China calls out U.S. ‘wrong actions’ as Huawei ban rattles supply chains

BEIJING (Reuters) – China said the United States needs to correct its “wrong actions” for trade talks to continue after it blacklisted Huawei, a blow that has rippled through global supply chains and battered tech shares as investors fear a technology cold war.

FILE PHOTO: A man takes a picture of a Huawei logo at the Huawei European Cybersecurity Center in Brussels, Belgium, May 21, 2019. REUTERS/Francois Lenoir/File Photo

Japanese conglomerate Panasonic Corp joined the growing list of global companies which have said they are disengaging from Huawei Technologies Co Ltd, the world’s second-largest seller of smartphones and the largest telecom-gear maker, saying it had stopped shipments of some components.

Its move came a day after British chip designer ARM said it had halted relations with Huawei to comply with the U.S. supply blockade, potentially crippling the Chinese firm’s ability to make new chips for smartphones. Huawei uses ARM blueprints to design the processors that power its smartphones.

“If the United States wants to continue trade talks, they should show sincerity and correct their wrong actions. Negotiations can only continue on the basis of equality and mutual respect,” Chinese Commerce Ministry spokesman Gao Feng told a weekly briefing.

“We will closely monitor relevant developments and prepare necessary responses,” he said, without elaborating.

The United States has accused Huawei of working for the Chinese government and activities contrary to national security, accusations Huawei denies. The Trump administration softened its stance slightly this week by granting the firm a license to buy U.S. goods until Aug. 19 to minimize disruption for customers.

Japan’s Toshiba Corp said it had resumed some shipments to Huawei after temporarily suspending shipments to check whether they included U.S.-made components.

“What we are witnessing is a potential reconfiguration of global trade as it has stood since World War II … investors should begin thinking about how sensitive their portfolios are to global supply chain-exposed shocks,” Saxo Bank’s head of equity strategy, Peter Garnry, wrote in a note titled “Are you ready for a cold war in tech?”

Huawei founder Ren Zhengfei told Chinese financial magazine Caixin on Thursday that he did not see ARM’s decision to suspend business with Huawei as having an impact on the company.

He said that Huawei had a long-term agreement with ARM and speculated that the British firm had made such a move because its parent, Japan’s SoftBank Group Corp, was waiting for U.S. approval for the merger of Sprint Corp, which it owns, and T-Mobile US Inc.

Industry experts have questioned Huawei’s claims minimizing the impact of moves that make it hard for the company to do business with American firms.

No further trade talks between top Chinese and U.S. negotiators have been scheduled since the last round ended on May 10, the same day U.S. President Donald Trump sharply increased tariffs on $200 billion worth of Chinese goods and took steps to levy duties on all remaining Chinese imports.

Speaking at a separate briefing in Beijing, a spokesman for China’s Foreign Ministry reiterated that China’s door was always open for talks, but that the situation with Huawei and other Chinese tech firms targeted by the United States made this difficult.

“Relevant U.S. actions obviously do not create a good atmosphere or environment for consultations,” spokesman Lu Kang said.

China has retaliated with its own levies on U.S. imports, but it was Washington’s subsequent move against Huawei that took the trade war into a new phase, stoking fears about risks to global growth and knocking financial markets.

Reporting by Stella Qiu, Se Young Lee; Writing by Tony Munroe; Editing by Christopher Cushing and Nick Macfie

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