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6 Months : From Apr 2019 to Oct 2019
By Asa Fitch and Yoko Kubota
Chinese authorities summoned some of the world's largest tech companies this week to tell them they could face repercussions if they respond too aggressively to U.S. trade restrictions, according to people familiar with the matter.
Called by China's National Development and Reform Commission on Tuesday and Wednesday, the meetings with more than a dozen companies add a new dimension to Beijing's pushback against the Trump administration's restrictions on access to advanced American technology amid a lengthy trade dispute.
Among the companies called in were chip makers Intel Corp., Qualcomm Inc., ARM Holdings PLC and SK Hynix Inc., software giant Microsoft Corp., South Korea's Samsung Electronics Co., computer maker Dell Technologies Inc., Finnish electronics company Nokia Corp. and networking equipment maker Cisco Systems Inc., according to one of the people.
Intel and ARM declined to comment. The other companies didn't immediately respond to requests for comment.
The warnings, previously reported by the New York Times, followed several rounds of new tariffs imposed by the Trump administration on billions of dollars of goods flowing from China to the U.S. As trade talks faltered last month, the administration upped the ante by putting Huawei Technologies Co. on a trade blacklist, further chilling already cold ties between the world's two biggest superpowers.
The move against Huawei disallowed sales to the telecom giant without a Commerce Department license. China responded by announcing an "unreliable entity list" for foreign companies that stopped supplies to China or took other actions seen as damaging the interests of Chinese companies.
On Saturday, Chinese official news agency Xinhua reported the NDRC, China's central economic planning body, was studying the establishment of yet another list system to "more effectively forestall and defuse national security risks." Xinhua also said in a commentary that this new system would prevent "certain countries from using Chinese technologies and simultaneously curbing China's development."
In the meetings this week, Chinese officials told foreign tech companies that there would be unspecified consequences if they pulled out of China, ended business partnerships there or stopped supplying products to Chinese customers, especially if those moves were in line with mandates by countries China saw as breakers of international rules, one person familiar with the matter said.
Another person familiar with the meetings said the Chinese understood that multinational companies had to comply with U.S. law, but that their message was that the firms shouldn't pare back their exposure to China any more than they were required to.
The person described the meetings between midlevel China-based company executives and midlevel NDRC bureaucrats as cordial but unusual. In addition to delivering the warning, Chinese officials asked what the companies' barriers were to doing business and how the Chinese government could help, the person said.
Companies with U.S. operations must comply with the administration's restrictions on their dealings with China. They can, however, seek licenses from the Commerce Department that allow them to continue trading with Huawei or any other entity that faces similar restrictions in the future.
China's targeting of American technology has been central to the Trump administration's trade concerns. The same day Huawei was blacklisted last month, Mr. Trump issued an executive order banning foreign technology dealings when they raised national security concerns, citing "malicious cyber-enabled actions, including economic and industrial espionage."
Negotiations with China appeared to be progressing toward a trade deal before last month, when the administration accused China of reneging on commitments by seeking significant changes to an agreed-upon deal. That set off another round of punishments and reprisals by both sides, with the U.S. raising tariffs on $200 billion of Chinese goods and China slapping new tariffs on $60 billion of U.S. goods.
China's NDRC couldn't be reached by telephone late Saturday.
Write to Asa Fitch at firstname.lastname@example.org and Yoko Kubota at email@example.com
(END) Dow Jones Newswires
June 08, 2019 18:56 ET (22:56 GMT)
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