Trade war looming? Huawei, ZTE banned from Sprint 4G bid

Security is the official reason Sprint will not consider the bids made by ZTE and Huawei, two Chinese telecoms equipment companies, for Sprint’s $7 billion upgrade of its network to 4G, even though these two firms submitted the lowest bids (don’t they always?). US Secretary of Commerce, Gary Locke, objected to the participation of Huawei and ZTE in building out Sprint’s network in the United States. Huawei’s CEO and co-founder is a former member of the People Liberation’s Army and Huawei is said to have supplied “Axis of Evil” regimes such as Iraq and that ever present menace, the Taliban.

I think something else is going on here, not entirely related to security and that is the trade tensions between China and the United States, most notably, the peg of the renminbi to the US dollar which US and European officials have criticized as artificially holding down the value of the Chinese currency, making Chinese exports cheaper than they should really be.

The exclusion of two of China’s most prominent telecoms equipment makers could be seen as a sign that the US government is getting tough with China. This means Huawei and ZTE need to spend more money hiring lobbyists and throwing parties in Washington DC.