As the anti-American sloganeering reaches an unprecedented level of froth (there's now an unofficial trade war 'fight song') across China, the Commerce Department has softened its anti-Huawei stance, calling for a 90-day reprieve to allow American broadband companies more time to work out a 'Plan B'.
The delay will cover continued operation of existing networks and equipment, as well as support to existing handsets and other limited actions, according to Bloomberg.
But that's not even the biggest trade headline of the morning, as analysts wonder how Beijing will retaliate for the war on Huawei. Anyone who thinks Beijing won't respond is being naive, China's ambassador to the EU warned Tuesday. China will provide a "necessary response" to Washington's "wrong behavior."
"This is wrong behavior, so there will be a necessary response," Zhang Ming, China’s envoy to the EU, said in an interview in Brussels on Monday. "Chinese companies’ legitimate rights and interests are being undermined, so the Chinese government will not sit idly by."
Zhang said the White House's crackdown on Huawei is "politically motivated" and an "abuse of export-control measures."
"The U.S. government is trying to bring down Huawei through administrative means," he said.
He also warned that Beijing would present "unwavering resolve"
"The United States has been repeatedly creating troubles to the consultation, undermining the positive momentum formed in the process of hard and tough negotiations and seeking illegitimate gains through bullying and blackmail," Zhang said.
"China has unwavering resolve to defend its legitimate right and interests," Zhang said. "If the U.S. wants to fight, we will accompany to the end and we will also fight earnestly. In other words, the ball is in the U.S. court."
"We have been holding on for 5,000 years," Zhang said. "Why not another 5,000 years?"
On Friday, the Commerce Department added Huawei and dozens of its affiliates to a blacklist that will stop US companies from selling Huawei equipment. This could be seriously disruptive for Huawei's business.
Meanwhile, Global Times editor Hu Xijin warned yesterday that China would devote itself to saving Huawei, and that Washington's aggression has "woke up Chinese society."
The US cutting off Huawei supplies completely woke up Chinese society. China will face difficulties in short term. We will devote to independent R&D and abandon any illusion. But it is also a real turning point of the US semiconductor companies gradually losing Chinese market.— Hu Xijin 胡锡进 (@HuXijin_GT) May 20, 2019
A steady drumbeat of aggressive editorials continued Tuesday with Xinhua warning that the US, which started the trade war, will bear the "heavy brunt" of its actions.
As CNBC warned in a headline Tuesday morning, the trade war might "get worse before it gets better" as Beijing stokes nationalistic fervor against the 'imperialist' Americans.
"It’s going to get worse before it gets better," said Curtis Chin, an Asia fellow at the Milken Institute, a think tank.
Trade talks are still on hold, and investors have pinned their hopes for a deal on a Trump-Xi meeting at the upcoming G-20 summit. Meanwhile, every day, the US takes one more step toward imposing tariffs of as much as 25% on all remaining imported Chinese goods.
And Beijing takes another step toward other means of retaliation like, for example, a rare-earth metals ban.