Trade war: China blasts US over Huawei blacklisting – as it happened
Rolling coverage of the latest economic and financial news, as America hits Huawei with a double-whammy
- Huawei denies being government=controlled
- Chinese foreign ministry hits back
- US companies blocked from selling kit to Huawei
- Huawei also banned from US networks
- Expert: This could harm Huawei very badly
9.05pm BST
And finally, Wall Street has posted another day of gains, as it continues to recover from Monday's sharp losses.
The Dow ended the day up around 214 points, or 0.8%, at 25,864.
8.57pm BST
A late newsflash: China has dramatically cut its orders for US pork.
Data from the US Department of Agriculture shows that Chinese buyers cancelled orders for 3,247 metric tonnes of U.S. pork last week.
China cancels US pork import order as US-China trade war drags on https://t.co/ro3YmBXUdm pic.twitter.com/7ddqNVxJar
8.15pm BST
It's notable that the major advanced economies don't agree on how to treat Huawei.
Not everyone sees the firm as such a security threat, although the US's move could prompt a change of heart....
Related: How other countries are responding to Trump's Huawei threat
7.37pm BST
There is precedent for a major Chinese firm being blacklisted by the US.
Last year, handset maker ZTE was hit with a "Denial Order, banning it from purchasing mobile components from American companies.
When smaller rival ZTE was shut out of the US, its smartphone shipments plummeted by about 75 per cent and it blew a Rmb7.8bn ($1.1bn) hole in its bottom line in the first half of last year.
With revenues last year of $105bn, Huawei is a lot bigger than ZTE and its greater focus on telecoms infrastructure equipment and high-end phones means the impact of an export ban "would be material", Credit Suisse analysts said in a report at the end of last year.
Can #huawei survive US blacklisting? https://t.co/tvXeXp0fjk via @financialtimes
6.34pm BST
Huawei has also argued that America is shooting itself in the foot, by banning its technology from its networks.
Earlier today a spokesperson said:
Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers.
In addition, unreasonable restrictions will infringe upon Huawei's rights and raise other serious legal issues.
China has warned the US move against Huawei could hurt trade talks and cost "tens of thousands of American jobs" at US suppliers. https://t.co/76kyPMvBcU
6.18pm BST
U.S. commerce secretary Wilbur Ross says the executive order banning use of foreign companies in America's 5G networks which is believed to be designed to target Chinese firm Huawei will come into force tomorrow
6.15pm BST
US cybersecurity expert Adam Segal points out that the ban on selling equipment to Huawei will hurt some American companies.
Now Huawei is on the Entity List, scores of US companies could suffer a drop in sales:
three of Huawei's top 10 suppliers in terms of sales were US companies. Contract manufacturer Flex derives 7 per cent of its revenue from the Chinese company, Broadcom counts on Huawei for 6 per cent of sales and Qualcomm for 5 per cent.
Of the company's hundreds of global suppliers, Huawei considers 92 as core suppliers, including 33 US companies, 25 from mainland China, 11 from Japan and 10 from Taiwan. The remaining companies are from countries and regions including Germany, South Korea and Hong Kong.
5.56pm BST
America's commerce secretary, Wilbur Ross, has just told Bloomberg TV that the new restrictions on Huawei will start tomorrow (Friday).
16 May - 12:48:09 PM [RTRS] - U.S. COMMERCE SECRETARY ROSS SAYS HUAWEI ORDER WILL BE EFFECTIVE TOMORROW -BLOOMBERG INTERVIEW
Wilbur Ross: Huawei is not part of trade talks. pic.twitter.com/XLz2RfYk50
5.47pm BST
Charlie Dai, a Beijing-based analyst at Forrester Research, reckons the curbs on Huawei could slow global take-up of 5G mobile (which should be faster, more flexible and offer greater capacity).
He fears a significant negative impact, given Huawei's leading position in the space, saying (via Bloomberg):
"Nokia and Cisco could address the gap to some extent, but the overall adoption will be slowed down, which eventually will be harmful to telco carriers and consumers around the world."
4.52pm BST
Wall Street has now clawed back the losses suffered at the start of this week, after the trade war blew up.
The Dow is now up 278 points, or over 1%, at 25,926
Stocks hit session highs; Dow also turns positive for the week https://t.co/JQW65QQaFM pic.twitter.com/gbsWi5fIPU
Washington's confirmed ban of Huawei and 70 affiliates, inevitably exacerbating a trade dispute with Beijing, vies with stronger earnings and signs of bargain hunting as chief influences on global shares
A positive start despite the White House's efforts, joins other clues suggesting risky markets could soon draw a line under weakness that became pronounced last month.
4.45pm BST
Huawei has criticised today's report from the UK's Henry Jackson Society, which recommended banning the firm's equipment from Britain's upcoming 5G mobile networks.
