China Business in the UK Struggled Due to COVID-19... Huawei on Edge

[Image source=Yonhap News]

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Since the outbreak of the novel coronavirus infection (COVID-19), there have been calls within the UK to fully reconsider pro-China business policies. The UK's turning away from China could trigger a domino effect among other European countries, putting Chinese tech companies such as Huawei on high alert.

On the 14th, Hong Kong's South China Morning Post (SCMP) reported, citing officials, that the UK government is under intense pressure to reconsider whether it should continue to keep the UK market open favorably to Chinese companies, including Huawei, a leader in 5th generation (5G) mobile communication technology. Conservative politicians in power in the UK are reportedly using the COVID-19 outbreak as a tool to push a tough stance against China, and there is a growing sentiment of reflection over Prime Minister Boris Johnson's previously overly pro-China actions.

UK intelligence agencies have already requested the government to review its relations with China. The foreign intelligence agency MI6 and domestic intelligence agency MI5 have suggested that after the COVID-19 crisis ends, the UK should reanalyze its relations with China, particularly considering restrictions on acquisitions of major companies in advanced technology sectors such as information and communications and artificial intelligence, as well as limiting Chinese students in university research. Recently, 15 Conservative MPs, including Bob Seely, reportedly sent a letter to Prime Minister Johnson urging a comprehensive review of relations with China after COVID-19.

Although he has since been discharged, Prime Minister Johnson's experience of being hospitalized due to COVID-19 has strengthened 'China skepticism' within the UK. There is a prevailing atmosphere that the UK suffered from the spread of the virus because China downplayed the situation and underreported the outbreak.

The movement to exclude Chinese business is already in its initial stages. Last week, the UK government directly intervened to thwart an attempt by China Reform Holdings, a venture fund under the Chinese government, to take control of Imagination Technologies, a UK graphic chip manufacturer.

On the 7th, an emergency board meeting of Imagination Technologies was convened, and four board appointments linked to China Reform Holdings were about to be pushed through, but Oliver Dowden, UK Secretary of State for Digital, Culture, Media and Sport, demanded an urgent meeting with Ray Bingham, chairman of Imagination Technologies, leading to the cancellation of the board meeting schedule. Voices within the UK Conservative Party expressing concern that "this company, which employs 600 people in the UK, could fall into Chinese hands" moved Secretary Dowden to act.

The UK currently allows Huawei to participate in the 5G market with a 35% cap on market share in non-core sectors, but if pressure to reconsider relations with China intensifies domestically, Huawei's position in the UK could weaken. France and Germany have also stated that they will not exclude Huawei in principle, but due to the COVID-19 outbreak, delays in Huawei's investments in Europe are inevitable, making future developments uncertain. Eric Xu, Huawei's rotating chairman, acknowledged at the end of last month during a performance announcement that "5G investments in Europe may be delayed until COVID-19 is controlled."

This content was produced with the assistance of AI translation services.