FILE - This Sept. 15, 2019 file photo, shows storage tanks at the North Jiddah bulk plant, an Aramco oil facility, in Jiddah, Saudi Arabia. Saudi Arabia's state-owned oil company Aramco on Thursday, Dec. 5, 2019, set a share price for its IPO — expected to be the biggest ever — that puts the value of the company at $1.7 trillion, more than Apple or Microsoft. (AP Photo/Amr Nabil, File)Associated Press
Shares in Aramco, the Saudi-owned oil giant, spiked 10% Wednesday when they hit the market in the world's biggest-ever IPO.
The spike came as shares began trading on Riyadh's Tadawul stock exchange, after years of wrangling over where they would list.
Due to regulations on the Tadawul, a 10% spike was the maximum possible for the debut.
The offering raised $25.6 billion, according to the Financial Times, putting it just ahead of the previous record IPO, which was the $25 billion amassed by Alibaba in 2014 in the New York Stock Exchange.
An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia.
Ahmed Jadallah | Reuters
Saudi Aramco, the world's largest initial public offering (IPO), surged past expectations as it debuted on the country's stock exchange on Wednesday morning.
Shares of the state-owned oil company rose to 35.2 riyals ($9.38) in early deals in Riyadh, after initially debuting at 32 Saudi riyals, giving it a valuation of $1.88 trillion.
Aramco's public debut, which listed 1.5% of its shares locally on the Saudi Tadawul, is the largest on record — topping the $25 billion Alibaba raised when it went public in September 2014.
The oil giant's initial public offering has surpassed its earlier valuation of $1.7 trillion, announced when share pricing was disclosed last week at the top of market range. But the $1.88 trillion valuation remains below what the kingdom had initially been targeting and relying heavily on local investors after canceling international roadshows due to lackluster foreign interest.
This is a breaking news story, please check back later for more.
The biggest holdup in the U.S.-China negotiations is Washington’s demand that China guarantee its pledge to buy more American soybeans, as well as poultry and other agricultural products.
Photo:
derek r. henkle/Agence France-Presse/Getty Images
U.S. and Chinese trade negotiators are laying the groundwork for a delay of a fresh round of tariffs set to kick in on Dec. 15, according to officials on both sides, as they continue to haggle over how to get Beijing to commit to massive purchases of U.S. farm products President
Trump
is insisting on for a near-term deal.
In recent days, officials in both Beijing and Washington have signaled that Sunday is not the final date for reaching a so-called phase-one deal—even though that is the date President Trump has set for tariffs to increase on $165 billion of Chinese goods. That date could be extended, as has happened several times when the two sides thought they were on the verge of a deal. Those prior deals, though, never held and tariffs continued to mount.
Chinese and U.S. officials involved in the talks say they don’t have a hard deadline. On Friday, White House economic adviser
Larry Kudlow
said on two television appearances that there were “no arbitrary deadlines.” Such remarks from Mr. Kudlow—especially when they are restated several times—often reflect the president’s views and have been echoed privately by other U.S. officials.
With both sides hinting that negotiations could be extended beyond Dec. 15, Mr. Trump himself has gone back and forth in his public remarks between threatening a prolonged trade battle and trying to calm jittery investors. White House adviser
Jared Kushner,
the president’s son-in-law, has recently become involved in trying to help the two sides reach a trade agreement.
At The Wall Street Journal CEO Council meeting on Monday, Mr. Kushner said the talks are “heading in a good direction.” Asked if President Trump would follow through with more tariffs on Dec. 15, Mr. Kushner said: “I don’t know what his decision will be.”
U.S. Trade Representative Robert Lighthizer, left, with Chinese Vice Premier Liu, the lead negotiators for each side.
Photo:
mark schiefelbein/Agence France-Presse/Getty Images
President Trump, however, hasn’t yet made his decision, and he has overridden his advisers on trade several times to add tariffs.
The talks are dragging on. Working-level negotiators talk on most days, but as of Friday, lead negotiators on both sides hadn’t spoken for 10 days. U.S. Trade Representative
Robert Lighthizer
has been tied up trying to get Mexico to agree to terms on the U.S.-Mexico-Canada Agreement.
