BEIJING/WASHINGTON: Following the collapse of a deal that would have seen US wireless carrier AT&T sell smartphones made by Chinese manufacturer Huawei, experts have raised the issue of a “trust deficit” between the two countries.

AT&T reportedly pulled out of the deal under pressure from US lawmakers who wrote to the FCC citing concerns “about Chinese espionage in general, and Huawei’s role in that espionage in particular”.

Huawei, which launched the Mate 10 Pro at CES this week, a top-end model that aims to compete with Apple and Samsung, will still be able to sell products via open channels, although these account for only around 10% of the market.

Huawei faced a similar issue in 2012 when the US lawmakers claimed there were long-term security risks linked with the company’s network equipment and services, leading it to pull out of the US market.

“The problem is to the extent that the investment decisions are not being made on the ground by businessmen in China, but instead for strategic purposes by authorities in Beijing,” Daniel Russel, diplomat in residence and senior fellow at the Asia Society Policy Institute, and a former assistant secretary of state for East Asian and Pacific Affairs at the US Department of State, told yesterday’s 2018 South China Morning Post China Conference.

“I think the warning signs point towards some sort of tough trade actions by the Trump administration towards China,” he added. “There is a trust deficit.”

But Dr Edward Tse, founder and chief executive of the Gao Feng Advisory Company, argued that most investment from China is not by state-owned enterprises, but from entrepreneurial private sector companies, led by shareholders. “National security issues are a minority among the deals,” he said.

At CES, an angry Richard Yu, CEO of Huawei, admitted the end of the AT&T deal was a loss for the company, “but the more big loss is for consumers, because consumers don’t have the best choice.

“We win the trust of the Chinese carriers, we win the trust of the emerging markets... and also we win the trust of the global carriers, all the European and Japanese carriers,” he said.

“We are serving over 70m people worldwide. We’ve proven our quality, we’ve proven our privacy and security protection.”

Sourced from South China Morning Post, Reuters, The Verge; additional content by WARC staff