The Wall Street Journal reported that China had plans to deploy more than 500,000 base stations as it moved aggressively to cover the country with 5G technology.
One Japanese company which is benefitting from the supply of equipment to China is electronic-component maker Murata Manufacturing whose chairman was quoted as saying: “The Chinese government is enthusiastically promoting the spread of 5G. It’s a very promising market for our parts."
The US introduced fresh restrictions on Chinese telecommunications equipment vendor Huawei Technologies in May, making changes in its Foreign Direct Product Rule which prevents a company from buying goods that are produced using American technology or equipment, no matter whether the firm making them is American or not.
The WSJ report said that while the US and China were fighting over technology leadership, Japan was supplying goods to both sides and avoiding any political slip-ups.
Export controls unveiled by the US have mostly hit American companies. But former US trade official Wendy Cutler said these export controls could be extended to US allies as well.
The report said Japanese companies were deriving healthy profits from selling to their Chinese counterparts. Anritsu, which makes machines that monitor the functioning of 5G base stations, had seen a 75% profit rise in the second quarter, compared to a year ago.
It is not yet clear how the latest US strictures will be interpreted and lawyers are working to understand the full implications.
But, as Martin Chorzempa, research fellow at the Peterson Institute for International Economics, put it there is a risk of de-Americanisation of global supply chains with foreign companies avoid US technology altogether to avoid coming up against US export controls.