The biggest holdup in the U.S.-China negotiations is Washington’s demand that China guarantee its pledge to buy more American soybeans, poultry and other agricultural products.
For the Americans, purchases are the centerpiece of the limited deal. Mr. Trump has made clear that more farm buys from China are his top priority for a near-term deal with Beijing. The American farmers who would benefit are Mr. Trump’s key supporters in his re-election bid next year. A recent study by
Chad Bown
of the Peterson Institute for International Economics and
Emily Blanchard
and
Davin Chor
of Dartmouth argues that Republicans lost five seats in the 2018 Congressional elections because of the tariff war. Privately, administration officials generally agree with the assessment and are looking for a China deal they can claim as a victory.
Other issues at the heart of the trade war include Chinese subsidies to domestic companies and pressure on U.S. firms to hand over technology. They are largely being pushed back for future negotiation.
Specifically, U.S. negotiators, led by Mr. Lighthizer, have asked their Chinese counterparts to commit to some agricultural purchases up front, according to people briefed on the talks. The Chinese side wants to tie the size of the upfront commitment to how much tariff relief the U.S. would be willing to extend immediately. It is unclear how much the U.S. is pressing for, though Treasury Secretary
Steven Mnuchin
has said that China had committed to annual purchases of between $40 billion and $50 billion a year within the second year of a deal.
President Trump, left, met with China's President Xi Jinping, right, at the G-20 leaders’ summit in Osaka, Japan, on June 29.
Photo:
kevin lamarque/Reuters
In addition, the people said, the U.S. side is pressing China to specify in the text of the deal that there would be a quarterly review of promised purchases and that the purchase amount wouldn’t drop by 10% in any quarter. Chinese negotiators, led by Vice Premier Liu He, have been pushing back against the demand while arguing that any guaranteed purchases would violate the rules of the World Trade Organization and cause friction between China and its other trading partners.
Mr. Liu’s team has also been trying hard to get the U.S. not just to eliminate the December levies but also to relax portions of the existing tariffs on the $360 billion of Chinese imports. But Mr. Lighthizer has so far held firm on not rolling back tariffs—a point of leverage seen as key to keeping the Chinese side engaged in negotiations over knottier issues such as subsidies and forced technology transfers. Other senior officials have indicated they are willing to eliminate the last round of tariffs, on $110 billion of Chinese goods.
“Neither side wants to blink first,” said Myron Brilliant, the U.S. Chamber of Commerce’s executive vice president, who consults with officials in both capitals. “But both governments realize they need to bank the progress being made and finalize a deal before tensions could rise further.”
Related Video
Beijing is giving Washington a concession in the trade talks: regulations that would level the playing field for foreign companies in China. But there are doubts about Beijing’s true commitment to opening its market. Photo: Johannes Eisele/AFP via Getty Images
The U.S. is scheduled to add 15% tariffs on roughly $165 billion of Chinese products on Sunday—unless the two sides cut a deal, or Mr. Trump decides to suspend the tariffs to allow negotiations to continue. Neither the Chinese nor many on the American side want those tariffs to go into effect. They would hit mobile phones, laptops, toys and clothing with 15% tariffs.
For the Chinese, fresh tariffs would deepen the country’s economic problems. The latest official data show China’s exports to the U.S. plunged 23% in November from a year earlier, continuing a trend of double-digit percentage declines that is exacerbating a slowdown in the Chinese economy. For the Americans, the tariffs could prompt a consumer reaction in the U.S., Messrs. Lighthizer, Mnuchin and Kudlow worry, undermining political support for the trade battle.
In recent weeks, the relationship between the U.S. and China has been strained further in the wake of two bills in the U.S. Congress supporting human rights in Hong Kong and in the northwestern Chinese region of Xinjiang. Beijing vehemently denounced both actions.
Even though both sides are keeping the trade talks separate from geopolitical issues, the increased tensions are emboldening hardline voices in both capitals advocating a harsher stance toward the other side.
Analysts at Eurasia Group, a New York-based consultancy, estimate that there is a 65% chance that the phase-one agreement will be reached early next year. “The key risk at this point is not re-escalation, but drift,” the firm wrote in a Dec. 6 report to clients.