The company insists it's not under Beijing's control - and warned against taking an 'isolationist' approach.
"This report is long on politically motivated insinuation but short on fact. It fundamentally misunderstands the nature of modern China, global technology markets and of 5G. The isolationist approach they recommend may support an America first trade agenda but it's hard to see how it's in UK's national interest.
We are an independent, employee-owned company which does not take instructions from the Chinese government. In 32 years, there have been no significant cyber security issues with our equipment. We hope and expect that any decision on Huawei's participation in Britain's build-out of 5G networks will be based on solid evidence, rather than on unfounded speculation and groundless accusations"
Related: The Huawei incident points to a deeper lesson for Great Britain | Larry Elliott
2.39pm BST
Wall Street isn't panicking about the moves against Huawei.
The Dow has gained 117 points in early trading in New York, to 25,765 points, up 0.45%.
2.13pm BST
Chinese scholar, Jin Canrong of Renmin University, says China has three trump cards it can play in the trade war.
- Banning exports of rare earth minerals to U.S.;
The first one is a total ban on the export of rare earths to the US. Rare earths are the raw materials for non-ferrous metals, which are indispensible in chip-making. China's rare-earth production accounts for a majority of the world's total.
The US has its own rare-earth reserves but it would take years for the US to restore its own rare-earth industry to meet its needs for chip production. Even when the US finishes re-establishing the industry, China would have completed R&D on high-end chips and started to export its own products.
China has three trump cards to win trade war with US. https://t.co/p9ILWLsdBN pic.twitter.com/CCMVvyfXvI
1.59pm BST
EIU analyst Nick Marro thinks China could hit back against US companies soon - which would further escalate the trade conflict.
With all of the news on Huawei, worth remembering China's foreign investment law allows it to reciprocate against "discrimination" facing Chinese investment in overseas markets. Yes this happens already, but now clearly sanctioned. Wonder if we'll see US tech casualties soon... pic.twitter.com/yKM77Q7zXV
12.47pm BST
Five major banks have been fined a total of a1.07bn for conspiring to rig the foreign exchange market.
Two cartels -- snappily titled the"Forex - Three Way Banana Split" and the "Forex- Essex Express" cartel -- saw traders swap details of their customer orders, trading plans, and open risk positions.
"Companies and people depend on banks to exchange money to carry out transactions in foreign countries. Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day.
Today we have fined Barclays, The Royal Bank of Scotland, Citigroup, JPMorgan and MUFG Bank and these cartel decisions send a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets. The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers".
12.32pm BST
Matthew Kendall, Chief Telecoms Editor at The Economist Intelligence Unit, fears that the crackdown on Huawei will hurt smaller US telecoms companies.
They could face a bill to rip the Chinese firms's kit out of their networks, and replace it with rival products instead.
While the bigger carriers are likely to be able to absorb the higher costs associated with using equipment from Nokia, Ericsson and smaller national manufacturers, it is the smaller start-up and rural US carriers that will suffer the most, with many of them already using Huawei equipment in their networks.
Whether the US will propose any form of financial assistance for small carriers to remove Huawei equipment is not yet clear, but competition and timescales for infrastructure delivery in regional US markets are likely to be adversely affected by this order, adding to uncertainty for small and medium-sized players who are likely to pass on costs to consumers.
12.25pm BST
Back in London, Lloyds Banking Group is being savaged by shareholders over the fraud scandal at its Reading branch, and over the whopping pay packets enjoyed by top bosses.
My colleague Kalyeena Makortoff is attending Lloyds' AGM, and reports:
Lloyds AGM kicks off on a fiery note, with a shareholder yelling that Lord Blackwell is "unfit" to be chairman and "should be facing a public inquiry into criminality".
He accuses Blackwell of lying to shareholders at last year's AGM about the Turnbull report
Lord Blackwell uses his opening statement to say the bank recognises the criminal activity at HBOS Reading "not only" had an impact on customer victims, but also "cast a long shadow" in undermining trust and confidence in Lloyds more widely
Shareholders are starting to hit out at exec pay at Lloyds. "One has to ask, if you enjoy banking, at what point do you say I enjoy my job and don't need more money and more money and more money? If you don't enjoy it, why do you do it?"
Another investor hits out at excessive pay, saying it's not right to pay execs "millions" when many working Brits rely on foodbanks. "CEOs and chairmen...are earning large amounts of money and it totally distorts the world in which we're living in. Greed is not good."
12.17pm BST
Donald Trump hasn't yet tweeted about the decision to blacklist telecoms firms who pose a security threat, and to restrict US companies from selling their tech to Huawei.
Professor Costas Milas of the University of Liverpool thinks that's an encouraging sign:
Donald Trump took the very wise decision not to tweet the news that he put Huawei on exports blacklist. Trump has 60.3 million Twitter followers and the 13th most popular Twitter account in the world.
