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US temporarily eases trade restrictions on China's Huawei

Shanghai, New York

THE United States has temporarily eased trade restrictions on China's Huawei to minimise disruption for its customers, a move that the founder of the world's largest telecoms equipment maker said meant little because it was already prepared for US action.

The US Commerce Department blocked Huawei Technologies from buying US goods last week, a major escalation in the trade war between the world's two top economies, saying that the firm was involved in activities contrary to national security.

The two countries increased import tariffs on each other's goods over the past two weeks after US President Donald Trump said that China had reneged on earlier commitments made during months of negotiations.

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On Monday, the Commerce Department granted Huawei a licence to buy US goods until Aug 19 to maintain existing telecoms networks and provide software updates to Huawei smartphones, a move intended to give telecom operators that rely on Huawei time to make other arrangements.

It is unclear what the US government extension permits, but if it allows Huawei to keep purchasing components, the company will likely order more to build inventory, said Mark Kelleher, an analyst at DA Davidson.

Huawei is still prohibited from buying American-made hardware and software to make new products without further, hard-to-obtain licences.

Huawei founder Ren Zhengfei on Tuesday told Chinese state media that the reprieve bore little meaning for the company as it had been making preparations for such a scenario.

Meanwhile, Huawei said that it is working on its own operating system for its mobile handsets and will consider rivals to Google's Android.

The Chinese telecom equipment giant said on Tuesday that it was in talks with the Alphabet Inc unit about how to proceed after Google confirmed it would cut access to some of Huawei's operating system features for the company's new devices in response to the announcement.

Should Google's system no longer be available, "then the alternative option will naturally come out - either from Huawei or someone else", Abraham Liu, Huawei's representative to the European Union institutions, said at an event in Brussels on Tuesday.

Mr Liu said that Huawei had been working on its own operating system but that he did not have the details about when this would be ready. Huawei would do everything in its power to mitigate the impact of the US decisions, he added.

"Obviously there is a challenge here," said Mr Liu. "I hope that very soon that the leaders from my consumer business group will be able to share with you our new strategy based on the new situation."

The US Department of Commerce on Monday granted a 90-day relief for certain US broadband companies and wireless customers using Huawei equipment. For Huawei phone users, the temporary reprieve means that Google will be able to provide key Android security updates during the 90-day time frame, but future Huawei phones will still lack Google's apps.

"For existing models already in market - there is no major impact," Mr Liu said of Huawei devices running on Google's Android. "For the future one, both teams are still working together to figure out what to do."

Bloomberg reported late on Monday that Huawei has been pitching app makers and European carriers in a bid to develop and spread its own mobile app store in Europe. The company's proprietary app store would have been an important feature of Huawei's own operating system, which it said last year it had started to build. REUTERS, BLOOMBERG

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