US-China trade war

Trump says Huawei could be part of trade deal with China

Surveillance cameras at Huawei's booth at a security exhibition in Shanghai. The Trump administration is seeking to choke off Beijing's access to key technologies by limiting the sale of vital US components to the Chinese telecommunications equipment
Surveillance cameras at Huawei's booth at a security exhibition in Shanghai. The Trump administration is seeking to choke off Beijing's access to key technologies by limiting the sale of vital US components to the Chinese telecommunications equipment-maker over security concerns.PHOTO: REUTERS

Company's talks with lenders to raise funds could show extent of its financial strength

WASHINGTON • US President Donald Trump has said that China's Huawei Technologies, which was put on a United States blacklist earlier this month, could be part of a trade pact with the country.

"It is possible that Huawei even would be included in some kind of a trade deal," Mr Trump told reporters at the White House on Thursday, without providing details. "Huawei is something that is very dangerous. You look at what they have done from a security standpoint, from a military standpoint, it is very dangerous."

The Trump administration is seeking to choke off Beijing's access to key technologies by limiting the sale of vital US components to the Chinese telecommunications equipment-maker over security concerns.

The US had held off on blacklisting Huawei out of concern the move could disrupt trade negotiations with China and took action only after the last round of trade talks hit an impasse, according to people familiar with the matter.

The decision to curtail the Shenzhen-based company's access to US suppliers unfolded quickly once trade talks broke down.

The US Commerce Department's action last week requires American suppliers of Huawei, a crown jewel of Chinese manufacturing, to seek US government permission to do business with the company.

DANGEROUS COMPANY

It is possible that Huawei even would be included in some kind of a trade deal... Huawei is something that is very dangerous. You look at what they have done from a security standpoint, from a military standpoint, it is very dangerous.

U.S. PRESIDENT DONALD TRUMP

The decision touched off a massive disruption in technology supply chains, hitting some of the biggest component-makers.

Intel, Qualcomm and Broadcom told their employees they will not provide products to Huawei until further notice.

Trade talks between Beijing and Washington deadlocked this month as Mr Trump accused China of backing out of a deal that was taking shape with US officials, saying China reneged on an agreement to enshrine a wide range of reforms in law.

Mr Trump increased levies on US$200 billion (S$275 billion) worth of Chinese imports to 25 per cent from 10 per cent, prompting retaliation from Beijing.

The US has said it is prepared to hit China with new tariffs even as Mr Trump said he will meet Chinese President Xi Jinping at next month's G-20 Summit in Japan, an encounter that could prove pivotal.

 
 
 

The Trump administration has offered a reprieve before to a Chinese telecoms company, ZTE, in a similar situation as Huawei.

Last year, it announced a seven-year ban on US exports to ZTE after it said the company violated sanction agreements by selling American technology to Iran and North Korea.

The ban forced ZTE to announce that it was shutting down. Mr Trump then reversed course, saying he was reconsidering penalties on ZTE as a personal favour to Mr Xi.

Shortly after, his administration announced it would allow the company to stay in business after paying a fine, changing its management and providing security guarantees.

Meanwhile, Huawei is seeking about US$1 billion from a small group of lenders, its first major funding test after getting hit with the US curbs.

The world's largest provider of networking gear is seeking an offshore loan in either US or Hong Kong dollars, said people familiar with the matter who asked not to be identified discussing private information. The company is targeting maturities of five and seven years, the people said.

The company's talks with lenders are still at an early stage, and there is no guarantee a deal will happen.

If it does, the loan's pricing - as well as the identities of the participating banks - could provide further clues on the mar-ket's perception of Huawei's financial strength.

Huawei's latest fund-raising attempt comes about four months after it obtained a loan of 14 billion yuan (S$2.8 billion) from five Chinese banks.

Last September, the company raised US$1.5 billion offshore from a group of 10 mostly international banks.

BLOOMBERG

 
A version of this article appeared in the print edition of The Straits Times on May 25, 2019, with the headline 'Trump says Huawei could be part of trade deal with China'. Print Edition | Subscribe