In China, after several months of official propaganda aimed at Washington, the leadership under President Xi Jinping appears to be showing concern about losing control of the fast-deteriorating bilateral relationship. In a notable shift, a People’s Daily editorial on Monday called for coolheadedness in dealing with the U.S. And some Chinese officials are saying privately that trade, the issue over which bilateral relations first began to crumble, could now help to put a floor under worsening ties.
For the U.S., insisting on a guaranteed purchase is a big change from past administrations, which have tried to encourage China to rely more on market forces, not government fiat, to manage its economy. But such managed-trade requirements are necessary, some experts argue, because China is far from a free-market economy.
“The United States has to deal with China as it is, not as we would like it to be,” said
Stephen Vaughn,
a former general counsel at the USTR’s office during the Trump administration who now works for law firm King & Spalding LLP.
Others say that the Trump administration is treating China in much the same way that the U.S. sought to deal with Japan in the 1980s and early 1990s. The U.S. figured that Tokyo had so much control over the Japanese economy that the U.S. had to insist on guarantees—in particular, that Japan would purchase a set amount of U.S. semiconductors.
“That’s the way we’re acting with China,” said
Douglas Irwin,
a trade historian at Dartmouth College. “We don’t trust it will be a market economy, so we have to guarantee outcomes, not just negotiate rules.”
U.S. worker productivity fell by the most in nearly four years in the third quarter, the government confirmed, while growth in unit labor costs was not as robust as initially thought.
The Labor Department said on Tuesday nonfarm productivity, which measures hourly output per worker, decreased at a 0.2% annualized rate in the last quarter, the biggest drop since the fourth quarter of 2015.
Productivity was previously reported to have decreased at a 0.3% pace in the July-September quarter. A rebound in hours, driven by a surge in the volatile self-employed and unpaid family workers component, outpaced output in the third quarter.
Productivity grew at an unrevised 2.5% rate in the second quarter. Economists polled by Reuters had expected third-quarter productivity would be revised up to show it falling at a 0.1% rate.
The government last month revised up third-quarter gross domestic product growth to a 2.1% rate from a 1.9% pace.
Compared to the third quarter of 2018, productivity increased at a 1.5% rate, instead of the previously reported 1.4% pace. Tepid productivity suggests the economy is unlikely to achieve the Trump administration's goal of 3% annual growth.
Productivity increased at an average annual rate of 1.3% from 2007 to 2018, below its long-term rate of 2.1% from 1947 to 2018, indicating that the speed at which the economy can grow over a long period without igniting inflation has slowed.
Some economists blame soft productivity on a shortage of workers as well as the impact of rampant drug addiction in some parts of the country. Others also argue that low capital expenditure, which they say has resulted in a sharp drop in the capital-to-labor ratio, is holding down productivity.
There is also a belief that productivity is being inaccurately measured, especially on the information technology side. Federal Reserve Chairman Jerome Powell said in October the U.S. central bank was "carefully assessing the implications of possibly mismeasured productivity gains."
Fed officials were scheduled to begin a two-day policy meeting on Tuesday. The central bank is not expected to cut interest rates on Wednesday after reducing borrowing costs in October for the third time this year.
Hours worked rose at a revised 2.5% rate last quarter. That was up from the 2.4% pace estimated in November.
Soft productivity last quarter lifted labor costs, though the pace of increase was not as robust as previously estimated. Unit labor costs, the price of labor per single unit of output, increased at a 2.5% rate in the third quarter. They were previously reported to have advanced at a 3.6% rate.
Compared to the third quarter of 2018, labor costs grew at a 2.2% rate, rather than the previously estimated 3.1%.
Hourly compensation increased at a 2.3% rate in the third quarter, instead of the originally reported 3.3% pace. Hourly compensation rose at a 3.7% rate compared to the third quarter of 2018.
Last quarter's gains in unit labor costs and compensation are in line with other measures showing moderate wages gains, suggesting inflation will probably continue to run below the Fed's 2% target.
Global markets shifted lower Tuesday as investors look for fresh cues on the progress of the U.S.-China trade talks ahead of the weekend’s tariff deadline.
