4 ms·

U.S. Holds Off on Huawei Licenses as China Halts Crop-Buying

68 points by tareqak 7y ago

traderjane 7y ago
The trade-off feels wrong from a naive perspective. Huawei withholding tech can damage US tech competitiveness, whereas the US withholding soybeans... does what? Raise the prices for soybeans in China? Make China go elsewhere for soybeans that the rest of the world can provide? Can the US similarly turn to alternative Huawei?
- mlindner 7y ago
  You've got it quite backward. First, China halted soybean sales, US never withheld soybeans. Secondly, US withheld licensing Huawei again for tech sales, as in it blocks US companies from selling to Huawei.
  - JustARandomGuy 7y ago
    >China halted soybean sales, I'm sure it was a mistype, but China halted soybean purchases (not sales) from US soybean farmers and now possibly other agricultural products.
    - deleted 7y ago
      [deleted]
    - deleted 7y ago
      [deleted]
    - Scoundreller 7y ago
      According to: https://oec.world/en/profile/hs92/1201/ https://oec.world/en/profile/hs92/1201/ China imports 63% of traded soybeans. The US accounts for 38% of exported soybeans. Based on that alone, China is going to have to reduce its soybean consumption. This is beyond one of those silly games where one country puts up a wall, so everyone else just navigates around it and wastes money on shipping.
      - Junk_Collector 7y ago
        Soybeans account for about 2.5% of China's total imports and almost 10% of their imports from the US. Even though, on the whole, China exports a lot to the US and imports little (about 4 to 1 I think), China is a big food importer and the US is a big food exporter. When the US starts hitting Chinese companies with tariffs or through license restrictions, China doesn't have much space to retaliate because they have already closed off as much of their market as they can and only really import food in large quantities for consumption inside the country. They can't restrict imports of integrated circuits because we are doing that to them on our end and that basically leaves advanced medical technology and petroleum as strong retaliatory targets for China which China desperately wants. Of course, the consumer ultimately pays for tariffs, or scarcity in this case, so we can expect the costs of food to rise in China. Couple this with the slowing economy and the recent devaluing of Chinese currency it could be a squeeze on the Chinese middle class.
    - mlindner 7y ago
      Yes, fixed. Thanks. Edit: Apparently I can't edit it.
  - deleted 7y ago
    [deleted]
- thedudeabides5 7y ago
  I’m pretty sure that’s the whole point. Who’s interest would it serve for the US to be entirely dependent technically from a company with published ties to the CCP state security apparatus.
- tedk-42 7y ago
  It's not an economic move, it's a political one. Trump needs votes from agricultural states like Ohio which would be severely impacted by these export cuts.
  - reaperducer 7y ago
    You're almost right. According to this past Sunday's New York Times, the play here is that Trump raised tariffs on China this time because it refused to stop selling fentanyl to the United States. Naturally, this will be a big play in rural states where it's a big problem. For some reason, the Times was the only place I saw this reported. Every other medium I looked at just glossed it over as "Evil Trump is raising tariffs on China and that means your iPhone will cost more!"
    - rgbrenner 7y ago
      Google says the fentanyl part was on npr, wsj, reuters cnbc, bloomberg, etc. Trump even tweeted it. But oddly I didn't hear about this until your post. So thanks for mentioning it.
      - mbreese 7y ago
        Completely agree -- I didn't hear about it either until this post -- and I'm in an area of the country where this would be important news. But that's the problem with so much noise, when there is a sliver of signal, it just gets lost.
    - dirtyid 7y ago
      China rescheduled fentanyl in response to Trump on May 1st. https://www.whitehouse.gov/briefings-statements/statement-chinas-class-scheduling-fentanyl/ https://www.whitehouse.gov/briefings-statements/statement-ch... One month later: "Most fentanyl is now trafficked across US-Mexico border, not from China" https://wjla.com/news/nation-world/most-fentanyl-is-now-trafficked-across-us-mexico-border-not-from-china https://wjla.com/news/nation-world/most-fentanyl-is-now-traf... Because Mexico is importing fentanyl precusors from China and taking over distribution like everyone predicted. Not much more China can do, you can't exactly ban basic chemistry.
- reaperducer 7y ago
  the US withholding soybeans... does what? There was a piece about this on the radio a few months ago. It's actually a big deal. My memory isn't exact, because of the passage of time, but essentially, China needs America's soybeans because it can't grow enough of them on its own. And it needs the soybeans to feed its livestock in order to feed its people. The natural thought is, "China can just buy soybeans elsewhere." Which is true. Except that there are not enough countries producing soybeans for export to fill the quantity that China requires. A more important problem for China is seasonality. When America's soybeans are ready to harvest, Brazil's soybeans are just being planted, and vice versa. So it leaves China eventually in a position where it can't/won't get soybeans from the U.S., Brazil doesn't have any soybeans to send, and none of the other countries can make up the defecit. Therein lies the rub.
  - petre 7y ago
    Totalitarian governments do not care too much about their people or what they're eating. For them people are mere means of production, just like tractors or medieval peons. They only care about exports and hard currency. If soybeans are used to feed what becomes exported goods (cattle, beef?), then it's a problem. If there's a shortage of soy sauce, no so much of a problem. Most of that would go to exports anyway, while the majority of Chinese people will use something else in their food.
  - User23 7y ago
