Breakingviews - Apple case underscores Chinese tech ties that bind

A attendee uses a new iPhone X during a presentation for the media in Beijing, China October 31, 2017. REUTERS/Thomas Peter

HONG KONG (Reuters Breakingviews) - It is hard not to see tense U.S.-China situations these days though a trade-war prism. Such is the case with a Fuzhou court banning the sale of some Apple iPhone models just days after the arrest of Huawei’s chief financial officer in Canada. The timing of U.S. regulators reviving concerns about audits seems curious, too. Even without direct links to increasingly frayed relations between Beijing and Washington, the last few days serve as a reminder of the technology ties that tightly bind them.

All three decisions relate to longstanding concerns. For example, it was nearly six years ago that Reuters first reported links between Meng Wanzhou, Huawei’s CFO and daughter of founder Ren Zhengfei, and a company that tried to sell embargoed equipment to Iran’s largest wireless operator. The accusations against her, and related extradition efforts, are also consistent with how U.S. officials have pursued perceived sanctions violators.

Something similar can be said of the patent lawsuits involving Apple and chipmaker Qualcomm. They span the globe and have dragged on for years. A provincial Chinese court’s ruling on Monday affects certain touch-screen and photo features on older versions of the iPhone. Apple already has derided the findings and started an appeal.

And U.S. securities and accounting watchdogs have been railing for more than a decade against the opacity of Chinese bean-counters. A new missive released on Friday says little progress has been made inspecting the audits of 224 U.S.-listed companies from the Greater China area with a combined market value of $1.8 trillion. It opens tech titans such as Alibaba and Baidu, among the biggest of the bunch, to demands for more disclosure or potential restrictions.

It is all too easy to believe these steps are more politically motivated than coincidental: trade tensions are creating widespread collateral damage elsewhere, as well. Even if they are not, though, the latest developments provide fresh illustrations of just how interdependent the two countries are in technology when it comes to supplies, labour, revenue and capital. It is also evidence that it won’t necessarily take a bazooka to damage the likes of Apple or Alibaba in a trade war. There are plenty of subtler ways to inflict pain.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.