China has responded to a new U.S. ban targeting telecom giant Huawei, threatening to retaliate through a series of countermeasures, including putting U.S. companies such as Apple, Qualcomm and Cisco on an “unreliable entity list” that would seriously impede their sales in Chinese markets.
The U.S. Commerce Department on Friday threw a one-two punch at China’s high-tech efforts by announcing a new ban on global chip supplies to Huawei, while allowing a Taiwanese semiconductor producer to open a next-generation plant in the United States.
In an editorial published Sunday by China’s state newspaper Global Times, China said that the new sanction has thrust the two countries into “a prolonged cold war in the tech sector.”
“China is prepared to impose restrictions on or launching investigations into U.S. tech companies like Qualcomm, Cisco and Apple in accordance with Chinese laws like the Cybersecurity Review Measures and Anti-monopoly Law, and suspending the purchase of Boeing airplanes,” the editorial declared.
Adam Segal, director of the Digital and Cyberspace Policy Program with the Council on Foreign Relations, said the U.S. must take seriously China’s threat to retaliate against individual U.S. firms.
“I think it is a credible (threat). A focused retaliation on a U.S. company seems likely, especially given that the Chinese officials have defended Huawei many times and have protested the U.S. targeting of it,” he told VOA.
China’s unreliable entity list
China first announced that it is considering its own “unreliable entity list” in May 2019, largely in response to the U.S. adding Huawei to the U.S. Entity List. It then said the list would include foreign entities and persons who cause serious damage to Chinese companies by cutting off supplies for “non-commercial” reasons.
China’s Ministry of Commerce has yet to announce which companies will appear on the list or explain what restrictions will apply to entities and individuals included on the list. Companies added to the list presumably would face legal and administrative barriers, while the Chinese public would be advised against dealing with them to reduce risk.
Some experts say they expect to see a change of law or regulation to create such a list in the upcoming National People’s Congress, one of China’s most important political events.
According to analysis by O’Melveny & Myers, an international law firm, the creation of China’s “unreliable entities list” may place companies with operations in both the U.S. and China in a difficult position: comply with U.S. law and be in violation of Chinese law, or vice versa.
A ban tailored for Huawei
The U.S. Commerce Department issued a statement on Friday to amend an export control rule that “strategically targets Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”
Under the new rule, foreign companies using U.S. semiconductor and chipmaking equipment will be required to obtain a license to supply chips to Huawei or its affiliates. The rule has a 120-day grace period.