Meng Wanzhou’s return helps US-China relations, but not US-Huawei relations

News sources quoted from: South China Morning Post/Matt Haldane, SCMP
Andrew Mullen

Production Editor, China Economy


Hello again, Global Impact readers,

The will-she, won’t-she saga surrounding Huawei chief financial officer Meng Wanzhou has finally come to an end after almost three years, as the daughter of company founder Ren Zhengfei landed back in China late last month, having reached a deal with prosecutors in New York that resolved her US fraud case.

At the same, Canadians Michael Kovrig and Michael Spavor were freed in China after they had been in detention since just days after Meng was taken into custody in December 2018.

So, does this three-sided game of international chess between Beijing, Ottawa and Washington mean all is rosy in the garden of US-China relations? And what does it mean for Huawei to have its CFO back on home soil.

Matt Haldane, a production editor with the technology desk at the SCMP, is here to unpack this and ponder what is next for Meng and Huawei, as well as for Messrs Xi, Trudeau and Biden.

Andrew Mullen
Production Editor, Political Economy

It’s politics as usual for Huawei

Media  – Huawei Technologies chief financial officer Meng Wanzhou returned home to Shenzhen at the end of last month, and it was not just people close to the company founded by her father Ren Zhengfei who were ecstatic. The country was full of pride, and the government used it as an opportunity to project an image of strength.

The end of the nearly three-year saga, during which Meng fought extradition from Canada to the US on charges of bank fraud related to sanctions on Iran, was enough to have some wondering whether this would mark an easing of tensions between the two countries under US President Joe Biden. Yet, the situation for Huawei, which has been under US sanctions since 2019, is not really any better today than it was two weeks ago.

US Trade Representative Katherine Tai did appear to strike a conciliatory tone this week when she said in a speech that the US would exempt certain products from tariffs on Chinese imports. But the tariffs are expected to remain in place, and Tai’s lack of specifics on the Biden administration’s approach to trade with China has frustrated some who see the tariffs as hurting the US economy.

But Tai’s tidings of tariff exemptions does not help Huawei, which is effectively blocked from doing business with US firms or acquiring advanced chips produced with US-origin technologies.

Huawei deputy chairman Eric Xu said in April that the company had no illusions about the sanctions being lifted under Biden, and that instinct has proven to be correct.

Days after Meng’s return, the US government issued instructions on how rural telecoms operators could apply for funding to remove Huawei equipment. Some US politicians are now also looking to fund the removal of hardware from Huawei and fellow Chinese technology company ZTE in Europe.

Huawei has been scrambling for ways to make up for lost smartphone revenue, which has plummeted under the sanctions. The company vowed to revive its smartphone business, but that is a tall order at the moment.

One of its primary efforts is upgrading traditional industries with 5G, artificial intelligence and internet-of-things technologies. It has already been doing this with hospitals and ambulancescoal mining and pig farming. It also wants to break into financial services and mobile payments.

A particularly big effort this year was the launch of its new operating system, HarmonyOS 2. This was meant to unify the company’s ecosystem of services and hardware, including electric cars.

The HarmonyOS that ran on smartphones, however, wound up being little different from Android, at least for now. The company is trying to move away from its reliance on American tech companies, and Android updates still come from Google.

So, even if the relationship between the world’s two biggest economies is on the mend, Huawei has little to gain.

The good news for the company’s mainstay telecoms-equipment business is that it continues to get big contracts back home.

Its overseas troubles have not soured Huawei on foreign markets, either. It continues to invest heavily in foreign talent and European lobbyists. Ren even told employees in May to continue to learn from the US.

“Just because the US is trying to suppress us does not mean we do not recognise it as a teacher,” he said.

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