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Escalating tensions

The arrest of Meng Wanzhou, a top executive at Huawei Technologies and the daughter of the company’s founder, has not only surprised the global business community but has added a new dimension to ongoing concerns that we may see an escalation in the ‘trade war’ between China and the US. A recently negotiated 90-day tariff truce between the two could now also be in peril.

Why was Meng arrested? According to reports she was arrested because Huawei has been accused of violating US trade sanctions against Iran.China’s response? Her detention is possibly a rights abuse!

Looking beyond that, what could be the consequences? Huawei is one of the world’s largest and most successful telecommunications equipment and service providers, second only to Samsung, and among its key suppliers are US companies including Qualcomm and Intel.

If there’s any escalation in the current ‘trade war’, then global supply chains could be seriously disrupted with dire consequences for the technology and automotive industries.

Huawei is no stranger to controversy, however, and is in the cross-hairs of many western governments.

New Zealand recently joined Australia and the US in blocking the use of the firm’s equipment in its 5G network, and US lawmakers have accused it of being a threat to US national security.

Security concerns recently led BT to bar Huawei equipment from the heart of the 5G network it is rolling out in the UK.

The arrest of a senior executive from the world’s second biggest smartphone maker and an escalation in trade tensions between these two major economies, as a result, could seriously impact the broader technology supply chain.

So, is a major collision brewing between China and the US? And, if it is, in truth is it less about tariffs and more about a battle for technological leadership?

Author
Neil Tyler

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