    Soybeans are literally a commodity. Some third country will just buy the US soybeans and sell them to China. Edit: Commodities are fungible. They are things like gold, pork bellies, soybeans, and so on where there is no meaningful difference based on where they were produced. Buyers from some third country will buy soybeans from the USA, relabel them as originating in their country, and flip them to China for a profit. Trade circumvention is nothing new[1]. The US seller doesn't even have to be complicit, once they deliver to the third party they have no control over the labeling and they're not liable to care much either. Edit: Regarding 5G hardware: "The basic idea is that there is little differentiation between a commodity coming from one producer and the same commodity from another producer. A barrel of oil is basically the same product, regardless of the producer. By contrast, for electronics merchandise, the quality and features of a given product may be completely different depending on the producer."[2] So, no, 5G hardware is not a commodity. [1] https://agmetalminer.com/2017/05/24/what-is-trade-circumvention-hint-its-certainly-nothing-new/ https://agmetalminer.com/2017/05/24/what-is-trade-circumvent... [2] https://www.investopedia.com/terms/c/commodity.asp https://www.investopedia.com/terms/c/commodity.asp
fspeech 7y ago
Google apps licenses may not be that big a stick for Huawei. What appears to be happening is that Huawei swaps market shares with the likes of Xiaomi and Oppo/Vivo. Huawei gains shares in China and cedes shares outside of China. I was puzzled when Qualcomm reported that its Chinese customers were buying Huawei chips. But it becomes understandable if they segregate the competition by geographic areas. So Huawei gains chip customers from the swap as well.
jrochkind1 7y ago
> The White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei Technologies Co. after Beijing said it was halting purchases of U.S. farming goods, according to people familiar with the matter. > ...American businesses require a special license to supply goods to Huawei after the U.S. added the Chinese telecommunications giant to a trade blacklist in May over national-security concerns. Uh... this doesn't sound like a decision based on national security concerns, right? If the US requires a special license to buy from Huawei due to ties to Chinese state security... what does that have to do with how many soybeans China buys, and why would the latter affect the former? Does Huawei have less worrisome ties to Chinese state security when China buys more soybeans? This is obvious to everyone, that it's got nothing to do with national security concerns, it's just a trade war entirely unmoored from the previous free-trade consensus? The administration feels no need to hide it? And yet won't actually just say it either, they still provide a cover story they know is unbelievable? What's going on exactly? This really is a new phase of global politics.
- dirtyid 7y ago
  I say this as someone who is generally pro China, in context of US hegemony and great powers security competition, Trump is fucking up hard by conflating security concerns with trade concerns. It's vexing a lot of people on the hill. The cost benefit analysis of cheap Huawei hardware is favorable for many countries, but US is not one of them. Smacking nuclear sanction arresting Meng is the kind of calculus that appeals to his base that would rather see blood than sensible policy.
- Iv 7y ago
  I have seen critics of the administration saying that it was stupid to get angry at China because of the trade balance. That there were legitimate causes to get angry though: IP legislation and spying. I may be an attempt at making a decent case, but yeah, the bullying rhetoric muddy this issue. And that's really a dangerous slope for US to go in. If they make spying on their neighbors a criterion to impose tarrifs, I am sure Europe would be happy to push some obligations on the GAFA
- LMYahooTFY 7y ago
justicezyx 7y ago
If Chinese companies are not building their own mobile OS, I would serious doubt their intelligence. This is becoming serious ridiculous situation. Edit: Missing "not" is a serious sin in writing...
- ulfw 7y ago
  You doubt the intelligence of a billion people country because they build their own OS while the Americans ban them from using theirs?
- deleted 7y ago
  [deleted]
deleted 7y ago
[deleted]
BillyWilly 7y ago
4D checkmate incoming.
asdf333 7y ago
the common knowledge in the industry is that most companies have found a way around it anyway so it doesn't much matter...
i_am_nomad 7y ago
This business will get out of hand. It will get out of hand, and we’ll be lucky to live through it.
8bitsrule 7y ago
In 1954 novel 'Lord of the Flies', the stupid carnage didn't stop until an adult set foot on the island. Where are those adults today?
- Synaesthesia 7y ago
  We’re all around. We’re called ordinary people. It’s up to the people to hold politicians to account and keep them in check. Nobody is going to do it for us, we need to organize and agitate ourselves.
mytailorisrich 7y ago
I'm hoping that the US have a plan to end this (not too sure considering things like "mission accomplished" in Iraq). One of the main policy of the Communist Party since they were founded is to fight off foreign aggression (look at China's history since the 18th century if you are wondering about that). The Chinese also have a strong cultural concept of "face" and "saving face". Thus, I don't think that hitting China will produce any result unless there is an opportunity to get a deal that allows both parties to save face. China is willing to endure, which is also an important Chinese cultural aspect, and their government does not have the pressure to please crowds in time for the next elections (which means all the time in the US). At the moment I think that this just reinforces Chinese nationalism and the Chinese people's willingness to stick behind their government.
Tinfoilhat666 7y ago
Huawei announces their own HarmonyOS, which can replace Android: https://www.androidauthority.com/huawei-harmonyos-1017511/ https://www.androidauthority.com/huawei-harmonyos-1017511/

