Nobody Move


Image source: de2marco, paparazzza, Frederic Legrand - COMEO, pzAxe, StepStock,PRESSLAB - Shutterstock

What's going on?

As the Chinese government threatened US arms dealer Lockheed Martin with sanctions on Tuesday, the UK wasn’t afraid to pull the trigger on one of China’s weak spots…

What does this mean?

China’s beef stems from a deal Lockheed struck with Taiwan to sell the country $620 million worth of arms parts. China considers Taiwan one of its territories, and asked the US to block the agreement in an effort to keep already-strained US-China relations on an even keel. But when the US instead gave Lockheed the thumbs up, China said it’d sanction the company – a damaging move given that Lockheed made 10% of its revenue in Asia last year.

But China has its own back to watch. The UK followed in the US’s footsteps on Tuesday by banning the use of telecoms equipment from Chinese giant Huawei as the country upgrades to 5G, as well as mandating the removal of existing equipment over the next few years.

Why should I care?

For markets: The 3310’s still got it.

Huawei’s loss could be telecoms investors’ gain. With the company left out of the UK’s 5G upgrade, British telecoms operators will be forced to buy equipment from more expensive – but arguably more secure – providers, or else risk missing out on the 5G revolution. That’d put Huawei’s previously cut revenue forecast even more at risk next year, but it could be good news for Nordic rivals Nokia and Ericsson, whose equipment – with the potential exception of Snake – might see a surge in demand.

The bigger picture: Anything but the gin…

Europe’s still playing its part in global tensions too. Its courts are set to decide this week whether to uphold a $15 billion tax levied against Apple, while France and the UK have announced “tech taxes” aimed at America’s biggest companies. The latter haven’t gone down well: the US has threatened to retaliate with trade taxes on European leather, olives, and gin. Tonic’s safe, though.

Originally posted as part of the Finimize daily email.

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