Commentary: U.S. tech restrictions risk losing Chinese market



File photo taken on Jan. 28, 2020 shows a Huawei 5G mobile phone testing speed in Huawei 5G Innovation and Experience Center in London, Britain. (Xinhua/Han Yan)

U.S. sanctions will only motivate Chinese enterprises' innovation ability. There are more and more reports that China's leading tech companies have been sharply increasing investment in developing semiconductor.

NEW YORK, July 11 (Xinhua) -- The U.S. government has constantly tightened its technological restrictions on China over the past few months, despite widespread concern that such moves would disrupt the global supply chain.

While these sanctions may bring some difficulties to China's high-tech development, they will also cost U.S. tech companies heavily and risk losing the Chinese market, which has the potential to be the world's biggest one.

On June 30, the U.S. Federal Communications Commission designated Huawei and ZTE, both China's leading telecommunications enterprises, as national security threats and banned rural carriers from buying equipment and services from them with government funds.

On May 15, the U.S. Department of Commerce (DOC) amended the so-called Direct Product Rule to restrict sales of any products using even a minimal portion of U.S.-origin technologies to Huawei and its affiliates. One year earlier, the DOC included Huawei in a blacklist of entities, requiring U.S. firms to get ratification from the government before selling products to the company.

Graduate students from China attend the Columbia University Commencement ceremony in New York, the United States, May 22, 2019. (Xinhua/Wang Ying)

Now the United States has gone even further to impose visa restrictions for Chinese students and visiting scholars, and launched tougher investigation into Chinese-American scientists working in the high-tech sector.

The United States has also pressed or even threatened other countries to stop cooperating with Huawei on 5G, trying to build a global blockade to choke the global leader in 5G technologies and impede China's high-tech development.

Doing so, the U.S. side often cites "national security threats" from Chinese products, which is unfounded and biased, as there has never been credible evidence for such claims. On the contrary, there are plenty of cases where the United States using its tech advantages to spy on the world, including leaders of its ally countries.

The U.S. tech restrictions target any foreign firms who pose challenges to the country's tech advantages, and their tactics could be extremely unscrupulous when necessary.

The French conglomerate Alstom was one victim in 2013, when it was charged with bribery crimes, fined heavily by the U.S. Department of Justice, and forced to restructure with the most important part of its business being acquired by an American company, just because it was poised to challenge America's leading position in the same business areas.

There is no doubt that the U.S. tech restrictions will severely impact the normal operations of Huawei and other Chinese companies, as well as disrupt the global supply chain. An abrupt ban on supplies will also cost U.S. high-tech enterprises substantially.

It should be noted that no enterprise in the supply chain is impervious to the restrictions, including American firms. A recent report by Boston Consulting Group found that if the United States fully bans semiconductor exports to China, U.S. semiconductor companies could lose 18 percent of the global share and 37 percent of their revenues in three to five years.

Even if the United States only maintains the restrictions already in force, U.S. companies could lose 8 percent of the global share and 16 percent of their revenues, according to the report.

Xu Zhijun, Huawei's rotating CEO, introduces achievements of 5G technology during the release ceremony for world leading Internet scientific and technological achievements in Wuzhen, east China's Zhejiang Province, Dec. 3, 2017. (Xinhua/Zheng Huansong)

The DOC's latest ban on Huawei has been widely questioned by American industry groups, warning that the ban will seriously harm American chipmaking industry.

Doug Jacobson, an international trade lawyer, was quoted in media reports as saying that the move would "have a far more negative impact on U.S. companies than it will on Huawei, because Huawei will develop their own supply chain," and will eventually find alternatives.

China firmly opposes U.S. irrational crackdown on Chinese enterprises, and tries to seek solutions in the spirit of international cooperation and distribution.

Andrew Polk, an economist at consulting firm Trivium, believed that putting Huawei on the entity list "accelerated China's tech rise." "It is going to ultimately prove the moment we lit a fire under China. And it's not going to kill Huawei. It's going to do the opposite," Polk was quoted by Quartz in 2019 following the U.S. blacklisting of Huawei.

It should be noted that U.S. sanctions will only motivate Chinese enterprises' innovation ability. There are more and more reports that China's leading tech companies have been sharply increasing investment in developing semiconductor.

With a population of 1.4 billion and fast-growing consumer capacity, China boasts a huge market for almost every industry, especially high-tech industries. The U.S. bigoted practices against China risk losing the Chinese market in the long run.