Restrictions go a little deeper as it affects a different sector, expert says

As the US government orders its tech companies to cut ties with China's Huawei, experts in Silicon Valley are concerned about the deeper effects - beyond trade and tariff tensions - that the move could have to the detriment of the world.

Last week, the Trump administration put Huawei and 68 of its non-US affiliates on an export blacklist, which makes it almost impossible for a company on the list to purchase US-made goods.

The US Commerce Department on Monday eased the restriction, allowing US mobile-phone companies and internet broadband providers to work with Huawei until Aug 19.

Huawei, the world's largest telecom-equipment manufacturer and the second-largest smartphone maker, spent $70 billion buying components in 2018. Some $11 billion went to US firms for products, including Qualcomm chips, Microsoft software and Google Android operating systems.

US technology company Google first acted on the government's order, saying it would cut ties with Huawei, but after Monday's temporary exemption, the company said it would work with Huawei over the next 90 days.

"Google technology software is going to be disrupted, so the 25 percent tariff is one kind of disruption, but it's not a disruption involving the flow of technology," said Mark Cohen, a senior fellow at the Asia IP Law Project at the University of California, Berkeley. "This is, in a way, a little deeper and affects a different sector because we are also dealing with how we collaborate with each other, not only in hard goods but also in soft things."

As for the US government's national security concerns, Cohen warns of "the potential intrusiveness" into commercial transactions, people's lives and export controls.

"Now we have Huawei as a target. And of course, a lot of us wonder: Is this about Huawei's back door that hasn't been identified? Or is this about 5G and the threat posed by 5G, or is this something else?" Cohen said.

"But if you look at the subsequent reactions, you look at how the security issues are wrapped up in it. You have to wonder whether this is probably no longer about intellectual property," he added. "It may no longer even be about trade deficits. It may be something much bigger that's on the minds of the folks in Washington."

In response to the Trump administration's temporarily eased restrictions, Huawei's founder and CEO Ren Zhengfei said on Tuesday that the US government's move affected the company's low-end products but not high-end ones, especially 5G, Xinhua reported.

He said Huawei will buy US products as long as the US government allows tech companies to export components. He also said US companies are trying to lobby the administration to relax restrictions on Huawei.

In another development, Hangzhou Hikvision Digital Technology Co, the world's largest manufacturer of video surveillance products and solutions, said on Wednesday the company takes the US government's concerns very seriously and follows all applicable laws and regulations in the markets in which it operates.

The statement came after The New York Times reported the US government was considering imposing limits on Hikvision's purchases of US technology. This would hamper Hikvision's ability to do business as it is reliant on US components for its products. According to the report, the potential restrictions stem from concerns, including the human rights of China's surveillance sector.

Hikvision's share price plummeted 5.54 percent on the Shenzhen Stock Exchange on Wednesday.

"Hikvision takes cybersecurity very seriously as a company and follows all applicable laws and regulations in the markets we operate in," the company said in a reply to China Daily. "The company has already retained a human rights expert and former US ambassador Pierre-Richard Prosper to advise the company regarding human rights compliance."

Foreign Ministry spokesman Lu Kang said on Wednesday that China opposes the US "suppressing and smearing" enterprises from other countries by using state power.

China always asks its enterprises to abide by market and international rules when doing business overseas, he said, adding that it also demands other countries provide a fair and nondiscriminatory environment for Chinese companies.

Ouyang Shijia in Beijing contributed to this story.