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With New Huawei Phone, China Mocks Western Sanctions

Travis Cunha

Sep 15, 2023

Sanctions have Failed to Slow Down China


The global technology sector and the United States were alerted when the Chinese company Huawei unveiled their latest smartphone, the "Mate 60 Pro +". What sets the Mate 60 apart is the advanced technology employed by Huawei, surpassing previous expectations of the United States. These recent advancements demonstrate that the sanctions imposed by the United States have not succeeded in impeding the progress of the Chinese tech giant and world's largest worker cooperative.


The Mate 60 uses a specific type of nanochip at a size of seven nanometers, defying western expectations that they were somehow stuck at constructing them at fourteen nanometers. Analysts from the Center for Strategic & International Studies asserted that achieving this seven-nanometer level would be impossible without access to specialized restricted equipment from ASML, the leading manufacturer of semiconductor lithography equipment worldwide. The Asia Times reported that SMIC had asserted it had reached this milestone before the U.S. imposed export controls in October of last year. However, it is with Huawei's phone that we are witnessing the first instance of a chip manufactured using SMIC's seven-nanometer process being publicly deployed.


Technology analyst Dan Hutcheson explains further by stating, “And seven nanometres is significant because it says that they've broken past the 14 nanometre barrier that people had thought, that the regulators thought they could stop them at. And they've gone far beyond that and hit seven nanometres.” The chips are being created by the Semiconductor Manufacturing International Corporation (SMIC), the United States sanctioned SMIC on December 18, 2020. This action was taken due to alleged concerns over potential military applications of SMIC's technology and ties to the Chinese military.


In 2019, former Republican President Donald Trump added Huawei to the entity list due to allegations of sanctions violations, concerns about spying capabilities, and accusations of intellectual property theft. The sanctions have been criticized by the Republican Party in how they have been implemented. Although they are blocked from doing business with the Chinese company and many others, the Biden administration has granted licenses to circumvent the sanctions in certain cases. It is noteworthy that Huawei, a major casualty of the US-China conflict, was among the beneficiaries of these granted licenses. From November 2020 to April 2021, suppliers to this Chinese tech giant were granted 113 licenses amounting to a total value of $61 billion.


An American Enemy Becomes a Symbol of Success


Gina Raimondo is the United States Secretary of Commerce in the Biden administration. She was nominated by President Joe Biden and confirmed by the Senate in March 2021. Since being nominated, she has made attacking China’s economy and technology sector her number one priority. Raimondo seems angry that we are no longer in the time where foreign companies are dominating China, and sees this as an issue the United States needs to address.


In September of 2021 she expressed her dissatisfaction with China not letting Western corporations dominate their economy, "They are not respecting intellectual property and stealing IP of American companies. They're putting up all kinds of different barriers for American companies to do business in China."



This difficulty to penetrate the Chinese market is being reflected by other institutions as well. The International Trade Association released a report titled “Market Challenges” to their page about China. The report states “The PRC remains a challenging place to do business” due to “Government-led emphasis on self-reliance is creating additional uncertainty for foreign businesses.” and that “Members remain committed to the PRC market, but many long standing business challenges remain.”


Raimondo blatantly ignores the vast amount of sanctions on Chinese companies and fails to mention how her own nation who allegedly supports a “free market” is hampering U.S. businesses from dealing in China. The Chinese public is well aware of Raimondo’s past comments towards them and used her as a symbol of the latest advancement by Huawei.


Last week, Raimondo journeyed to Beijing and Shanghai for discussions with government representatives, marking the first visit by a U.S. Commerce secretary to China in half a decade. Upon returning, she stated, "I did, myself, personally, talk to over a hundred CEOs of U.S. businesses before going to China, and to say that they were desperate for some kind of a dialogue is not an exaggeration," Raimondo continued, "I'm not going to say we're going to solve every problem, because we won't. But to even find some practical solutions, I have to be the voice of business and put it to the Chinese government, and give them a chance to make some changes and show some action."


During her visit to China, she also became the symbol of Huawei’s recent technological advancement. Following the phone's launch, technologically altered  advertising campaigns showcasing Raimondo as a Huawei brand ambassador have inundated Chinese social media platforms. In the beginning of one clip, Raimondo asserts, “No commerce secretary has been tougher than I on China,” followed by a sequence of manipulated images portraying her alongside Huawei's latest phone.

 

They have Sown the Wind, and they Shall Reap the Whirlwind


On the day of the phone's launch, a Twitter/X clip captures a bustling Huawei store, while the adjacent Apple store appears deserted, save for disheartened-looking employees who might be second-guessing their choice of employer. This video, depicting the contrasting treatment of the leading tech companies from both competing nations in the Chinese market, could potentially mirror a future that the United States may find itself responsible for shaping.


The Chinese government is poised to extend its prohibition on iPhone usage to encompass government-affiliated institutions and state-run enterprises. China has determined that the iPhone poses a threat to national security. However, restricting the use of Apple's smartphone within certain Chinese ministries is evidently just the initial phase, as this restriction is anticipated to encompass personnel at state-owned corporations and government-backed agencies.


The potential impact of such a ban on future iPhone sales in China could be substantial. For instance, state-owned entities like PetroChina have a workforce exceeding 500,000 individuals. When applied to all affected companies and agencies, Apple could potentially face the loss of millions of iPhone users in China this year. China stands as the biggest international market for the company's goods, accounting for roughly a fifth of its total revenue last year. While Apple doesn't publicly disclose specific iPhone sales figures by country, analysts from research firm TechInsights suggest that last quarter, there were more iPhones sold in China than in the United States. Moreover, the majority of Apple's iPhones are manufactured in Chinese factories.


Following the news of the potential expanded ban, Apple (AAPL) notched its largest daily fall in over a month on Wednesday. The company lost about $200 billion in two days, and its stock is currently the worst performer in the Dow Jones Industrial Average after falling 2.9%. The United States should take this as a sign that it is time to alter their foreign policy. If sanctions are still the go-to tool of international diplomacy, it will only be a matter of time before only the United States and its "allies" buy Apple products, while the rest of the world advances with Huawei. It is becoming more clear everyday why China and their allies have chosen Win-Win Cooperation as their method instead of the predatory policies implemented by the United States; using sanctions is simply bad for business.

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