68 points by tareqak 7y ago

The trade-off feels wrong from a naive perspective. Huawei withholding tech can damage US tech competitiveness, whereas the US withholding soybeans... does what? Raise the prices for soybeans in China? Make China go elsewhere for soybeans that the rest of the world can provide? Can the US similarly turn to alternative Huawei?

mlindner 7y ago
You've got it quite backward. First, China halted soybean sales, US never withheld soybeans. Secondly, US withheld licensing Huawei again for tech sales, as in it blocks US companies from selling to Huawei.
- JustARandomGuy 7y ago
  >China halted soybean sales, I'm sure it was a mistype, but China halted soybean purchases (not sales) from US soybean farmers and now possibly other agricultural products.
  - deleted 7y ago
    [deleted]
  - deleted 7y ago
    [deleted]
  - Scoundreller 7y ago
    According to: https://oec.world/en/profile/hs92/1201/ https://oec.world/en/profile/hs92/1201/ China imports 63% of traded soybeans. The US accounts for 38% of exported soybeans. Based on that alone, China is going to have to reduce its soybean consumption. This is beyond one of those silly games where one country puts up a wall, so everyone else just navigates around it and wastes money on shipping.
    - Junk_Collector 7y ago
      Soybeans account for about 2.5% of China's total imports and almost 10% of their imports from the US. Even though, on the whole, China exports a lot to the US and imports little (about 4 to 1 I think), China is a big food importer and the US is a big food exporter. When the US starts hitting Chinese companies with tariffs or through license restrictions, China doesn't have much space to retaliate because they have already closed off as much of their market as they can and only really import food in large quantities for consumption inside the country. They can't restrict imports of integrated circuits because we are doing that to them on our end and that basically leaves advanced medical technology and petroleum as strong retaliatory targets for China which China desperately wants. Of course, the consumer ultimately pays for tariffs, or scarcity in this case, so we can expect the costs of food to rise in China. Couple this with the slowing economy and the recent devaluing of Chinese currency it could be a squeeze on the Chinese middle class.
  - mlindner 7y ago
    Yes, fixed. Thanks. Edit: Apparently I can't edit it.
- deleted 7y ago
  [deleted]
thedudeabides5 7y ago
I’m pretty sure that’s the whole point. Who’s interest would it serve for the US to be entirely dependent technically from a company with published ties to the CCP state security apparatus.
tedk-42 7y ago
It's not an economic move, it's a political one. Trump needs votes from agricultural states like Ohio which would be severely impacted by these export cuts.
- reaperducer 7y ago
  You're almost right. According to this past Sunday's New York Times, the play here is that Trump raised tariffs on China this time because it refused to stop selling fentanyl to the United States. Naturally, this will be a big play in rural states where it's a big problem. For some reason, the Times was the only place I saw this reported. Every other medium I looked at just glossed it over as "Evil Trump is raising tariffs on China and that means your iPhone will cost more!"
  - rgbrenner 7y ago
    Google says the fentanyl part was on npr, wsj, reuters cnbc, bloomberg, etc. Trump even tweeted it. But oddly I didn't hear about this until your post. So thanks for mentioning it.
    - mbreese 7y ago
      Completely agree -- I didn't hear about it either until this post -- and I'm in an area of the country where this would be important news. But that's the problem with so much noise, when there is a sliver of signal, it just gets lost.
  - dirtyid 7y ago
