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US Formalizes Ban on Government Contracts to China's Huawei, Others

FILE - A logo of Huawei marks one of the company's buildings in Dongguan, in China's Guangdong province, March 6, 2019.

The U.S. administration unveiled rules Wednesday formally banning technology giant Huawei and other Chinese firms from government contracts, in the latest move in an escalating trade war.

The interim rule will preclude any U.S. federal agency from purchasing telecom or technology equipment from the firms "as a substantial or essential component of any system, or as a critical technology as part of any system," starting August 13.

The rules implement a ban included in the defense authorization act approved by Congress earlier this year.

The document said waivers may be granted "under certain circumstances" by an agency head for up to two years, or in other cases, by the director of national intelligence.

The new rules are part of a sweeping effort by President Donald Trump's administration to restrict Huawei, which officials claim is linked to Chinese intelligence.

It also comes amid a heated dispute between the two economic powers over international trade rules, which some analysts say could roil the global economic system.

The rules, which require a 60-day comment period, also bar contracts to Chinese firms ZTE, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company and Dahua Technology Company.

Huawei also faces sanctions that bar the export of US technology to the Chinese firm on national security grounds. That ban, which has been suspended until mid-August, could prevent Huawei from getting key hardware and software including smartphone chips and key elements of the Google Android operating system.