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Why Blacklisting Huawei Could Backfire

Foreign Affairs

June 19, 2019

CSET’s Lorand Laskai explains in Foreign Affairs how U.S. restrictions on Chinese technology, including the products of Huawei, could wind up spurring on China’s efforts at self-reliance in innovation.

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Last spring, when the U.S. Department of Commerce added the Chinese telecommunications company ZTE to a trade blacklist, effectively severing ZTE from its vital U.S. suppliers, Chinese President Xi Jinping told an audience at a tech company that the Chinese people must “cast aside the illusion and rely on ourselves.” “The illusion” was the idea that China can prosper even as it relies on foreign technology.

The Trump administration seems determined to prove Xi right. Last month, it blacklisted the telecommunications giant Huawei, the third major Chinese company to be added to the Commerce Department’s blandly named Entity List within the last year. Huawei is an indispensable Chinese company, central both to the rollout of China’s 5G mobile network at home and to the country’s efforts to expand its digital influence abroad. The Trump administration is also considering blacklisting several of China’s largest artificial intelligence companies.

The Trump administration is betting that banning Chinese tech companies will bring Beijing to the negotiating table with the aim of negotiating “structural changes” to the Chinese economy. And barring that, it is hoping to deal China a blow in the race to harness next-generation technologies, such as AI and 5G. But within China, the administration’s moves have created a powerful new consensus in support of “self-reliance” and “indigenous innovation,” two mantras of the Chinese Communist Party that the country’s tech industry has reluctantly taken up. Washington has underestimated China’s ability to “tighten its belt,” as Xi put it after the ZTE blacklisting, and to develop replacements for foreign technology. The Trump administration may well be paving the way toward a more technologically independent, and possibly more powerful, China.

Read the full article at Foreign Affairs.

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