Futures tied to the Dow Jones Industrial Average dropped 0.4%, and the yield on U.S. 10-year Treasurys fell to 1.805%, down from 1.829% Monday. Gold, like government bonds, a traditional haven for investors, rose 0.5%. The pan-continental Stoxx Europe 600 gauge fell 0.9%.
Markets are waiting on a decision from President Trump regarding whether he will delay instituting new tariffs on imports from China by a Dec. 15 deadline, as the levies carry the risk of boosting prices on products for American households and may prompt retaliatory measures.
Meanwhile, U.S. lawmakers are taking aim at China with a new bill that would bar the use of federal funds to buy Chinese buses and railcars, congressional aides familiar with the matter told The Wall Street Journal. That may complicate Mr. Trump’s efforts to reach an initial trade agreement, which would bring to a halt tensions that have made markets jittery for much of the year.
Over in China, the government last year introduced a sweeping policy to curtail its use of foreign technology products by awarding more contracts to domestic suppliers, people familiar with the matter said. The initiative, which hadn’t been made public, may help China double down on its efforts to decouple its technology sector from the U.S.
Markets have been parsing such signals as they try to gauge the potential outcome of the trade negotiations, though some investors say a degree of fatigue has also set in.
“On the one hand, there’s the boy-who-cried wolf aspect, where investors have heard it all before,” said
Oliver Jones,
market economist at Capital Economics. “On the other hand, the outcome really does impact equity markets one way or another, it impacts the earnings of big tech companies and manufacturers.”
Ahead of the New York opening bell, shares in
NortonLifeLock
climbed over 4% after The Wall Street Journal reported that the consumer-software company has attracted deal interest from a range of companies including rival McAfee.
AutoZone
shares rose almost 6% in premarket trading after the car-parts retailer’s profit beat estimates for the quarter. Regeneron dropped 3.7% after French drugmaker
Sanofi
said it may sell its stake in the U.S. biotech company.
Within European equities, Sanofi climbed over 4% in Paris after the company said it would stop its research efforts in the challenging field of diabetes, and offered a bullish forecast for its star drug Dupixent.
The U.K.’s FTSE 100 index dropped almost 1%, in line with most other major European markets. Britain is preparing to head to the polls Thursday for a crucial election.
Federal Reserve officials are poised to begin a two-day meeting Tuesday, where they are expected to decide to hold steady on interest rates as Friday’s strong jobs report will likely reassure policy makers about the strength of the economy.
Federal Reserve Chairman Jerome Powell gave a news conference as traders worked on the New York Stock Exchange floor in September.
Photo:
Spencer Platt/Getty Images
Jerome Powell
engineered a humbling about-face in U.S. interest-rate policy in 2019, steering a group of reluctant colleagues at the Federal Reserve toward rate cuts to ensure a cooling U.S. economy didn’t slip into recession.
The moves have worked so far. The expansion recently entered its second decade, unemployment held at a 50-year low and stocks neared all-time highs.
Now as Mr. Powell, the Fed chairman, looks toward 2020, he is on a new mission: Keep the U.S. out of the kind of economic anemia plaguing Europe and Japan.
SHARE YOUR THOUGHTS
Do you agree with the decisions Jerome Powell has made in 2019 as head of the Federal Reserve? Join the conversation below.
After the Fed failed to get inflation up to its 2% goal for much of this expansion, Mr. Powell is increasingly determined to meet—or even exceed—that level. Such a shift marks an important change in thinking at the Fed about how it manages the inflation target that is at the core of its mission.
Officials are likely to hold rates steady at their final meeting of the year this Tuesday and Wednesday. They lowered their benchmark rate three times since July, to a range between 1.5% and 1.75%, to cushion the U.S. economy against ebbing global growth and trade tensions after raising it four times last year.
Mr. Powell is eager to build a broad consensus among his colleagues and synthesize a range of views when making policy, but key turning points this year made him more willing to press ahead when unanimity wasn’t possible, according to interviews with current and former Fed officials and a review of Mr. Powell’s public calendars.
Fed officials were more divided this summer over Mr. Powell’s push to cut rates than at any other time in his nearly two years at the helm.
“This is not a my-way-or-the-highway approach to monetary policy. That said…we’ve had some tough decisions to make,” said Fed Vice Chairman
Richard Clarida,
a close ally of Mr. Powell, in an October interview.
