• Bryan

Huawei Is On The Frontline Of The New Tech Cold War

Last week the US and China were dialling down trade tensions with the US agreeing to reduce tariffs on $120 billion worth of Chinese-made goods followed by reciprocal action by China that halved tariffs on $75 billion worth of US goods. However, this week things appear to be moving in the opposite direction as the US Department of Justice charges the Chinese technology and telecommunications company Huawei with racketeering and conspiracy to steal trade secrets.

The Trump administration is determined to do whatever it can to try and diminish Huawei's reputation internationally, and possibly prevent it from doing business with its allies. Huawei is also charged with engaging in wire fraud to steal intellectual property, adding to several other charges that have been lodged against the company. This demonstrates that President Donald Trump is compartmentalizing his dispute with China. In the absence of a comprehensive resolution to all areas of disagreement with China - which by the way is unlikely - President Trump is willing to give some ground on trade while taking a very tough line on Huawei. It is true that Huawei poses a national security threat in relation to espionage because of the law that requires Huawei and other entities and individuals to cooperate with the Chinese state. However, the Trump administration has even greater considerations driving its stance on Huawei. President Trump made clear in Tweets a year ago, his concern about how far behind the US had fallen in the development of 5G technology. The administration understands the geopolitical importance of 5G, which will transform the way the world operates in terms of business and finance and Internet infrastructure and network provision. Unlike major US telecommunications companies, which came late to the 5G party in terms of investment and resources, Huawei has the largest research and development department in telecommunications that is constantly improving the company's 5G capabilities. The investment is paying off for Huawei as it gains ground globally as the main provider of wireless technology to several countries. But the growing dominance of the company isn't limited to its activities in other parts of the world, it also has a significant presence in the US, especially in rural areas where wireless technology is required. Experts in the field are suggesting that if things continue this way, then new industries of the future and new ways of making a living, will be in China and not in the US. The Trump administration sees Huawei as the primary delivery vehicle for China's dominance in 5G and future technologies and is therefore prepared to do whatever is required to try and stop Huawei.


Interested in learning how to trade fundamentals yourself? Check out our course here!

Click Here To Become A Member To understand and stay on top of all market themes and how to implement into trades.