The ban on Huawei has been extended for another three months. Why is the United States holding on to it?

Russian media reported that the US Department of Commerce has extended the ban on Huawei for another 90 days, allowing Huawei to continue to purchase parts from US suppliers. A few days ago, US President Trump said that the United States would not cooperate with Huawei in any way. However, the US Secretary of Commerce explained that many US telecommunications companies rely on Huawei, so the trade regulator gave them more time to eventually get rid of this dependence.

According to a report on the Russian Satellite News Agency website on August 22, as early as May, the US Department of Commerce had included Huawei and dozens of other companies related to the Chinese telecommunications giant on the "blacklist." This means that US companies cannot sell any parts and software to companies on the "blacklist" without the permission of the US authorities.

However, the US Department of Commerce almost immediately provided its companies with a three-month "grace period" so that they could systematically reduce the scale of cooperation with Chinese partners. Now, this grace period has been extended.

However, while extending the ban on Huawei, the US Department of Commerce also expanded the "blacklist" of companies prohibited from cooperating with the United States, adding 46 companies related to Huawei. Therefore, from Huawei's point of view, this is bad news. Huawei said that these actions of the United States were caused by unfair competition and have nothing to do with national security issues. Huawei urged the United States to wake up and stop discriminating against the company and its partners to ensure a healthy competitive environment in the US market.

The report analyzed that Huawei does not think that extending the "grace period" for another three months is a sign of reconciliation by the United States. On the contrary, the US government's step is based on considerations of the domestic situation. Companies that work with Huawei are losing a big customer. Last year, Huawei spent $70 billion (1 US dollar is about 7 yuan) on purchasing components, and about $11 billion went to Qualcomm, Intel and Micron Technology. Another $2 billion went to Broadcom. In addition, Commerce Secretary Ross also admitted that a considerable number of local telecom operators in the United States use Huawei equipment. It would be too costly to abandon Huawei overnight, especially for small operators. Finally, many Americans use Huawei smartphones. If they suddenly disappear from the shelves, this is not the best Christmas gift for people.

Huang Weiping, a professor at the School of Economics of Renmin University of China, commented in an interview with the Russian Satellite News Agency: "I think it is difficult to say that the US market will be completely closed to Huawei in three months. First, Trump is now faced with the situation of dealing with Christmas. Although the tariff increase does have an impact on China, it will inevitably have a counter-effect on the lives of Americans during Christmas. And if the connection with Huawei is completely cut off, what should the relevant employees do? The added value of a mobile phone exported to the United States is not high for the Chinese, but higher for the Americans. If this mobile phone is excluded from the business, it will affect the United States itself, which is probably why American companies must tell Trump that this matter is not feasible."

"Second, the U.S. Department of Commerce hopes that American companies will get rid of their dependence on Huawei as soon as possible and find alternatives around the world. In fact, it is not difficult to find alternatives to Huawei, but their manufacturing costs will inevitably increase. It is well known that Huawei's cost-effectiveness is very high. The United States proposed "re-industrialization" during the Obama administration, and now the Trump team has made it clear that it wants to reshape the global supply chain, industrial chain, and value chain. But reshaping is not a simple matter. If the supply chain is broken at the moment, it will have a greater impact on the United States."

"Third, the United States needs to clarify where the market for high-tech companies is. Not just American chips, but also Korean storage devices, Japanese electro-acoustic components, etc., where is their market?" said Huang Weiping.

Russian media said that, on the contrary, for Huawei, the problem of losing the US market is not so acute. According to data from the US Del Oro Group, a research institute, Huawei accounted for 29% of the world's telecommunications equipment market in 2018. This is the largest share. Its closest competitor, Nokia, accounts for about 20%. Therefore, Huawei can do without the US market in principle. But Huawei relies on American products with high added value, especially software. For example, simply refusing to cooperate with Google means that the Android operating system will not be able to use all functions on Huawei mobile devices. Huawei recently launched its own Hongmeng OS, which may replace Android in the future. But in the short term, the company will have a difficult period.

The report concluded that it is not naive to think that the trade dispute between the two countries can be resolved by increasing purchases of any product and reducing trade imbalances. Obviously, the trade war is just a manifestation of a large-scale technological confrontation between the two major countries. And it is no accident that Huawei is suppressed. Huawei is indeed a threat to the United States - threatening the United States to lose its global technological leadership. At present, Huawei is already higher than its competitors in terms of the development level of 5G technology. For example, in terms of the number of basic 5G patents, Huawei ranks first with 2,160 patents; Nokia has 1,516 patents, and Ericsson is only ranked sixth.