U.S. Holds Off on Huawei Licenses as China Halts Crop-Buying | Hacker News Reader

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

bloomberg.com

68 pointstareqak61 comments

> 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.

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.

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

I'm somewhat surprised this is confusing? The Executive is in charge of matters of national security, and thus is to use whatever is at its disposal to secure the nation.

Why wouldn't you expect economic restrictions in national conflicts where we've agreed not to invade over such things?

That's not what grandparent is saying. The argument is that instead of saying "we're delaying Huawei licenses in response to tariffs" they keep up the charade that it's something to do with security.

I think the reason for this might have to do with denying the thing in front of a wto panel.

Well, I mean, if we suspect Huawei is spying on us, then changed tariffs on soybeans don't change that, right?

I think it was obvious when they used national security concerns to put tariffs on aluminum and steel from Canada.

I can kind of understand it if you consider having a stable, strong steel and aluminum industry a national security issue.

Say Canada pulls an Uber and just drives all US forges out of business with Uber cheap metals. Though I doubt we have thay much production capacity to actually put the US at risk.

What gets me is the hypocrisy of the US. If it's a US industry/company under threat then it's a national security issue. If a foreign country has any protectionist policies, then they're communists and subject to sanctions and/or invasion and/or having their government toppled.

I guess it's pretty straightforwardly self-serving, but surely all the other countries' economy's who get carelessly trashed constitute a bigger national security issue!

They do it because the people who vote for them eat it up. Politics is basically the "science" of hypocrisy. All you need is an easily impressionable audience, ideally with plenty of preconceived notions.

https://i.redd.it/gye28fevde011.jpg

I think the mistake you're making is that the protectionist policies of (say) the US and China are not remotely comparable. In particular, the whole reason the US needs steel and aluminium tariffs is that China has used protectionism and state subsidies to build a steel and aluminium industry so far in excess of what the country consumes that the surplus has tanked global prices. This is pretty much unprecidented. The US is not the only country that objects to this; the EU wanted to put tariffs on China a few years earlier but they couldn't agree on which goods the tariffs should apply to.

Even if Canada is not likely to become an enemy, their metal industry could dissipate due to any number of other causes (just like how ours has dissipated). It's like using software dependencies - in the long term it can be better to cultivate your in-house engineers and their packages even when popular well-maintained libraries are out there.

If protectionism is good, then why did the world move away from it when it did?

I ask this question in good faith: global trade definitely has its downsides, but one positive aspect it has is that reduces the probability of armed conflict taking place between countries trading with one another. All else being equal, waging war on a customer deprives one of their business, and waging war on a supplier deprives one of that source of supplies.

To your point, cultivating your in-house engineers on a given project means that those engineers are tied up in that endeavour as opposed to working on something that has a higher return on investment.

Two things. First, military security is entirely dependent on economic security. The productive capacity of a country's economy places a hard upper limit on its ability to produce materiel and thus effectively wage war. For obvious reasons trade can't be relied on when at war with the former trading partner.

Second, this administration has been promising a trade war with China since before the election. It's not as if this is some kind of surprise. "CHYNA!" was a major campaign issue.

For background: in the Nixon era, the USA decided that it would start a Marshall plan style trade deficit funded "investment" in China, with the belief that increasing the economic prosperity of the PRC would lead it to greater openness and generally becoming a tame satrapy of the US empire, much as Germany and Japan did. Now that it's clear that plan was a complete failure and the Chinese played the Americans for fools, some Americans, most notable among them the President, are looking to reset to a less inequitable trade relationship. Pretty much all major economic and political news from the pacific region is a consequence of this process. The Hong Kong riots? Turns out the CIA is involved[1]. North Korean missile launches? Yeah, how much real autonomy does the DPRK have when China decides to call shots?

Edit: [1] https://www.reuters.com/video/2019/08/08/us-calls-china-thug... (Obviously this is a pro-US outlet and frames it as innocuously as possible, but anyone who knows anything about tradecraft knows that "diplomat" in this context is a polite word for operative).

"The Hong Kong riots? Turns out the CIA is involved."

I would be very interested in seeing any credible evidence that 'the CIA is involved' in the current Hong Kong protests.

And I don't mean HKHermit scratching his stomach, or the hilarious training manual for non-verbal battle communications...

Well, generally speaking, this is exactly the ballpark CIA feels very much at home at and has tons of experience doing exactly this, for last 70+ years.

On the other hand, Chinese involvement would also make sense, but things are too obviously pointing to their direction for my subjective taste.

Maybe its both - US escalating situation just because that's what 3-letter agencies do, China obviously deeply involved since its a crucial place for them and literally their territory, which is rebelling and questioning Chinese supremacy. At the end, these are all just constant games for these folks.

