The UK’s mobile telecom providers are being banned from buying new Huawei 5G equipment after December 31, and they must also remove all of the Chinese firm’s 5G equipment from their networks by 2027, the UK government announced. New restrictions are also being applied to the use of the Chinese company’s broadband equipment. The UK government wants operators to “transition away” from purchasing new Huawei equipment for use in the full-fiber network, according to the BBC. “It will have very bad implications for the country. The UK will lag behind other major economies in utilizing the next-generation ultra-fast mobile technology, and potentially revolutionary new business models as well, to be enabled by Huawei’s 5G,” a Beijing-based industry analyst told the Global Times, adding that the UK’s trade ties with China will be hurt. The CEO of British Telecom has warned it may take a decade to remove Huawei equipment from Britain’s wireless infrastructure. The Chinese firm’s equipment has been in the UK’s telecoms infrastructure for two decades. Two-thirds of BT’s networks are currently provided by Huawei, with one-third from Nokia.

The UK decided in January to let Huawei continue supplying equipment to the country’s 5G network despite pressure from the U.S. to crack down on the Chinese firm, but with restrictions. The company was excluded from providing “core” 5G gear. “Excluding Huawei’s participation in the UK’s next-generation networks means the country’s telecommunications sector would suffer unbearable losses, and the extra costs would shift to consumers,” said Industry Analyst Ma Jihua. “Regrettably our future in the UK has become politicized, this is about U.S. trade policy and not security,” Huawei commented. It threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide. Instead of “leveling up,” the government is leveling down and we urge them to reconsider, Huawei said.

China harshly criticized the UK’s decision to ban Huawei from the UK’s 5G development, painting London as an accomplice in the U.S.’ politically driven crackdown on the Chinese telecom firm based on fabricated “national security risks,” and vowed to take “all necessary” measures to protect the legitimate interests and rights of Chinese businesses, the Global Times reports. China’s Foreign Ministry Spokeswoman Hua Chunying said that the UK’s move has undermined mutual trust for China-UK cooperation and China’s confidence in the UK market. “This is not about one company or one industrial sector, this is about the UK highly politicizing commercial and technology issues at all costs,” she said. “If the UK insists on politicizing the business operations of a single Chinese firm, China could also do the same to defend the rights of Chinese firms,” Zhao Junjie, Research Fellow with the Chinese Academy of Social Sciences’ Institute of European Studies, told the Global Times, noting that UK firms’ “political bow” to the U.S. should make UK companies that make big profits in China like HSBC to “get nervous and suffer.” “It has become questionable whether the UK can provide an open, fair and non-discriminatory business environment for companies from other countries,” Chinese Ambassador to the UK Liu Xiaoming said, adding that “the way you are treating Huawei is being followed very closely by other Chinese businesses, and it will be very difficult for other businesses to have the confidence to have more investment”.

Some British Conservatives even want more. Iain Duncan Smith said that while he welcomed the decision, the government should shorten the seven-year timetable for purging Huawei equipment. “Let us bring it forward to five and let’s do it quickly,” he told Parliament. His colleague, Bob Seely, said in a statement he too wanted the government to move faster. Huawei said it is disappointed by the ban and called on ministers to reconsider. “UK revenues are less than 1% of Huawei’s global revenues,” Executive Vice President Jeremy Thompson said.

Prospects for a post-Brexit China-UK trade agreement have worsened considerably. If the Huawei ban prompted a wider trade conflict between China and the UK, the UK’s trade with China could fall by 90% in the worst case scenario, its GDP could drop by 0.75% and inflation could rise by 0.6% in 2020, the UK’s National Institute of Economic and Social Research (NIESR) said in a report, according to the Global Times. Huawei said it supported over 26,200 jobs in the UK in 2018 and contributed GBP470 million in tax revenue to the UK.

The U.S. announced it was imposing visa restrictions on employees of Chinese high-tech companies, including those from Huawei. It is also considering imposing visa restrictions on Members of the Communist Party of China.

Huawei posted revenue of CNY454 billion in the first half of 2020, a 13.1% increase year-on-year, with a net profit margin of 9.2%, beating forecasts amid the Covid-19 pandemic and an intensified U.S. crackdown. Huawei’s carriers, enterprises, and consumer businesses had revenue of CNY159.6 billion, CNY36.3 billion, and CNY255.8 billion respectively, all recording slight growth compared to the same period last year.