China Vows To Fight Trade War “To The End” As Huawei Sues Commerce Department
It’s the weekend, which means the trade war between the US and China moved to the front page of the local propaganda media (in both the US and China). And while Trump has yet to slam Beijing, focusing this morning on the all time high in the market instead, China has been busy and in an editorial in the state-run People’s Daily, Beijing has warned that China has “the strength and patience to withstand the trade war, and will fight to the end if the U.S. administration persists.”
Echoing what China’s notorious twitter mouthpiece Hu Xijin said yesterday, the editorial said that just days ahead of the much anticipated G-20 summit in Osaka where Trump and Xi are set to meet, “the U.S. must drop all tariffs imposed on China if it wants to negotiate on trade, and only an equal dialogue can resolve the issue and lead to a win-win”, according to Bloomberg.
Chinese side is concerned about the fairness of a trade deal. The most important part is the US side must remove all newly imposed tariffs since the trade war. Until now, what I’ve learned is China won’t accept a deal that the US keeps part of the tariffs.
— Hu Xijin 胡锡进 (@HuXijin_GT) June 21, 2019
The communist party’s official paper also said the US had failed to take into account the interests of its own people, and they are paying higher costs due to the trade dispute. “Wielding a big stick of tariffs” also disregards the condition of the U.S. economy and the international economic order, according to the editorial.
Beijing’s official warning to the US ended as follows: if the U.S. chooses to talk, “then it must show some good faith, take account of key concerns from both sides and cancel all tariffs.”
And just to prove that China isn’t a paper tiger whose threats will be confined to the local newspapers, Reuters reported that overnight China’s controversial telecom giant, Huawei, filed a civil lawsuit against the US Commerce Department over the mishandling of telecommunications equipment seized by American officials, demanding its release.
In an almost absurd reversal, the company whose entire existence can be traced to stealing and reverse-engineering foreign technology and trampling over corporate ethics, the complaint alleges that the US government took possession of hardware, including an ethernet switch and computer server, which was transported from China to an independent laboratory in California for testing and certification back in 2017.
However, the equipment was not shipped back to China. It was “purportedly” seized en route and is currently sitting in Alaska, as US officials wanted to investigate whether the shipment required a special license. Such requests are usually processed within 45 days, but nearly two years have already passed since then.
“The equipment, to the best of HT USA’s knowledge, remains in a bureaucratic limbo in an Alaskan warehouse,” Huawei said in its lawsuit, which was filed on Friday in federal court in Washington.
Huawei contends that the equipment did not require a license because it did not fall into a controlled category and because it was made outside the United States and was being returned to the same country from which it came.
The company is not seeking any financial compensation and is not challenging the seizure itself, but is sending a message to Washington, saying “post-seizure failures to act are unlawful”, in effect charging the Trump admin with doing precisely what it, itself has been accused of. Huawei wants to force the Commerce Department to decide whether an export license is really necessary and, if not, release the withheld equipment.
The lawsuit comes amid a bitter row between two world’s largest economies, and Washington’s crackdown on Huawei. In May, the Trump administration added Huawei to the entity list, barring it from buying needed U.S. parts and components without U.S. government approval. The US alleges that Huawei could be spying for the Chinese government, a claim which the company has repeatedly denied.
Huawei CFO Meng Wanzhou, daughter of the company’s founder, has been detained in Canada since December on a U.S. warrant. She is fighting extradition on charges that she misled global banks about Huawei’s relationship with a company operating in Iran.
Of course, Huawei is not the only Chinese tech company that the White House decided to put on its trade blacklist. On Friday, five Chinese organizations – supercomputer maker Sugon, three its affiliates, and the Wuxi Jiangnan Institute of Computing Technology – were added to entity list on the grounds that their activities are allegedly contrary to US national security and foreign policy interests.
The fresh US blacklisting comes ahead of crucial talks between US President Donald Trump and Chinese President Xi Jinping in Osaka, Japan, which are intended to ease tensions between the two sides. Still, don’t expect a breakthrough: as Goldman’s trade deal odds index found last week…
… the probability of a breakthrough between the two nations is roughly one in five.