Things are getting tougher for China’s flagship international telecommunications firm. Not only is the CEO’s daughter detained in Canada pending extradition to the United States, but Poland charged the country head of Huawei with espionage, Germany reconsidered allowing Huawei access to its 5G network rollout, the United States initiated a criminal probe into whether Huawei had been involved in the theft of trade secrets and – the horror-of-horror demeaning insults! – Oxford University announced it would no longer accept funding from the company. Phew! (But the Mate 20 smartphone is apparently really good).
Faced with this barrage, Huawei’s founder and CEO Ren Zhengfei took the highly unusual step, for him, of making a public statement, in which he said that his company had not done any spying and he missed his daughter.
The confinement of Mr Ren’s daughter has led to actions by the Chinese authorities against a number of Canadian citizens in China, and one Canadian man was sentenced to death in Dalian this week on drug smuggling charges. The reaction to this from Canada has not been, shall we say, positive.
It’s a dilemma with no easy answer and huge implications. And behind it is the continuing trade negotiation between the US and China. The sense a week ago was trending in the direction of sunshine; this week, less so. It’s impossible to be more specific than that, but the markets seem to be moving in the direction of taking the view that even if there is a deal which allows for the lifting of tariffs, the fundamental problems facing China’s economy – slowdown in the global economy, debt buildup, property slowdown, ossification of the private sector etc etc – will add up to a continued unhappy prospect for this year.
We await the announced and official GDP figure for 2018, which is a great little guessing game. What number will they decided to go with? Our bet is 6.5%. What will the real and announced GDP growth rates be for 2019? Even harder to say, but probably averaging below the magic 6 for the year. Then our crystal ball gets misty and we have to replace the cover and accept we have to just wait and see. All the best for a great weekend.