Chinese telecoms equipment manufacturer Huawei Technologies (華為) on Thursday rejected a US government official’s suggestion that its rapid growth was because of Chinese government financial aid.
“It is fundamentally and utterly incorrect,” Huawei’s vice president of external affairs Bill Plummer said.
He was responding to a comment by US Export-Import Bank president Fred Hochberg on Wednesday that one reason Huawei’s “growth has been so dramatic is that it’s backed by a US$30 billion credit line from the Chinese Development Bank [CDB, 中國發展銀行].”
“This backing allows Huawei to significantly reduce its cost of capital and to offer financing to their buyers at rates and terms that are better than their competitors,” Hochberg said in a speech.
He used Huawei as an example of what he described as a changed global environment for US exporters in which China and other emerging economies are directing capital flows toward favored sectors in an attempt to grab market share.
Plummer said CDB agreed in 2004 to make available “as much as US$10 billion in export credits to potential Huawei customers, not Huawei.”
When that expired, Huawei and CDB signed a second memorandum of understanding in 2009 for US$30 billion for five more years, Plummer said.
Since 2005, Huawei customers have attempted to tap US$4.25 billion of CDB export credits to finance 35 projects around the world, Plummer said.
“Only US$2.99 billion of the US$4.25 billion was actually extended. Over the same period of time, from 2005 until now, our global sales have exceeded US$110 billion. It is a minuscule fraction of our business that has actually benefited from a customer getting credit from the China Development Bank,” Plummer said.
“The suggestion that there’s some US$30 billion credit line to Huawei that has driven our global growth is fundamentally incorrect,” Plummer said.
A spokeswoman for the US Eximbank said Hochberg had no intention of backing away from his comments.
“Chairman Hochberg stands by his assertion that a US$30 billion line of credit from the Chinese Development Bank — used as buyer financing — has undoubtedly contributed to Huawei’s growth. Financial backing of this magnitude creates options and opportunities that may not otherwise exist,” Eximbank vice president Maura Policelli said.
This is not the first time the world’s No. 2 network equipment provider has clashed with the US government.
Earlier this year, Huawei abandoned a US$2 million bid to buy the assets of US server technology company 3Leaf Technologies after the administration of US President Barack Obama raised national security concerns about the deal.
Three years ago, Huawei was forced to drop a massive investment in US telecoms company 3Com under similar pressure from US government officials.
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