The Chinese telecom company Huawei has been incredibly resilient after receiving a full blast from the American White House in the weeks past, as evidenced by new reports that financial losses have hurt Huawei a lot less than expected.
American officials went so far as to put Huawei on a Commerce Department ‘entity list’ which would prohibit the Chinese company from buying American components and other products and services from American vendors. That was in response to a White House executive order based on accusations that the Chinese could use Huawei to spy on American companies or other parties.
Now, there’s news that the trade ban will only cost Huawei about a third of what was previously estimated by the company’s CEO Ren Zhengfei.
Where Zhengfei had projecting $30 billion of lost revenue, new numbers cited in a CNet story by Sean Keane today show that that amount could be more around $10 billion.
“Eric Xu, the controversial Chinese phone maker‘s deputy chairman, told reporters that it expects a sales reduction of $10 billion for its phone division,” Keane writes.
In addition, breaking news after the ban showed that American chipmakers found ways to keep supplying Huawei with components after all.
Essentially, according to news from Bloomberg, lawyers for the technology companies went through the books and found end runs around the blacklist as companies were struggling to maintain their operations in the face of a sudden change.
In the wake of that fiasco, many talked about the interconnectedness of the global economy and how protectionism fails. If American companies have sufficient incentive, analysts argued, they will often find ways to do what they want to do, despite laws suddenly and chaotically enacted by a particular administration.
“We might be moving toward a bipolar world in digital technology with two walled-off ecosystems: U.S. and Chinese,” wrote commentator Fareed Zakaria earlier this year. “This division would erode the open world economy, the deep levels of interdependence and the cross-border investments and supply chains that characterize the global economy today. Before traveling down this road, the United States should ensure that it has the smartest strategy in place to deal with the real challenge from China.”
Stay connected to world financial news to see the eventual results of chaotic US/China trade conflict, which seems to whipsaw back and forth, as economist continue to note evidence that a recession may be coming.
