Huawei, ZTE product ban by US violates WTO rules, shows discrimination: commerce ministry

Updated 2018-02-24 09:23:01

A new bill that would ban the U.S. government from buying Huawei and ZTE phones discriminates against Chinese companies and violates the principles of fair trade, the Ministry of Commerce (MOFCOM) said on Friday.

The comment came after two US Republican senators on February 8 introduced a bill that would forbid the US government from buying or leasing products made by Huawei and ZTE.

The senators introduced the legislation citing concerns that the Chinese government could exploit hypothetical backdoors in their devices to spy on U.S. government officials.

"Such a move shows an obvious Cold War mentality and is discrimination against Chinese companies," the ministry said in a note faxed to the Global Times on Friday.

Such conduct goes against WTO rules and also runs counter to the principle of fair trade which has been emphasized many times by the U.S., the ministry noted.

"It will also harm Chinese companies' confidence in the U.S. business environment," the note reads.

Since the beginning of the year, the U.S. has strengthened scrutiny of Chinese firms, citing security concerns.

On January 2, Ant Financial's plan to buy U.S. money transfer firm MoneyGram International Inc collapsed after the Committee on Foreign Investment in the U.S. rejected the proposals over national security concerns.

U.S. semiconductor firm Xcerra Corp on Thursday canceled its sale to a Chinese company, the latest instance of U.S. regulators blocking Chinese takeovers of U.S. tech firms, according to media reports.

Xcerra and Hubei Xinyan Equity Investment Partnership mutually agreed to call off the deal after deciding it would not be cleared by the committee.

It might look like the U.S. was protecting national security, but in fact the U.S. was deploying protectionist measures against investment from China, said Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation in Beijing.

"The U.S. is selective about Chinese capital… It prefers Chinese companies that can offer jobs for its people, like Fuyao Glass, but restricts domestic firms from investing in the U.S. tech industry in case Chinese companies acquire its technology," Bai said.

The U.S. has always required China to open its markets, the tech industry in particular, while at the same time limiting access to Chinese companies for its own tech sector, Bai said, calling it "unequal and asymmetric opening-up."

Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges in Beijing, said that the U.S. is on alert toward the fast growth of China's economy.

It would be hard for investors nowadays to believe that the U.S. has long advocated investment liberalization and facilitation, Wang told the Global Times on Friday.

Experts said that given the pressure from competition with Chinese industries, the U.S. is likely to continue to hinder Chinese investment in the U.S. market in the future, especially in sectors like technology and energy.

Failed deals will hit Chinese firms' confidence in the U.S. market, experts suggested.

The commerce ministry said in the note faxed to the Global Times that it hoped the U.S. could treat Chinese companies and products in a fair and objective way.

The U.S. is expected to create a more open, transparent and convenient business environment and to secure sound and stable growth of Sino-U.S. economic and trade relations, which will also be conducive to the growth of the U.S. economy, according to the note sent from the ministry.

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