A top official of the telecommunications giant Huawei has said that Beijing may consider counter-measures should the United States choose to impose further restrictions on exports of American equipment to be used by the Chinese firm.
Speaking to reporters on the publication of Huawei’s 2019 annual report on Tuesday (31 March), Huawei’s rotating Chairman Eric Xu said he would expect the Chinese state to step in if any further US bans were put in place.
“The Chinese government will not just stand by while Huawei is slaughtered on the chopping board,” Xu said, adding that he believes the government in Beijing would take “counter-measures” should the US seek to extend the entity list designation, by potentially enacting bans on the sale of Chinese-made products to the US.
In this case, Xu said, there could be “catastrophic destruction” to the global supply chain.
“It is our hope that the global industry can work together,” Xu added, while also noting that the company may seek to source vital equipment from other regions in the future, including Europe.
Xu has blamed a $12 billion revenue shortfall on US President Donald Trump’s placement of the company on the US entity list, which bars American firms from trading with Huawei unless a temporary general license is obtained.
Despite this, Xu told the Financial Times that Huawei had spent $18.7bn with US companies in 2019, a substantial increase from 2018’s figure of $11bn. An investigation by the newspaper also recently found that the company’s most recent smartphone release, the P40, has heavily relied on components from US companies.
Meanwhile, the US campaign against Huawei, which is founded on the allegation that the company engages in espionage programmes on behalf of the Chinese state, has had a tangible impact on the company’s profit margins, it emerged on Tuesday.
For 2019, the company announced a 62.7 billion yuan (8 billion euros) net profit, an increase of only 5.6%, compared to a 25% increase a year earlier.
Revenue from the company’s carrier business, which includes 5G equipment, saw a rise of only 3.8% to 296.7 billion yuan (€38 billion). In terms of global sales revenues, an increase of 19.1% was reported for 2019.
5G in Europe will ‘certainly be delayed’
Meanwhile, 5G deployment in Europe will “certainly be delayed” due to the ongoing coronavirus crisis, Xu said on Tuesday.
In a veiled call for Europe to accelerate its future investments into 5G network infrastructure after the COVID-19 outbreak has been reigned in, Xu said China has accelerated its 5G deployment plans since the pandemic was brought under control in recent weeks.
Elsewhere, Huawei Chief Representative to the EU Institutions, Abraham Liu, noted the strategic importance of the company maintaining a stronghold in the European Union.
“More than ever, in this difficult period we currently face, Huawei remains committed to Europe as our second home,” he said in a statement on Tuesday.
The Italian connection: A Health Silk Road
Due to the struggles the continent has faced with regards to stemming the spread of the coronavirus, China has been keen to offer assistance to various EU member states with vast donations of medical equipment, which EURACTIV recently surveyed.
This led the EU’s Foreign Chief Josep Borrell to say that a ‘politics of generosity’ is being played out amid the spread of the virus, in which “China is aggressively pushing the message that, unlike the US, it is a responsible and reliable partner.”
However, Borrell toned down his stance over the weekend, saying that the EU appreciates all support from global partners.
Italy has emerged as one particular EU country where China believes it can offer a substantial degree of assistance.
A EURACTIV investigation last year revealed that China plans to cooperate with Italy in the development of “roads, railways, bridges, civil aviation, ports, energy, and telecommunications” as part of Beijing’s Belt and Road Initiative.
More recently, China’s President Xi has floated the idea of establishing a ‘Health Silk Road,’ to which Italy would be a partner, which may help to combat the epidemic.
Transport corridors and logistics centres originally planned for the Belt and Road initiative could be earmarked as hubs to drop in vital medical supplies to partners in the project that require assistance.
The move has provoked concern in Brussels, with Italian MEP Anna Bonfrisco writing to the European Commission to warn that as part of the plans, China may be “seeking to acquire health and technological data” from EU citizens.
Bonfrisco said this should be regarded as a “cause for grave concern,” bearing in mind China’s lack of safeguards for the protection of personal data. She added that Huawei’s recent offer to set up a cloud computing network for the real-time sharing of data between Italian and Chinese health authorities should also be probed.
EURACTIV caught up with Bonfrisco on Tuesday, and she advised the Italian government not to form any such partnerships with Huawei.
“Protecting electronic health information is crucial in order to respect people’s life and privacy,” she said.
“Citizens need to stay the ultimate owner of their own health data, sharing them in a secure way with the government. In China this is not the case: the Chinese government owns citizens’ lives.”
Meanwhile, as tensions heighten between the US and China, President Trump has been keen to demonstrate America’s own support to the Italians in the fight to contain the virus.
Speaking to reporters at the White House on Monday (30 March), Trump said that following his telephone conversation with Italian Prime Minister Giuseppe Conte, the latter was “very happy” to hear that the US would be shipping $100 million worth of medical equipment to his country.
[Edited by Zoran Radosavljevic]