Another move by the Trump administration against China could send a shiver through global stocks Thursday.
President Donald Trump on Wednesday signed an executive order barring US companies from using telecoms gear from sources the administration deems a national security threat.
That action is seen as targeting Beijing and Chinese telecoms equipment maker Huawei, a global leader in next-generation 5G technology. The US government on Wednesday also added Huawei to the so-called Entity List of companies it says undermine American interests. That means US companies may need a license to continue supplying Huawei with crucial components.
For Huawei and its American partners, that could spell trouble. The company relies on US suppliers such as Intel, Qualcomm, Micron, Microsoft and Oracle, according to analysts. Intel and Qualcomm shares are down slightly in premarket trading.
The United States is already locked in a trade war with China. Both sides are still negotiating, but new rounds of tit-for-tat tariffs in the past week have made markets jittery.
In response, China vowed Thursday to “resolutely safeguard” Chinese companies.
A foreign ministry spokesman, Lu Kang, criticized the moves as an “abuse of export control measures” after the Trump administration issued an order requiring Huawei to obtain government permission for purchases.
Huawei, the biggest global maker of switching equipment for phone companies, has spent a decade fighting accusations it facilitates Chinese spying.
“We urge the United States to stop the wrong approach,” said a foreign ministry spokesman, Lu Kang. “China will take further necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.”
Lu gave no details, but analysts warned the export controls threaten to worsen a U.S.-Chinese conflict over technology and trade.
The restriction is “a grave escalation with China that at minimum plunges the prospect of continued trade negotiations into doubt,” said Eurasia Group analysts in a report.
“Unless handled carefully, this situation is likely to place U.S. and Chinese companies at new risk,” the report said.