Trump Agrees to Timely Decisions on Huawei as China Talks Near
Any easing of restriction on Huawei is expected to be met with a resumption of Chinese purchases of U.S. agricultural commodities.
(Bloomberg) -- The U.S. and China are moving closer to their first face-to-face trade negotiations in months, with a meeting between tech chief executives and President Donald Trump on Monday marking another step toward easing a ban on sales to China’s Huawei Technologies Co.
The White House invited many of the U.S.’s biggest technology companies to discuss economic issues including a possible resumption of sales to Huawei. Trump and senior administration officials met with CEOs from Alphabet Inc.’s Google, Broadcom Inc., Cisco Systems Inc., Intel Corp., Micron Technology Inc., Western Digital Corp. and Qualcomm Inc., according to White House spokesman Judd Deere.
Deere said the CEOs had requested "timely" decisions on license applications to sell to Huawei and Trump agreed. National Economic Council director Larry Kudlow told reporters Tuesday that the meeting was positive and cited it as one reason he’s optimistic that in-person talks with China are likely to resume soon.
The meeting between government officials and U.S. technology leaders may assuage Chinese concern that one of its largest technology companies is under existential threat from a blacklisting. But lawmakers and others in the administration who oppose any relief for Huawei could stymie any tentative progress in resolving a trade dispute between the world’s two largest economies.
Huawei Suppliers Rise in Asia After Trump Discusses Easing Ban
Negotiating Mission
Chinese state media on Monday hailed signs of progress on Huawei as part of what it called efforts to display “sincerity and goodwill’’ by both sides. Any easing of restrictions on Huawei is expected to be met with a resumption of Chinese purchases of U.S. soybeans and other agricultural commodities.
“We expect, we hope strongly that China will very soon start buying agriculture products, number one as part of an overall deal and part two as a goodwill gesture," Kudlow said. “So I’m going to strike a note of hopefulness, and I think we will see the ag purchases come on soon.”
The moves, which followed a meeting between Trump and China’s Xi Jinping in Japan late last month, are meant to clear the way for a trip to China by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin as soon as next week.
Such a trip would mark the first high-level negotiating mission to China since talks broke down in May.
Business Perspective
Kudlow and Mnuchin led the meeting Monday, which also included Commerce Secretary Wilbur Ross. Lighthizer attended as well, according to people familiar with the gathering. It was called to inject a business perspective into a debate that has often been driven by an intelligence and national security community eager to see an outright ban on Huawei, one of the people said.
Xiaomeng Lu, international policy manager and head of the China practice at Access Partnership, said the meeting is an opportunity for U.S. companies to demonstrate how resuming sales to Huawei’s consumer business can help American corporations innovate better and outperform the Chinese telecoms giant in the long run.
Trump will very likely face backlash from Congress if he chooses to allow shipments to the Chinese telecoms giant, especially after the Washington Post Monday reported that the company helped build North Korea’s 3G network in a potential violation of U.S. export control laws.
Legislative Push Back
Many U.S. lawmakers, including hawks in Trump’s own party, are opposed to the president’s approach on the issue and have made the case for a complete decoupling of supply chains that would cut off Huawei from American components.
“At every turn, we learn more and more about what a malign actor Huawei is,” Senators Tom Cotton and Chris Van Hollen said in a statement following the Washington Post report. The revelation underscores Huawei’s serial violations of U.S. law, they added, saying it’s crucial Congress pass legislation they’ve sponsored.
A spokesman for the Commerce Department, which oversaw the blacklisting of Huawei in May, declined to comment.
Semiconductor Technology
Most of those invited are suppliers of technology to Huawei, one of the biggest makers of smartphones and computer-network equipment. The chipmakers in particular have said that a blanket ban on doing business with the Chinese company may do more harm than good to U.S. national security.
Many of the components they supply to Huawei can be easily obtained from companies elsewhere and jeopardizing their access to their biggest market risks cutting them off from revenue that’s vital to investing in their ability to maintain the U.S.’s lead in semiconductors, they’ve argued.
Intel said in an emailed statement after the meeting that the company appreciated the opportunity to share its “perspective on economic issues, including how the current trade situation with China impacts the critical US semiconductor industry."
Micron CEO Sanjay Mehrotra said the company appreciated the opportunity to meet and stressed that "open and fair trade are essential to ongoing U.S. technology leadership."
Chinese companies, meanwhile, have begun asking U.S. exporters about buying agricultural products and also applied for exemptions from China’s retaliatory tariffs on the goods, state-run Xinhua News Agency reported Sunday.
The Chinese government met Friday with domestic soybean buyers about a plan to purchase more U.S. supplies, according to people familiar with the situation. That could include waiving China’s retaliatory tariffs, but details have not been decided yet, the people said.
Face-to-Face
With China’s top leadership likely to be out of Beijing from early August for their annual seaside conclave, people close to the talks say there is a narrow window for face-to-face meeting in the coming two weeks. Mnuchin, Lighthizer and their Chinese counterparts talked by phone last week for the second time since the two nations’ presidents met.
Separate to the possible agricultural purchases, China announced Saturday new measures to further open up the nation’s financial sector to foreign investors. Foreign companies will be able to take a stake in or control entities including wealth management units of commercial lenders, pension fund managers and currency brokers.
The changes weren’t announced as directly related to the trade talks with the U.S., but American criticism of China’s protection of various domestic markets is a core issue in the ongoing trade tensions.
--With assistance from Miao Han, Justin Sink, Laura Litvan and Mark Milian.
To contact the reporters on this story: Shawn Donnan in Washington at sdonnan@bloomberg.net;Jenny Leonard in Washington at jleonard67@bloomberg.net;Ian King in San Francisco at ianking@bloomberg.net
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alister Bull
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