R i g h t a r d i a: China Daily: Economy China decries US 'obstruction' in Huawei bid

Tuesday, February 22, 2011

China Daily: Economy China decries US 'obstruction' in Huawei bid

BEIJING - Beijing charged Washington with blocking Chinese investment in US companies after telecom gear maker Huawei dropped buying assets from server technology provider 3Leaf.

The ministry of commerce said "the US side has used all kinds of excuses, including national security, to engage in obstruction and interference in the trade and investment activities of Chinese businesses in the US."

"This purchase of 3Leaf technology assets by Huawei was normal commercial activity with Huawei following market economy rules and acting on its own development needs. We express regret over the outcome," an unnamed official said in a statement on the ministry website (www.mofcom.gov.cn).

"To some extent, this obstruction and interference is affecting China-US trade and economic cooperation," said the ministry, which encourages Chinese firms to expand overseas.

The ministry said that it hopes "relevant parties" in the United States would "abandon prejudice, avoid protectionist measures and treat properly investments from China and other countries" with a fair, just and open attitude.

"We believe an open, just and transparent trade and investment environment is good for economic growth for both China and the Untied States and can help facilitate the world economic recovery," the ministry said.

Huawei bought assets from 3Leaf for $2 million last May but Huawei said the Committee on Foreign Investment in the United States (CFIUS) suggested the Chinese company divest them.

The company gave up a bid for 3Com in 2008 due to security concerns. In 2010, US Republican lawmakers raised national security concerns about Huawei's bid to supply mobile equipment to Sprint Nextel Corp.

Huawei is the third biggest mobile gear maker behind Ericsson and Nokia Siemens Networks. And The Committee on Foreign Investment in the United States (CFIUS) is a US government panel that reviews deals with national security implications.

In May, Huawei paid US$2 million to buy intellectual property from 3Leaf Systems. # leaf is a yong company that specializes in building servers to run to interoperate as more powerful mainframe computers.

The deal came under scrutiny from the U.S. government, because it was cleared without the approval from CFIUS. Government officials then asked Huawei to place the deal under the review of the CFIUS.

Rightardia likes the idea of Chinese companies on-shoring in the US and some re-shoring of US companies. We are not so keen on exporting technology of "intellectual property."