E D'S RANT
March 2019
INTERESTING
TIMES
Despite appearances, the Year of the Pig is off to a good start, says Michael Wilson. Can it last?
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h dear, this isn’t shaping up very well, is it? With hindsight, perhaps it wasn’t such a great idea to let Huawei, a Chinese technology company with firm links to Beijing’s ruling Communist Party, become the dominant force in the western world’s 5G telephone networks? Not so much because the evil reds have finally moved out from under the beds and installed their listening ears in your bedside telephone instead - but simply because they might? Please feel free to take that observation with a large pinch of salt. But over the last couple of months the issue of Huawei Technologies’ insidious global reach has become something of a political bellwether cause in the Trump administration’s struggle against China’s wider trade ambitions. It might have started out as a loud burst of presidential namecalling against China’s premier telecoms company, but the issue has been gaining traction in its own right. And in other ways. ECHO CHORUS
First it was Australia that heeded the US President’s call by banning Huawei from the rollout of its national 5G networks, and New Zealand and Japan quickly followed. Then
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came Japan, and then Germany, Italy and Canada started debating their own bans, while the Czech Republic barred the Chinese company from tendering for a contract, apparently in response to pressure from US secretary of state Mike Pompeo. In Britain, where we’ve had more things to think about recently, the response has been less strident but BT is reported to be removing Huawei equipment, especially from its emergency response infrastructure. Should we be worried about a creeping Chinese advance into our secret lives? It depends on how much you trust your ever-listening Amazon Echo Dot, which is also made in China, or your new Huawei AI Cube, which contains an Alexa voice assistant. Can you see where all that paranoia is coming from? THE INVESTMENT TIDE TURNS
But here’s a funny thing. As we were preparing for press, the Financial Times reported that foreign investors are turning back to Chinese equities in their millions, apparently unfazed by all the political dust that’s been blowing around. During January, the FT said, foreigners had pumped $9 billion of net new money into Chinese equities, the largest inflow in history. Thus neatly reversing the massive slowdown during 2018 which had lopped 25% off the value of Shanghai and Shenzhen blue chips. And almost trebling the average net inflow of the previous thirteen months. And why? Firstly, the industry reckons, because there are rising hopes that President Trump can make progress in his trade tariff negotiations with Beijing, which if successful
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