Trade tension between the United States and China appears to be intensifying soon, as the latter is taking steps to respond to the US ban on doing business with Huawei. Bloomberg reports that China has prepare to limit the export of rare earth minerals to the US while also setting up your own black list of "unreliable entities" for unfavorable foreign companies. At the same time, the Japanese SoftBank has announced that it will build its 5G network with Nokia and Ericsson equipment, snoring Huawei, which was a 4G supplier for the major mobile provider.
The export restriction for rare earths now seems to be an act of sabeling. The leadership in Beijing indicates that it is willing and willing to take this serious measure, but according to Bloomberg this is only the case when the trade war between China and the US deepens. Neodymium is one of the most recognizable rare earths, because it is widely used in magnets. You will most likely have seen it on the specification sheet of your headphones, and there is a broad consensus among economists and international trade observers that American companies outside of China do not have good alternative sources.
As for the Chinese entity list, this reflects the language of the entity list of the US Bureau of Industry and Security on which Huawei is now located. That could be a deliberate sign of a & # 39; tit-for-tat & # 39; answer, because China does not really need a formal list, because it has already banned a number of prominent American companies such as Google and Facebook. The list will cover "foreign companies, organizations and individuals who do not comply with market rules, violate and block contracts, prohibit delivery for non-commercial reasons or seriously harm the legitimate interests of Chinese companies," said China National Radio, a government official. In simple terms, China reflects the actions of the US and takes a more assertive position in response to its next round of negotiations.
Huawei, the company that is experiencing the focus of friction in the current trade dispute, has suffered a significant loss in the form of SoftBank's 5G activities. There is rarely a dispute about the performance of Huawei & # 39; s network equipment, but concerns about security vulnerability and the company's relationship with the Chinese government weigh heavily on corporate customer heads. SoftBank's decision is now probably a mix of that track record and the current turbulence caused by the American blacklisting of Huawei. This is one of those consequences that will have a lasting impact, no matter how quickly trade relations between the US and China improve. Even if the current impasse is resolved quickly, Huawei's reputation as a reliable smartphone maker for consumers and a reliable 5G supplier for mobile operators remains contaminated.