Huawei mounts legal challenge against US over rural carrier ban

The US Federal Communications Commission said that Huawei’s ties to the Chinese military posed a threat to US national security. (AP)
Updated 05 December 2019

Huawei mounts legal challenge against US over rural carrier ban

  • Chinese telecoms giant says federal commission ruling failed to provide evidence of a cybersecurity threat

SHENZHEN: China’s Huawei has mounted a legal challenge against the US Federal Communications Commission (FCC) after the body designated the technology giant as a security threat and moved to bar it from a government subsidy program.

The FCC last month voted unanimously to designate Huawei Technologies and peer ZTE Corp. as national security risks, barring their US rural carrier customers from tapping an $8.5 billion government fund to purchase Huawei or ZTE telecommunications equipment.

Huawei said on Thursday it filed a petition challenging the decision.

The FCC argued the companies’ ties to China’s government and military apparatus, and Chinese laws requiring that such companies assist the Chinese government with intelligence activities, pose a US national security risk.

It also voted to propose requiring carriers remove and replace equipment from Huawei and ZTE in existing networks.

“Banning a company like Huawei, just because we started in China — this does not solve cybersecurity challenges,” Song Liuping, Huawei’s chief legal officer, said at a news conference at the firm’s headquarters in Shenzhen.

He said the FCC has not provided evidence to show the company is a security threat and that “this decision, just like the entity list in May, is based on politics,
not security.”

The Huawei document was not yet available in the US court filing system. It is not clear when the FCC decision will come into effect.

FCC spokesman Brian Hart declined to comment. On Wednesday, the body’s chairman said he will propose $9 billion in funding over the next decade to boost fifth-generation (5G) wireless telecommunications coverage in rural US areas.

US President Trump in May placed Huawei on the country’s trade blacklist, citing national security concerns, which banned companies from supplying Huawei with US components without special licenses. The move came after Washington brought criminal charges against Huawei, alleging theft of trade secrets, bank fraud and violation of US sanctions against Iran. It has also sought to convince allies to ban it from the 5G networks over spying fears — increasing tension with Beijing amid a tit-for-tat trade war.

The US is now considering approaches that will halt more foreign shipments of products with US technology to Huawei, Reuters reported last week.

Karl Song, vice president of Huawei’s corporate communications department, said the FCC rule threatened improving connectivity in rural America, and would cost hundreds of millions of dollars and even force some small carriers to go bankrupt.

Asked to comment on Huawei’s sales to rural carriers, Song said the firm’s US revenue was “minimal” compared with the $11 billion in goods that it procured from the US.

Alan Fan, Huawei vice president of IP strategy and international legal policy, said US rural carriers and groups submitted 90 comments to the FCC, 58 percent of which opposed action against it.


HSBC profits hammered by pandemic and soaring US-China tensions

Updated 03 August 2020

HSBC profits hammered by pandemic and soaring US-China tensions

  • Bank reports post-tax profit of $3.1 billion while pre-tax profit was $4.3 billion
  • Asia-focused lender embarked on a huge cost-cutting initiative at the start of the year

HONG KONG: HSBC said Monday profits for the first half of 2020 plunged by 69 percent on year as the banking giant was hammered by the coronavirus pandemic and spiraling China-US tensions.
The lender reported post-tax profit of $3.1 billion while pre-tax profit was $4.3 billion, a 64 percent drop on the same period last year. Reported revenue was down nine percent at $26.7 billion.
The figures missed analyst forecasts and the bank also raised its estimate for 2020 loan losses from $8 billion to $13 billion.
Chief executive Noel Quinn described the first six months of the year as “some of the most challenging in living memory.”
“Our first-half performance was impacted by the COVID-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility,” he said in a statement to the Hong Kong stock exchange.
Even by the standards of the current economic maelstrom engulfing global banks, HSBC has had a torrid time.
Before the coronavirus crisis it was beset by disappointing profit growth, ground down by US-China trade war uncertainties and Britain’s departure from the European Union.
The Asia-focused lender embarked on a huge cost-cutting initiative at the start of the year, including plans to slash about 35,000 jobs as well as trimming fat from less profitable divisions, primarily in the United States and Europe.
The coronavirus upended some of that cost-cutting drive with banks hammered by market volatility and the economic slowdown caused by the pandemic.
But HSBC has a further headache — geopolitical tensions via its status as a major business conduit between China and the West.
HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth.
As a result, it has found itself more vulnerable than most to the crossfire caused by the increasingly bellicose relationship between Beijing and Washington.
The bank has tried to stay in Beijing’s good graces.
It vocally backed a draconian national security law that Beijing imposed on Hong Kong in June to end a year of unrest and pro-democracy protests.
The move sparked criticism in Washington and London but analysts saw it as an attempt to protect its access to China, which has a track record of punishing businesses that do not toe Beijing’s line.
But that has not shielded it from Beijing’s wrath.
Last month the bank was a subject of multiple reports in China’s state-run media claiming that it had helped to provide the evidence that led to the arrest in Canada of Huawei executive Meng Wanzhou on a US arrest warrant.
HSBC released a statement on its Chinese Weibo accounts saying it had not “framed” telecom giant Huawei or “fabricated evidence” that led to the arrest of Meng.
China’s Internet censors blocked access to HSBC’s statement within hours of publication, without offering an explanation.
Quinn referenced the bank’s growing political vulnerability in Monday’s statement.
“Current tensions between China and the US inevitably create challenging situations for an organization with HSBC’s footprint,” he said.
“However, the need for a bank capable of bridging the economies of East and West is acute, and we are well placed to fulfil this role,” he added.
The bank’s Asia operations continued to show “good resilience,” Quinn said, with profit before tax of $7.4 billion.
Earlier this year Quinn put some of the job cuts on hold as the pandemic struck.
But in Monday’s statement he vowed to press ahead with the cost-cutting.
“As we seek to accelerate our transformation in the second half of the year, I am mindful of the impact it will have for some of our people, particularly those leaving us,” he said.