The latest US ban on Chinese tech is all noise, no substance

US Chinese tech import ban
Image by JB_Photography | Bigstockphoto

The US has banned the sale of all electronics from Chinese tech firms Huawei and ZTE into the country on the grounds of national security in what is largely a symbolic move with no real substance. However it may pave the way for further restrictions in the future.

The US FCC released an order on Friday which also banned surveillance camera makers Dahua Technology, Hikvision and 2-way radio maker Hytera.

This marks a step up in action by the FCC in two ways.

  1.  Scope: Prior to this ruling it was really only mobile handsets and mobile network infrastructure that could not be imported from Huawei and ZTE. Now it is all electronics, meaning that enterprise products such as routers, switches, Wi-Fi and so on will also now no longer be able to be imported.
  2. Companies: The FCC has moved on from targeting civilian communications and is now also taking action on surveillance and private communications with the addition of Hikvision and its peers. This will have a significant impact, as Chinese cameras are used widely across the US, while some US agencies use Hytera radios. This order means no more can be sold. Meanwhile, the FCC has asked for consultation as to whether what is in use today should be removed and replaced.

Impact on Huawei is minimal

These new regulations are very unlikely to cause Huawei further significant problems, as sales to the Americas are already down to just 4.6% of the total. Consequently, these moves are fairly symbolic in nature.

One can make an argument that there is a credible data security threat from using Huawei or ZTE devices and equipment in one’s network, but hard evidence of spying or data siphoning has yet to surface.

In fact, most of the scandals where an app has been sending user data to China has, in my opinion, been caused by sloppy programming rather than a malicious attempt to steal my mother’s email address, phone number and the fact that she likes playing Candy Crush.

There had been some hope of a relaxation of the tension between the US and China after President Biden met with President Xi at the G20 meeting in Indonesia. However, this latest action demonstrates that this was just noise.

The last six weeks have seen a significant increase in restrictions that are being placed on China’s nascent semiconductor industry, as well as other areas like AI where RFM already considers China to be one of the leaders.

More US restrictions to come

These new regulations also leave the door open to further restrictions and actions in the future, as the new regulations have clearly been designed as a framework rather than a set of exhaustive rules.

Hence, I think that more restrictions are likely to come, and US companies with a lot of revenues in China may end up as collateral damage.

This is the one area that I think will lead the Department of Commerce and other regulatory agencies to tread carefully. The US and Chinese economies remain tightly intertwined, and separating them is going to be painful.

Meanwhile, this uncertainty – plus the Zero-COVID-related problems in China – will further delay the much hoped-for recovery in the Chinese technology sector. There is plenty of value to be had in this sector, but one is now going to have to wait even longer to realize it.

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