I know you didn't make the original comment, but I'm going to put this one down as "stated as fact, no actual evidence"...

In the Chinese media I've read about this, the CIA usually isn't accused directly. Rather, they cite a Washington Post article [1] where Allen Weinstein, co-founder of the National Endowment for Democracy, says "a lot of what we do today was done covertly 25 years ago by the CIA." Then they argue that the NED's funding of various political groups in Hong Kong [2] is essentially a CIA operation.

Personally, I think that's a lazy argument trying to link the CIA (known bad) to the NED (therefore also bad). On the other hand, it does mean that US government organizations are picking favorites to provide with funding in order to influence the politics of foreign countries.

[1] https://www.washingtonpost.com/archive/opinions/1991/09/22/i...

[2] https://www.ned.org/region/asia/hong-kong-china-2018/

Lol, it's China that caused the riots.

That should be clear by now :p

US & UK intelligence have a long record of actively creating discord where there would be none for economic/political gain.

To act like this is not the case, is to ignore well documented history.

The free-trade consensus has been dead for a while. We're only just starting to see the effects now because of how slow global politics moves. I figured the end was nigh when bipartisan efforts killed both the TPP and the TTIP. The political system in the US is no longer in favor of free trade.

I believe that loosening up the restrictions on Huawei was one of the things China demanded in order to stop blocking purchases of US farm goods, and that's what ties the two together.

I've said before and I'll say it again. Trump has no interest in settling the trade war with China any time soon. He is forcing companies out of China, and once China realizes this and tries to correct it, it will be too expensive for those companies to want to return.

This will be viewed in posterity as the fastest cold war ever won against a Communist country.

> this doesn't sound like a decision based on national security concerns, right?

Do you also think that most of the troubling places that the US had to invade had, by coincidence, lots of oil in them?

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?

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.

>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.

According to: 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.

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.

Yes, fixed. Thanks.

Edit: Apparently I can't edit it.

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.

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.

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!"

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.

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.

China rescheduled fentanyl in response to Trump on May 1st.

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-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.

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.

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.

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-circumvent...

[2] https://www.investopedia.com/terms/c/commodity.asp

That's not how things work.

And 5G equipment is not a commodity?

No? It's something with basically one and a bit suppliers and a large patent pool.

> Buyers from some third country will buy soybeans from the USA

This isn't happening. US farmers are not selling as many soy beans as they used to. The year over year soy bean export decline was in the billions of dollars.

I may be a bit naive when it comes to international politics but when I look at a world map; I think there is one obvious place for China to get its soybeans: Russia (and other former Soviet republics).

This massive piece of land may not have the effective and modern agriculture industry of USA but with enough investment and stable demand, it could have.

Its already happening: https://www.caixinglobal.com/2019-08-06/chinese-farmers-are-...

Terraforming a chunk of land like the Russian east to turn it into productive farmland is possible (Brazil did something similar), but it's expensive, time-consuming, and temporary. China and Russia actually have a somewhat-standoffish relationship, and it's unlikely that Russia would invite Chinese investment into a region that it sees as a target for Chinese expansionists.

This is happening exactly as you suspect.

Russia is going places in the world of agriculture. It is a sector that is like telecoms in that a country that is behind can leapfrog the West by putting in new infrastructure.

This agricultural trade is working out with new markets sought for organic produce, 'kosher' food items and plenty else. It is also two way so Russia is best buddies with Turkey these days with agricultural trade being part of the deal.

Recently Russia signed up to have Huawei put in their 5G network. There is an on-going ambition to boost bilateral trade between China and Russia. Although dollar denominated, this trade is really 'barter', China get their soybeans, Russia get their 5G network. It is a win-win for both sides.

Also to remember is that Russia has had sanctions that have led to a certain level of self sufficiency. Hence the emphasis on the agricultural sector as well as manufacturing things like cars. Weapons sales are part of the picture too, good for foreign currency reserves.

I think patience is running out in China and in Russia with the UK/USA and their vassal states. The recent efforts to start conflict in Venezuela and Iran have been met with resolve from both China and Russia.

The world was unipolar after 9/11 with Western dominance in telecoms. Now it is a multi-polar world and all of that early dominance in mobile telecoms has evaporated. Had the UK/USA not been fighting pointless wars in places like Afghanistan, Iraq and Libya (to name a few) then I don't think this situation of backwardness would have arisen.

> it leaves China eventually in a position where it can't/won't get soybeans from the U.S.

(Gasp), Chinese people face hard times of eating lots of fish, shellfish and Laminaria kelp for some months...

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.

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

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

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...

You doubt the intelligence of a billion people country because they build their own OS while the Americans ban them from using theirs?

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.

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

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?

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.

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