Would the American embargo on the sale of certain strategic products to China be so easy to circumvent?
After the decision of the Donald Trump administration to include Huawei in the list of companies under embargo, the Chinese firm itself admitted to experiencing major supply difficulties. But a few billion in subsidies from the Beijing government would have finally made it possible to circumvent this embargo.
Why is Huawei under embargo?
Like other Chinese companies in the new technology sector, Huawei’s activities are always accompanied by a strong suspicion of subservience to the Chinese Communist Party, and generally of espionage for the latter’s benefit. It is this argument, coupled with a more or less open trade war between China and the United States, launched by the Trump administration in 2018, which ended up affecting Huawei.
Thus, the company is added in 2019 to theexport control list, which prohibits, among other things, American companies from selling certain products to it, starting with the chips essential to most of its activities. A terrible decision for Huawei, whose CEO Guo Ping had recognized that it created enormous difficulties.
So last year, Huawei received $30 billion in subsidies from the Chinese government to enable it to launch its own production of microchips. At least that was the stated goal.
Huawei would have found a way to circumvent the sanctions
Because, according to a newspaper report Bloomberg, if the company has indeed bought two factories and launched the construction of three others for this purpose, it is not really certain that these are actually used to produce these chips. At least one detail suggests this to the American Semiconductor Industry Association: none of these factories seem to take on a name that is linked to Huawei.
Because if theexport control list prevents American companies from selling products to Huawei, it is not generalized to all Chinese companies. And for Bloomberg, the objective of these new factories, by trying to avoid being affiliated with Huawei, is above all to circumvent the embargo to obtain various American products and technologies, before subsequently transferring them to the blacklisted company . A simple sleight of hand, therefore, but it is now widely probable that the American administration, at the very least, will investigate the question… and at worst, further toughen the regime of trade sanctions against China.
Sources: Bloomberg, Reuters
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