    China rescheduled fentanyl in response to Trump on May 1st. https://www.whitehouse.gov/briefings-statements/statement-chinas-class-scheduling-fentanyl/ https://www.whitehouse.gov/briefings-statements/statement-ch... One month later: "Most fentanyl is now trafficked across US-Mexico border, not from China" https://wjla.com/news/nation-world/most-fentanyl-is-now-trafficked-across-us-mexico-border-not-from-china https://wjla.com/news/nation-world/most-fentanyl-is-now-traf... Because Mexico is importing fentanyl precusors from China and taking over distribution like everyone predicted. Not much more China can do, you can't exactly ban basic chemistry.
reaperducer 7y ago
the US withholding soybeans... does what? There was a piece about this on the radio a few months ago. It's actually a big deal. My memory isn't exact, because of the passage of time, but essentially, China needs America's soybeans because it can't grow enough of them on its own. And it needs the soybeans to feed its livestock in order to feed its people. The natural thought is, "China can just buy soybeans elsewhere." Which is true. Except that there are not enough countries producing soybeans for export to fill the quantity that China requires. A more important problem for China is seasonality. When America's soybeans are ready to harvest, Brazil's soybeans are just being planted, and vice versa. So it leaves China eventually in a position where it can't/won't get soybeans from the U.S., Brazil doesn't have any soybeans to send, and none of the other countries can make up the defecit. Therein lies the rub.
- petre 7y ago
  Totalitarian governments do not care too much about their people or what they're eating. For them people are mere means of production, just like tractors or medieval peons. They only care about exports and hard currency. If soybeans are used to feed what becomes exported goods (cattle, beef?), then it's a problem. If there's a shortage of soy sauce, no so much of a problem. Most of that would go to exports anyway, while the majority of Chinese people will use something else in their food.
- User23 7y ago
  Soybeans are literally a commodity. Some third country will just buy the US soybeans and sell them to China. Edit: Commodities are fungible. They are things like gold, pork bellies, soybeans, and so on where there is no meaningful difference based on where they were produced. Buyers from some third country will buy soybeans from the USA, relabel them as originating in their country, and flip them to China for a profit. Trade circumvention is nothing new[1]. The US seller doesn't even have to be complicit, once they deliver to the third party they have no control over the labeling and they're not liable to care much either. Edit: Regarding 5G hardware: "The basic idea is that there is little differentiation between a commodity coming from one producer and the same commodity from another producer. A barrel of oil is basically the same product, regardless of the producer. By contrast, for electronics merchandise, the quality and features of a given product may be completely different depending on the producer."[2] So, no, 5G hardware is not a commodity. [1] https://agmetalminer.com/2017/05/24/what-is-trade-circumvention-hint-its-certainly-nothing-new/ https://agmetalminer.com/2017/05/24/what-is-trade-circumvent... [2] https://www.investopedia.com/terms/c/commodity.asp https://www.investopedia.com/terms/c/commodity.asp

fspeech 7y ago

Google apps licenses may not be that big a stick for Huawei. What appears to be happening is that Huawei swaps market shares with the likes of Xiaomi and Oppo/Vivo. Huawei gains shares in China and cedes shares outside of China. I was puzzled when Qualcomm reported that its Chinese customers were buying Huawei chips. But it becomes understandable if they segregate the competition by geographic areas. So Huawei gains chip customers from the swap as well.