To an unusual degree among Washington institutions, the Fed operates by consensus. Many decisions are unanimous, and while official dissents are common, the chairman rarely loses votes.
Absent a crisis, Fed officials make big policy moves with caution. It takes time to build agreement among the 17 officials who participate in policy discussions, including the 10 who cast votes on rate changes.
When Mr. Powell presented his recommendation for a quarter-percentage-point rate cut before the July 30-31 meeting, around half of the 12 Fed reserve bank presidents resisted.
Economic data hadn’t deteriorated, but long-term bond yields had tumbled, which happens when investors grow risk-averse or pessimistic on growth, after repeated tariff threats by President Trump.
President Trump has repeatedly attacked Mr. Powell and the Fed.
Photo:
carlos barria/Reuters
The internal split reflected uncertainty over the economic outlook and the requisite tactics. Some Fed officials were hearing from business executives that trade uncertainty—not high borrowing costs—was holding back investment. Others wanted to wait for more evidence of a global manufacturing downturn infecting the broader economy.
Mr. Powell and his lieutenants argued the global slowdown meant that keeping rates unchanged would leave them too high, provoking a market backlash that could spread the weakness to the broader economy.
Two Fed bank presidents voted against the July cut because they preferred to hold rates steady. At least three others without a vote also thought a cut wasn’t warranted. When the Fed approved another quarter-point cut in September, a third official dissented in favor of a bolder half-point action.
Committee divisions persisted into October, when the Fed lowered rates for a third consecutive time and Mr. Powell signaled he didn’t expect more cuts.
Well before 2019, Mr. Powell had played a key, behind-the-scenes role shaping the group of officials whose support he needed this year. Last year, he pressed the White House to make Mr. Clarida, a macroeconomist who worked at bond giant Pimco, the Fed’s vice chairman.
The Trump administration had looked at
John Williams,
a monetary theorist who was then president of the San Francisco Fed, for the vice-chairman job. After Mr. Trump was lukewarm on Mr. Williams, Mr. Powell steered the New York Fed to select him to lead the bank last year instead of two central-bank outsiders.
Messrs. Powell, Clarida and Williams form the so-called troika at the Fed. Policy decisions are the product of a large committee, but the troika plays the key role molding that consensus. The three men meet or speak by phone several times a week, shaping Mr. Powell’s policy recommendations that they later defend in public speeches and private deliberations.
Mr. Powell had also built support among the Fed reserve bank presidents, several of whom owed their jobs to him.
In 2013, one year after Mr. Powell joined the Fed board of governors, he took on the unglamorous job of running the Fed committee that serves as the go-between with the reserve banks. The post put Mr. Powell, a 66-year-old former lawyer and financier, at the center of the search processes that the reserve banks in Philadelphia, Dallas, Minneapolis, Atlanta and Richmond conducted to select their current presidents.
“He has shown a level of trust by supporting their candidacy for president. Trust tends to be mutual,” said Vincent Reinhart, a former senior Fed economist.
Mr. Powell and Boston Fed President Eric Rosengren toured East Hartford, Conn., in late November to survey recent community redevelopment efforts.
Photo:
brendan mcdermid/Reuters
Most of the selections look like Mr. Powell—non-economists with executive experience in finance, business or academia.
Mr. Powell, the first Fed chairman without a Ph.D. in economics in three decades, doesn’t always come to big issues with a firm view but instead waits to hear what everyone says first. Some staffers have traced certain intellectual curiosities to economic debates he has been following on Twitter. He doesn’t tweet.
When Dallas Fed President
Robert Kaplan
joined the central bank in 2015, Mr. Powell, then a governor, advised him that to gain credibility within the system, he should spend lots of time with Ph.D. economists “working your tail off to learn economic theory,” Mr. Kaplan recalled in an interview last year.
Mr. Powell blocks out the Thursday and Friday before every policy meeting to speak by phone with all 12 reserve bank presidents and to meet individually with the four other Fed governors. He gauges where his colleagues stand while previewing his arguments for the meeting.
“He’s a very good listener,” said Mr. Kaplan. “He’s not looking…for people to agree with him just because it’s his view.”
