The meetings this week were led by China’s central economic planning agency, the National Development and Reform Commission, and attended by representatives from its Ministry of Commerce and Ministry of Industry and Information Technology, who addressed their remarks to a broad range of companies that export goods to China, according to the two people familiar with the gatherings.
The involvement of three government bodies suggested a high level of coordination and likely approval from the very top of China’s opaque leadership structure. The intervention seemed designed to rally support for Huawei, though the company was not specifically mentioned, the two people said.
“There is a strong perception in Beijing that the U.S. government is intent on blunting China’s technology rise, and that if this process is not slowed or stopped, the future of China’s entire digital economy is at risk,” said Paul Triolo, the head of geotechnology at the consultancy Eurasia Group, adding that the spat had major political implications for Xi Jinping, China’s president and the head of its ruling Communist Party.
“Mr. Xi and the party will be seen as unable to defend China’s economic future” if the confrontation with the United States does major damage to Huawei and throws off China’s rollout of the next generation of wireless technology, called 5G, Mr. Triolo added.
More broadly, the warnings also seemed to be an attempt to forestall a fast breakup of the sophisticated supply chains that connect China’s economy to the rest of the world. Production of a vast array of electronic components and chemicals, along with the assembly of electronic products, makes the country a cornerstone of the operations of many of the world’s largest multinational companies.
As the trade relationship between the United States and China has broken down, fears have risen in China that major companies will seek to move production elsewhere to avoid longer-term risks. In the meetings this week, Chinese officials explicitly warned companies that any move to pull production from China that seemed to go beyond standard diversification for security purposes could lead to punishment, according to the two people.
The Chinese officials appeared to have differing messages for the companies, depending on whether they were American or not, the people added.
