aren’t working, Chinese officials are suggesting that Xi Jinping may not even meet with Trump at the G20 meeting.
China’s Self Reliance
A few days ago, Xi Jinping told the Chinese people that they must be prepared for the “long march.” This is a reference to Mao’s legendary military victory. In 1934, the communists under Mao strategically retreated to encircle and defeat their enemies. This retreat lasted an entire year and resulted in Mao & his troops trekking 4,000 miles!
In 2015, Xi Jinping came up with the slogan “Made in China 2025,” which was a vision for China’s self-reliance in key industries by 2025. Now the date has probably been moved up to 2022.
As for Huawei, it plans to release its own operating system (OS) called “Hong Meng” to replace Microsoft Windows and Google’s Android. Huawei had been preparing for a devastating American attack since 2012 – they even symbolically named their project “Noah’s Ark.” Huawei’s subsidiary HiSilicon makes Huawei’s core chips; and thus Huawei might save its 5G and other high-end products with components from Taiwanese and South Korean companies (if those don’t succumb to US pressures like the UK and Japan did).
With subsidies from the communist party, Chinese engineers and scientists will be working hard to advance their semiconductor industry and create end-to-end Chinese solutions from design software to chip fabrication. If they succeed, the US will regret the brutal trade war, since America’s biggest chip customer would have turned into its biggest competitor.
China’s Leverage
In any case, China won’t let Huawei die. Xi Jinping has his own leverage over Trump and the US economy. For example:
– China can hurt Apple in numerous ways – by banning its products or shutting down its factories. Apple is an $800 billion company and if it fails, it will bring down the entire US stock market with it.
– China can ban the export of rare earth minerals to the US, without which US fighter jets, MRI machines, electric cars or even touch screens won’t work. The USimports 90%of these minerals from China.
– The USgets40% of all its apparel, 50% of furniture, 70% of appliances, 72% of footwear, 75% of toys, 80% of shoes, 85% of travel goods and 90% of smartphones/computers/electronics from China. If China places an export ban for a few weeks, retail stores across America will have empty shelves, and there will be riots everywhere.
– China holds $1.2 trillion of US treasuries. Strategically dumping these will cause havoc in the US economy.
Conclusion
What started out as Trump’s obsession with a trade deficit with China has now morphed into a full economic and geopolitical war. Rather than discuss trade, the US has a long list of demands that will essentially dismantle China’s current political, financial and economic system. These are hubristic, unrealistic and imperialistic demands. The entire US establishment has succumbed to group-think and has needlessly started a new Cold War, which is only a few miscalculations away from a hot war. Unfortunately, the decoupling of the two largest economies in the world will continue, which will also result in the bifurcation of the tech world. Rather than interdependence, cooperation, trade and peace, the world’s two largest powers are heading into an alarming confrontation. As I have written before, the next decade will be extremely dangerous.
Chris Kanthan is the author of three new books, Deconstructing the Syrian war., Geopolitics for Dummies and What the heck happened to the USA. Chris lives in the San Francisco Bay Area, has traveled to 35 countries, and writes about world affairs, politics, economy and health. His other book is Deconstructing Monsanto. Follow him on Twitter: @GMOChannel
