24/7 Wall St.

Huawei Technologies, the largest smartphone company in China and the third largest in the world, was about to build a beachhead in the U.S. market via a distribution deal with AT&T Inc. (NYSE: T). But AT&T suddenly walked away from the partnership. Little was available on the reasons for this, although rumors were that Huawei was a security threat.

At about the same time, The Wall Street Journal reported that Huawei’s telecom infrastructure businesses could be key to competitive bids for multibillion 5G build-outs in the United States. More competition means lower prices to put these new networks in place, presumably. Are China’s tech companies serial spies on U.S. tech, corporate and government interests? If so, where does the line get drawn when the use of Chinese technology is a security hazard?

Chinese companies could have tech products, both hardware and software, in America. Americans could have access to some of China’s e-commerce and social media sites. For the most part, however, there is almost no cross-pollination in these sectors between the two countries. If the AT&T decision is any sign, that will continue and the United States may become even more aggressive as it blocks Chinese businesses from the large U.S. technology market, probably the largest in the world.

Much of the blocking is due to concerns by the federal government that Chinese companies are tools of the Chinese government. Would large multinational companies do that? Not if they have any chance to expand beyond the borders of the People’s Republic. Maybe China does not care how much it undermines the future of these enterprises. That means the businesses will never be true multinationals and never grow the way that western multinationals can.

China is left with a large dilemma. Prove large Chinese companies are safe for the United States to do business with, or make certain that they are never more than Chinese companies, cordoned off from the largest business opportunities in the world.