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Why China did not retaliate after latest US move to target Huawei
- Beijing prepared black list of ‘unreliable entities’ but was not prepared to take economic hit from targeting US business, source close to Chinese government says
- Economic impact of Covid-19 pandemic has made authorities increasingly cautious about upsetting international companies
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China had prepared a blacklist of US companies after Washington tightened export controls on telecoms giant Huawei and 33 other Chinese firms in May – only to hold off for fear the move would backfire and damage its economy, according to a source close to the Chinese government.
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“It was almost released,” the source said. “But at the last moment the decision was taken to put the list on hold and wait.”
Beijing’s caution was motivated by faltering economic growth and a desire to stabilise foreign investment at a time when growing numbers of foreign companies were looking to reduce their dependence on Chinese supplies following the Covid-19 pandemic and increasing pressure from the White House.
The same restraint was apparent during Premier Li Keqiang’s annual press conference at the end of the National People’s Congress in late May, when he avoided combative rhetoric towards the US and called instead for economic cooperation.
Beijing has made stabilising foreign trade and investment two of its main economic priorities for the year as it seeks to recover from the economic damage caused by the pandemic.
Beijing threatened to introduce its list of so-called unreliable entities – firms deemed to have damaged the interests of Chinese businesses or threatened national security – 12 months earlier following previous US restrictions on Huawei.
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