Not so long ago, a tweet by Trump on Turkish steel tariffs resulted in a massive drop of the Turkish currency. Being aware of Twitter's power to move financial markets (see here for research) Donald Trump restrained, this time, from using his Twitter 'weapon' to put enormous pressure on Huawei, the Chinese government, and financial markets (the Telecoms industry in particular).
11.55am BST
France's president, Emmanuel Macron, has poured a carafe of cold water over the idea that his government could blacklist Huawei.
He told CNBC that security concerns were important, but that wasn't a reason to chuck out foreign companies.
"There is no over-protectionism vis-a-vis any of the big global tech (firms) because we need them to fertilize our ecosystem, we want to be stronger and stronger and create maximum jobs.
For sure on some issues we have restrictions, not focused on Huawei, but to preserve our national security and our sovereignty for critical reasons."
11.31am BST
Being banned from the US market won't cause Huawei too much short-term pain - it barely sells any equipment to American carriers at the moment.
A ban on sales to the U.S. is less of a concern for Huawei: The $109 billion company had pretty much given up there anyway https://t.co/dcO039dWRF pic.twitter.com/zfbZTZocW5
The firm would be unable to upgrade software and conduct routine maintenance and hardware replacement."
One China expert said this could be the end of Huawei and also totally torpedo what's left of the trade talks https://t.co/TCTCQBA8a3 pic.twitter.com/1etFXIWhcp
11.19am BST
In another blow to Huawei, a report has just recommended that it is completely banned from supplying 5G mobile networks in the UK.
The report, drawn up by Conservative MP Bob Seely and academics John Hemmings and Peter Varnish, says Huawei's links to the Chinese government make it a "potential security risk".
Very pleased to announce the launch of "Defending our Data: Huawei, 5G, and the Five Eyes" report at @UKParliament from noon today.
Report link below: @IoWBobSeely, @HudsonInstitute's @robert_spalding @ASPI_ICPC's @DaniellesCave @tomatospy & @VarnishPeter https://t.co/Iygwfx3rH3 pic.twitter.com/gNMuLzJ9YQ
They argue that a decision announced by Theresa May last month, following a fraught meeting of the National Security Council (NSC), to allow the company to supply "non-core" equipment should be overturned because using the company's technology presents "risks".
In a report from the Henry Jackson Society (HJS), the authors go on to claim Huawei "has long been accused of espionage" - a claim denied repeatedly by the firm - and notes that "while there are no definitely proven cases", a precautionary principle should be adopted.
Related: Huawei poses security threat to UK, says former MI6 chief
11.01am BST
CNN points out that Huawei is already fighting political pressure across the globe -- with some governments keen to ban the company, but others open to working with it.
They say:
While some US allies -- notably Australia and New Zealand -- have followed Trump's lead on Huawei, others have been more reticent. Europe in particular is split over whether to ban the company, a market leader on 5G technology which is expected to be the lifeblood of the new economy.
The Huawei issue cuts to the heart of tensions between security and economic interests when it comes to China and Chinese influence. While many countries around the world share Washington's suspicion -- even hostility -- towards Beijing, they are unwilling to take the economic hit that openly standing apart from China would entail.
10.39am BST
China's foreign ministry has now weighed in, warning that Beijing will take necessary measures to safeguard the rights and interests of its businesses.
Ministry spokesman Lu Kang also suggested that the clampdown on Huawei could overshadow the ongoing trade talks:
"Negotiations and consultations, to have meaning, must be sincere.
"First, there must be mutual respect, equality and mutual benefit. Second, one's word must be kept, and not be capricious."
#China has accused @realDonaldTrump of engaging in industrial sabotage with "the use of national security as a pretext for the business activity of foreign companies". The US president issued an order which effectively blocked Huawei technology from being imported into the #USA.
Beijing has now threatened reprisals saying that it would "take steps to safeguard the legitimate interests of Chinese businesses". #China #USA
In what some'll see an understatement, For Ministry Spokesman Lu Kang, when referring to these moves by @realDonaldTrump to block Huawei tech entering the #USA, said "nobody has seen this as a constructive or friendly gesture". But hey he's accusing the US of industrial sabotage.
10.04am BST
Expert reaction to the Huawei ban is flooding in.
Roger Sheng, a China-based analyst with Gartner, believes Huawei could be extremely badly hurt if it can't buy IT products from American companies (Bloomberg reports):
"The impact is well-beyond its 5G ambitions because without these American suppliers like Qualcomm and Marvell, it can't even keep a normal operation.
One question remains unanswered though, is how strict will the U.S. execute the ban."
