The phase one agreement is in tariff mud. Mr. Trump told the press China needs to sign his deal, or its economy could go belly up. China’s economy is not in good shape, but not all the economic issues are results of the trade war. Manufacturing, China’s main economic motivator, has more capacity than orders. But that sector did show signs of life in November.
The consumer market in China also has issues. But the tech sector is on fire thanks to Huawei’s smartphone dominance and advancements in 5G technology. Huawei owns 16 percent of the worldwide smartphone business. The only company that sells more phones is Samsung. Samsung owns more than 20 percent of the smartphone business.
Ren Zhengfei told the press the new Mate Pro smartphone sold out in a matter of a couple of hours when it hit the Chinese market. U.S. vendors won’t get their hands on the Mate Pro, but Europe and other parts of Asia are waiting for a chance to use the new phone technology in the Mate Pro. According to Zhengfei, the Mate Pro camera is as good or better than Samsung’s Galaxy phone and Apple’s iPhone 11.
Google, Microsoft, and other U.S. tech firms still do business with Huawei thanks to the Commerce Department extending the Huawei license for another 90 days. Huawei stopped using Google’s Android operating system in their new phones, and that hurt Google. Google, Apple, Microsoft, and other companies want the Trump Administration to get real and allow Huawei to buy and sell in the American tech market. But Huawei is a pawn in the trade war. And Meng Wanzhou, Huawei’s CFO, is visible proof the U.S. uses Huawei’s blackballing to keep the pressure on President Xi.
Meng Wanzhou is under house arrest in Vancouver. She wears an ankle bracelet, and she can’t leave her Vancouver home until Canada drops their attempt to extradite her to the United States. Customs officials arrested Meng when she got off a plane last December. Her arrested created bad blood between China and Canada. The Chinese arrested two Canadians living in China on spying charges. China also stopped buying Canadian beef and canola oil until they release Wanzhou.
Wanzhou has another court date in January. A judge will decide if Canada should send her home or to the United States. If Canada sends Meng to the U.S., China will retaliate. That means the economic relationship with China will implode, and those two Canadians in custody may be eating rice behind bars in China for years.
