Punishing Huawei, the US annihilates Shenzhen economy
World News

Punishing Huawei, the US annihilates Shenzhen economy


The United States has launched a trade war against major Chinese tech companies, most of which are located in Shenzhen. This city is called a “darling” for China’s economic development.

China, Huawei, Tham Quyen Economic Center
Shenzhen has become the “darling” of China’s economy.

Huawei is already an important part of the city’s economy, which will become a global telecommunications equipment giant and China’s largest smartphone maker.

However, the administration of US President Donald Trump’s embargo not only pushed Huawei Technologies to the brink of collapse, but also dealt a heavy blow to the Shenzhen city economy.

Yuehai – the western district of Shenzhen, where social networking company Tencent, telecom maker ZTE and drone maker DJI live, jokes it’s like trade war between America and the city, or even the county itself.

Over the past 40 years, Shenzhen has transformed itself from a drab fishing village just across from Hong Kong to a metropolis of more than 12 million people, where the high-tech sector accounts for more than a third of the city’s GDP.

Given the sector’s importance, many are starting to worry about the impact the trade war could have on the South China Morning Post.

Beijing has big plans for the city and has planned it to be a major hub for innovation and innovation in the Greater Delta – a project designed to create an economic region that is competitive with the San Francisco (USA) and Tokyo Bay (Japan) regions, by linking the southern cities of Guangdong with Hong Kong and Macau.

But in the face of increased export taxes to the US and the continued attack on Huawei – a key player in China’s 5G network – agencies, government officials and technology companies are contemplating. for an uncertain future.

A policy researcher working for the Shenzhen government told SCMP that Shenzhen’s key is Huawei.

“Huawei is the most important company in the value chain, the leader and center of the industry. It is our dragon head,” said the researcher.

In a rare report published by the Shenzhen Bureau of Statistics in 2016, Huawei is the largest contributor to the city’s GDP, accounting for 7% of the total GDP, or 143 billion yuan (20.6 billion). USD).

This is roughly equal to the total value of the rest of the city’s top 20 contributors to GDP, including “big players” like ZTE, Tencent, and chipmaker Foxconn. and car manufacturer BYD.

Huawei and its subsidiaries have the largest staff size in the city, with about 80,000 people working at its Shenzhen headquarters and more than 3,000 working at a new research and development facility in East City. Manager nearby.

Policy researchers say the city government “must do everything it can” to help the tech companies in today’s circumstances.

But now, when Washington has banned Huawei from importing components from the US and froze the company from its 5G network due to concerns about national security, as well as urging allies to follow suit, local governments are running out. Selection.

“You know the key (for Huawei’s problems) is not in Shenzhen. The problem lies in Washington. Shenzhen cannot help resolve disruptions in supply chains and overseas markets” – researcher this says.

Huawei is still the main priority of the local government.

“While we will keep an eye on others, we will definitely focus our efforts on helping Huawei,” said the researcher.

Liu Kaiming, director of the Contemporary Observatory in Shenzhen (which monitors the state of Chinese manufacturers), said that the sanctions that undermine Huawei will have a negative effect on the entire supply chain. Chinese electronics.

He agreed that Huawei’s problems will have a far-reaching impact on China’s national economy, and be a sign of the end of the era when Chinese companies are accepted as key players in the supply chain. global technology application.

The cooperation logic has been broken and the split has already begun, Liu said. He predicts that some Chinese companies with foreign investment, including many based in Shenzhen, will now be gone.

“These foreign-owned electronics companies are truly the high-end sector in China’s current export-oriented electronics manufacturing industry … The move of these firms,” said Mr. Liu. The department does not bring any benefit to China’s technological innovation ”.

A source close to the Guangdong Provincial Department of Science and Technology said the provincial government has set up a special force, working with relevant agencies from Guangzhou, Shenzhen and Dongguan.

This team has met with tech companies that have been, or would likely be, affected by the trade and technology competition between the US and China to discuss the possible impact on business.

Hai Lam

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