Go back up there tension between the US and China. The US president, Donald Trump, announced during a press conference new sanctions against Beijing. The law, underlined the number one in the White House, was approved unanimously by Congress, thus bringing Republicans and Democrats into agreement (almost a miracle these days). The new sanctions they will "punish" the Chinese leaders which apply the new security rules in Hong Kong and all the banks that have business with them.
Not only that: “Today I also signed an executive order that puts end of preferential treatment for Hong Kong which will now have the same conditions as mainland China – said Trump -. There will no longer be privileges and preferential financial treatments, and there will also be a stop to technology exports”.
The sanctions announced by Trump follow, among other things, the umpteenth blow inflicted by the US on Huawei. After extending the ban on US companies from using Huawei and ZTE network equipment until May 2021, the US Department of Commerce has banned the Chinese company from supplying chips that use design tools, components and machinery produced with US technology, hitting the Asian company on very slippery ground (Huawei has always focused on imports on semiconductors). The battle is therefore not only commercial, but also and above all technological and is firmly intertwined with the global development of 5G.
Despite this, officially, unleashing the new US offensive, as mentioned, was the national security law in Hong Kong, entered into force on July XNUMX, which punishes acts of subversion, secession, terrorism and collusion with foreign forces committed in the former British colony and opens up the presence of Chinese security agencies on the territory. A law that de facto criminalizes internal dissent, trying to put a stop to the protest movements that filled the streets of the city before the outbreak of the coronavirus pandemic.
Beijing, however, does not seem willing to be intimidated. Through a note, the Chinese Foreign Ministry reiterates that no country has the right to interfere "in China's internal affairs". “American attempts to obstruct national security law in Hong Kong will never be successful. To safeguard its legitimate interests, China will give a necessary response and impose sanctions on relevant US persons and entities,” the statement read. Finally, Beijing urges the United States to "correct its mistakes" and stop interfering in China's internal affairs.
At the same time comes the (hard) response to the United Kingdom relating to the decision taken on July 14 by Johnson of exclude Huawei from the development of 5G on British territory, indicating as the motivation behind his choice "the latest decisions by Washington" on chips which will in fact create major supply problems for the Chinese giant, forcing him to turn to sources considered by London to be very dangerous.
This time the reply is entrusted to an article of Global Times, a newspaper published by the People's Daily, the official press organ of the Communist Party of China. The choice of Downing Street is considered "the result of heavy pressure" exerted "by Washington", a decision to which China will have to respond forcefully. “Is it necessary for China to strike back at Britain, otherwise we wouldn't be too easy to bully? There retaliation should be public and painful for the UK”, reads the editorial which, however, underlines: "it is not necessary to transform it into a clash between China and Great Britain".
There will be no confrontation, perhaps, but the chances of the UK being able to wrest China from a “favorable” trade deal for post-Brexit seem to shrink significantly.
With London's decision, the trade battle between the US and China that monopolized the attention of the markets throughout 2019 seems to be spreading to Europe as well. Except that by now the field has moved to another sensitive area: technology in general and the development of 5G in particular.
A market, that of the fifth generation standard, dominated by three players: in fact, they are alongside the Chinese giant Huawei Ericsson (Swedish) and Nokia (Finnish) with the last two which in the last year have taken advantage of the difficulties created by the Shenzhen multinational by the US bans to recover part of the previously existing gap, even if the prices guaranteed by Huawei still remain unbeatable.
It is certain that Chinese technological dominance will still be difficult to scratch even if, and Trump is also aware of this, a fundamental role in this clash will be played by the European Union. It is no coincidence that the American president quoted Italy directly yesterday. Although in Rome, for the moment, there is no discussion on a direct exclusion of Huawei from telecommunications, last week the Conte government exercised the Golden Power on two 5G supply contracts from Huawei to Tim and Wind. In parallel, the company chaired by Salvatore Rossi has decided to exclude Huawei from the tender for the construction of the core part of the 5G network in Italy and Brazil.
Two moves that have alarmed Chinese society which fears that Johnson's choice could also change the mind of other European countries. So much so that after the announcement of the British decision, Huawei has launched an appeal to our Executive: “We expect the Italian government to continue its digitization process on the basis of objective, independent and transparent security criteria for all suppliers, preserving diversity and competition in the market” reads a note.
And the other countries? Last week, the French cybersecurity chief announced that companies doing business with Huawei will only have time-limited licenses available, while Germany will communicate its indications only in September, even if German Chancellor Angela Merkel does not seem willing to do so. exclude the Chinese from the development of 5G and has always said she is against any type of ban. In any case, the common aim will be to guarantee safety, avoiding jeopardizing the development of 5G and above all trying to stay within the previously established times (otherwise costs could rise). Not an easy balance to maintain.