China and Chinese companies can pose threats to the West. But Trump does his case no favours using the same type of national security/emergency executive order to ban Chinese telcos as he used to penalise European steel & aluminium exports to the US, and to build his wall
Will the blacklisting of Huawei in the US lead to secondary sanctions against European companies doing business with Huawei? If so, this would be a dramatic escalation. - https://t.co/VKWTz4IeXi
9.37am BST
#BREAKING China warns US against 'harm' to trade ties over Huawei ban pic.twitter.com/XGHbg6NDE5
9.24am BST
China's commerce ministry has criticised America's decision to blacklist Huawei, and warned that it could retaliate.
Commerce ministry spokesman Gao Feng accused Washington of acting unfairly, by using security laws to restrict Huawei from buying components from US companies.
"China has emphasised many times that the concept of national security should not be abused, and that it should not be used as a tool for trade protectionism.
"China will take all the necessary measures to resolutely safeguard the legitimate rights of Chinese firms."
China Commence Ministry: Asked If Trump And Xi Are To Meet To Resolve Trade Dispute; That Is Not True
9.15am BST
America's new broadside against Huawei is undermining hopes that presidents Trump and Xi can agree a trade deal at next months' G20 meeting.
Investor sentiment has swung back and forth this week due to the persistent uncertainty and ever-changing jigsaw puzzle that is being mapped out around global trade developments.
Asian shares are mostly mixed during early Thursday trade amid the contrasting signals that are being delivered to investors in regards to US-China trade tensions. While there is hope on one side of the table that there will be a handshake between the US and Chinese authorities at the G20 next month to smoothen the recent escalation, this is being met with news that the US government will ban Huawei's access to the US markets over national security concerns.
9.03am BST
Reuters' Tokyo bureau report that Japanese robotics makers have been hit by escalating trade tensions in the last couple of weeks:
Shares of Fanuc Corp, which makes industrial robots, have tumbled 8.5% so far this month.
The company saw a significant drop in its China sales for the fiscal year ended March 2019. China now accounts 19% of its overall sales, down from 30% a year ago.
8.52am BST
Jim Reid of Deutsche Bank has just attended a conference on the West Coast of America, and reports that Donald Trump's hard line on Huawei will be popular in political circles (if not on Wall Street...)
At the conference I was attending there was a panel on US politics with a couple of Washington insiders and a couple of things struck me from the conversation. Firstly, virtually every market person I've spoken to over the last few months wants a deal, pretty much any deal.
However, in listening to the panel it's quite clear that China has few friends on the trade front in Washington across the political spectrum. Also, the view was that behind closed doors virtually all US corporates were supportive of being more aggressive with China on Trade.
8.49am BST
Patrick Zweifel of Pictet Asset Management believes that highly globalised countries, such as Singapore, South Korea and Ireland, will suffer badly if the trade war intensifies:
a With Huawei on the Entity List, #US intensifies its tech war with #China & exacerbates the impact on Global Value Chains (GVC)
a If supply chains start to be really disrupted, countries with high GVC participation rates will suffer the most, more than China & specially US pic.twitter.com/RZ9ZktZFR0
8.41am BST
European stock markets have dropped in early trading, hit by the latest clash over Huawei.
Technology stocks and consumer goods firms are the biggest fallers, along with financial companies and industrial groups.
Trump's meddling is almost single-handedly driving the markets right now. It's not so much Adam Smith's invisible hand but a very visible hand of President Donald Trump.
The President's almost hap hazard approach, of sounding optimistic over trade talks, before turning confrontational that is creating high levels of uncertainty and volatility. European and US futures are heading to a lower start today after strong gains in the previous session.
8.30am BST
It's been quite a week in the US-China trade war, points out analysts and broadcaster Louise Cooper:
Last Friday US increased tariffs on $200bn if Chinese imported from 10% to 25%
China responded Monday with tariffs on $60bn American imports
Wednesday Trump signed order preventing Huawei accessing American market & buying anything from US firms.
All in less than one week.
8.24am BST
Republican senator Tom Cotton has tweeted that it's "RIP" for Huawei's ambitions in 5G telecoms networks.
.@Huawei 5G, RIP. Thanks for playing. https://t.co/Rltwqj52AW
Given this morning's Huawei news worth reminding that Vodafone announced it's launching 5G with Huawei equipment on July 3rd
8.12am BST
Paul Triolo, a technology policy expert at Eurasia Group, a risk consultancy, says the new ban on US companies selling kit to Huawei is a "huge development".
Triolo says that Huawei will be hurt by being added to the "dreaded" US Entity List.
"The US has basically openly declared it is willing to engage in a full-fledged technology war with China."
7.53am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Huawei lands on the Commerce Department entity list pic.twitter.com/MLWrUn91BA
"prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests."
Related: Huawei hits back after Trump declares national emergency on telecoms 'threat'
Trump's move to restrict Huawei's access to US markets has further soured the US-China trade relationship. US companies will also require licenses to sell key technology to Huawei.
Continue reading...