Huawei has been on a crisis since the US government imposed a ban that prevents US companies from trading with it freely. In the recent past, China and the United States have been holding talks in an attempt to resolve their trade issues. However, we have since learned from the Wall Street Journal that the negotiations have stalled because of disagreements surrounding Huawei.
According to the Journal, there has been very little progress since President Trump announced a potential ceasefire at the G-20 summit in June. The main point of conflict is the type of products that can be sold to Huawei without compromising US national security.
The blacklist by the Trump government essentially prevents American companies from trading with Huawei. This was a big blow to the Chinese tech giant since it relies heavily on American companies for hardware and software. Although Huawei has taken a few steps to reduce its dependence on US tech, including building its OS, it still has a very long way to go. American firms can only trade with Huawei after seeking permission from the US Commercial Department.
The restrictions by the US government have taken a toll on the Chinese Tech Giant. The company’s CEO said they are expecting a $30 billion loss in revenue over the next few years because of the restrictions. I also said in a previous article that retailers in Kenya reported a decrease in demand for Huawei smartphones since the White House imposed the ban citing national security.
The Journal also reported that Huawei is planning to lay off some of its employees as the ban continues to bite. The trade war has also slowed down the growth of the Chinese economy. China’s economic growth has gone down to 6.2 percent in the second quarter of 2019 – which is the slowest rate over that last 27 years.