Cutting Off Chinese Companies Risks a US Policy Own Goal
The US banned Huawei. Now it’s a bigger threat than ever.
Illustration: Chau Luong for Bloomberg
In May 2019, the US Department of Commerce added China’s Huawei Technologies Co. and 68 affiliates to the Bureau of Industry and Security Entity List ― a catalogue of companies subject to strict limits that effectively cut them off from the US technology sector. The government had been concerned about espionage and sabotage risks associated with Huawei for more than two decades, but the advent of 5G cemented the urgency to act as more devices and critical infrastructure would be connected to Huawei hardware. Unsatisfied with blocking Huawei at home, American officials launched a global effort to convince other countries to block it, too.
The impact was immediate: Huawei’s revenue fell by more than a quarter over the next two years. But then something unexpected happened. Exiled from the world’s largest economy, Huawei refused to die. Its financial results picked up and last year Huawei’s revenue came close to its peak before the US restrictions.