Huawei gets a Christmas gift from the Wall Street Journal

Photo credit: The China Project illustration by Derek Zheng

It has not been a pleasant year’s end for Huawei, the leading Chinese telecom company.

A month ago, you wouldn’t have anticipated this. Attacks on the company by the U.S. government did not affect its third-quarter revenue: 611 billion yuan ($86 billion), or nearly 25 percent more than the third quarter of last year. Countries from Russia to Kenya have embraced Huawei, and the telecom giant is also benefiting from the early launch of 5G technology in China on October 31.

But then, reports emerged that Huawei had mistreated a former employee, and internet users in China saw hypocrisy in how the company was handling the situation.

The Wall Street Journal gave Huawei a big sack of coal for Christmas, with a wide-ranging investigation into how much the company’s finances benefited from Chinese government support.

• “China’s tech champion got as much as $75 billion in tax breaks, financing and cheap resources as it became the world’s top telecom vendor.” (See How the Journal calculated Huawei’s state support for details.)
• These are the calculations:

The largest portion of assistance — about $46 billion — comes from loans, credit lines and other support from state lenders… The company saved as much as $25 billion in taxes between 2008 and 2018 due to state incentives to promote the tech sector. Among other assistance, it enjoyed $1.6 billion in grants and $2 billion in land discounts.

This matters because Huawei has consistently claimed that it has an arms-length relationship with the Chinese government. Click here to read the company’s full response to the WSJ investigation.