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Pentagon Blocks Clampdown on Huawei Sales

 

Proposed rules making it harder for American firms to sell to Chinese company are withdrawn

In an interview with The Wall Street Journal, Huawei’s Ren Zhengfei discusses how his company will navigate the trade war, concerns over whether its equipment could be used to spy for Beijing and his road trip across America. Photo: Anthony Kwan for The Wall Street Journal

By 

Bob Davis

Updated Jan. 24, 2020 7:05 pm ET

The Commerce Department’s efforts to tighten the noose on Huawei Technologies Co. is facing a formidable obstacle: the Pentagon.

Commerce officials have withdrawn proposed regulations that would make it harder for U.S. companies to sell to Huawei from their overseas facilities following objections from the Defense Department as well as the Treasury Department, people familiar with the matter said.

The Pentagon is concerned that if U.S. firms can’t continue to ship to Huawei, they will lose a key source of revenue—depriving them of money for research and development needed to maintain a technological edge, the people said. The chip industry has pressed that argument in talks with government officials.

Defense Secretary Mark Esper was asked about The Wall Street Journal’s reporting on the concern during an appearance Friday at the Center for Strategic and International Studies in Washington.

“We have to be conscious of sustaining those [technology] companies’ supply chains and those innovators,” Mr. Esper said. “That’s the balance we have to strike.”