jrochkind1 7y ago

> The White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei Technologies Co. after Beijing said it was halting purchases of U.S. farming goods, according to people familiar with the matter. > ...American businesses require a special license to supply goods to Huawei after the U.S. added the Chinese telecommunications giant to a trade blacklist in May over national-security concerns. Uh... this doesn't sound like a decision based on national security concerns, right? If the US requires a special license to buy from Huawei due to ties to Chinese state security... what does that have to do with how many soybeans China buys, and why would the latter affect the former? Does Huawei have less worrisome ties to Chinese state security when China buys more soybeans? This is obvious to everyone, that it's got nothing to do with national security concerns, it's just a trade war entirely unmoored from the previous free-trade consensus? The administration feels no need to hide it? And yet won't actually just say it either, they still provide a cover story they know is unbelievable? What's going on exactly? This really is a new phase of global politics.

dirtyid 7y ago
I say this as someone who is generally pro China, in context of US hegemony and great powers security competition, Trump is fucking up hard by conflating security concerns with trade concerns. It's vexing a lot of people on the hill. The cost benefit analysis of cheap Huawei hardware is favorable for many countries, but US is not one of them. Smacking nuclear sanction arresting Meng is the kind of calculus that appeals to his base that would rather see blood than sensible policy.
Iv 7y ago
I have seen critics of the administration saying that it was stupid to get angry at China because of the trade balance. That there were legitimate causes to get angry though: IP legislation and spying. I may be an attempt at making a decent case, but yeah, the bullying rhetoric muddy this issue. And that's really a dangerous slope for US to go in. If they make spying on their neighbors a criterion to impose tarrifs, I am sure Europe would be happy to push some obligations on the GAFA
LMYahooTFY 7y ago

justicezyx 7y ago

If Chinese companies are not building their own mobile OS, I would serious doubt their intelligence. This is becoming serious ridiculous situation. Edit: Missing "not" is a serious sin in writing...

ulfw 7y ago
You doubt the intelligence of a billion people country because they build their own OS while the Americans ban them from using theirs?
deleted 7y ago
[deleted]

deleted 7y ago

[deleted]

BillyWilly 7y ago

4D checkmate incoming.

asdf333 7y ago

the common knowledge in the industry is that most companies have found a way around it anyway so it doesn't much matter...

i_am_nomad 7y ago

This business will get out of hand. It will get out of hand, and we’ll be lucky to live through it.

8bitsrule 7y ago

In 1954 novel 'Lord of the Flies', the stupid carnage didn't stop until an adult set foot on the island. Where are those adults today?

Synaesthesia 7y ago
We’re all around. We’re called ordinary people. It’s up to the people to hold politicians to account and keep them in check. Nobody is going to do it for us, we need to organize and agitate ourselves.

mytailorisrich 7y ago

I'm hoping that the US have a plan to end this (not too sure considering things like "mission accomplished" in Iraq). One of the main policy of the Communist Party since they were founded is to fight off foreign aggression (look at China's history since the 18th century if you are wondering about that). The Chinese also have a strong cultural concept of "face" and "saving face". Thus, I don't think that hitting China will produce any result unless there is an opportunity to get a deal that allows both parties to save face. China is willing to endure, which is also an important Chinese cultural aspect, and their government does not have the pressure to please crowds in time for the next elections (which means all the time in the US). At the moment I think that this just reinforces Chinese nationalism and the Chinese people's willingness to stick behind their government.

Tinfoilhat666 7y ago

Huawei announces their own HarmonyOS, which can replace Android: https://www.androidauthority.com/huawei-harmonyos-1017511/ https://www.androidauthority.com/huawei-harmonyos-1017511/