Mr. Trump’s repeated attacks on Mr. Powell have drawn the other officials closer to their chairman. The president has called Mr. Powell naive, clueless and a “terrible communicator” for not moving more aggressively to cut rates.
Mr. Powell has avoided provocation. “We serve all Americans in a nonpartisan, nonpolitical way,” he said last month. “We’ll make mistakes. We’re human. But we will not make mistakes of character.”
Even if they couldn’t support Mr. Powell’s policy recommendations, his colleagues respected his quiet vigilance to safeguard the central bank’s apolitical culture. “He is navigating that as skillfully as anybody could, and we all see that,” said Minneapolis Fed President
Neel Kashkari,
who favored a larger rate cut this summer, in an interview last month.
Mr. Powell’s approach has also earned accolades outside the Fed. He received a standing ovation from 750 attendees before a speech at a Chamber of Commerce dinner in Providence, R.I., last month, after Sen. Jack Reed (D., R.I.) praised his demeanor and “steady hand.”
Mr. Powell will come out of this era “strengthened in his committee standing” if the economy steadies next year, predicted David Wilcox, a former Fed economist who from 2011 to 2018 led its forecasting division. “I was a little skeptical of the case for cutting interest rates. In hindsight, as inflation has continued to lag, they’ve been proven much more right than wrong.”
Mr. Powell testified before a Joint Economic Committee hearing on Capitol Hill in November.
Photo:
james lawler duggan/Reuters
Robert O'Brien, President Trump's new national security adviser, has dire warnings for U.S. allies considering Huawei as a partner for 5G networks.
Saul Loeb/AFP via Getty Images
hide caption
toggle caption
Saul Loeb/AFP via Getty Images
President Trump's new national security adviser is warning of a information security doomsday scenario for U.S. allies that allow Chinese telecommunications company Huawei to build their next generation 5G networks.
Ambassador Robert O'Brien said countries that allow Huawei in could give China's communist government backdoor access to their citizens' most sensitive data.
"So every medical record, every social media post, every e-mail, every financial transaction, and every citizen of the country with cloud computing and artificial intelligence can be sucked up out of Huawei into massive servers in China," O'Brien told NPR in an interview.
"This isn't a theoretical threat," O'Brien said before speaking at the Reagan National Defense Forum, an annual gathering of defense industry and military officials.
The Trump administration has taken measures to keep Huawei and other companies with ties to the Chinese government out of U.S. telecommunications systems. It's working hard to convince allies to do the same.
Australia, New Zealand and Japan block Huawei, but other allies such as Canada and Britain have said they are open to allowing the company build some less sensitive 5G networks.
O'Brien warned it would be difficult to have full intelligence sharing information with a partner whose network was tied to Beijing.
He described how China has assigned a "social credit score" to its own citizens based on information it gathers — information used to determine whether people can get on an airplane, buy a train ticket or get a particular job.
"But what if China had a social credit score for every single person in the world?" O'Brien said. "What if, for democracies, China knew every single personal, private piece of information about any of us and then could use that to micro-target people to influence elections?"
O'Brien's concerns underscore the complexity of current relations between the United States and China.
The Trump administration is in the throes of a bitter trade war with Beijing, has imposed visa restrictions on Chinese officials believed to be involved in human rights abuses and has proposed a $2 billion U.S. weapons sale to Taipei, which Beijing objects to, claiming Taiwan is part of greater China.
O'Brien and Defense Secretary Mark Esper, both of whom have only been in their positions a few months, have already spent considerable time traversing the globe warning of the Chinese threat.
During his own speech at the Reagan National Defense Forum on Saturday, Esper also warned of the spread of Huawei. And he said the United States needs to reallocate military forces and resources from Afghanistan and the Middle East to Asia.
Esper pointed to the National Defense Strategy, released last year, which cites China's "predatory economics," and calls for building up military operations in the Pacific to counter China's global ambitions and military expansion.
"China's economic rise has allowed it to triple its annual military spending since 2002, with estimates reaching close to $250 billion last year," Esper said in his speech. "Beijing continues to violate the sovereignty of Indo-Pacific nations and expand its control abroad under the pretense of 'belt-and-road' infrastructure investments."
President Trump has also raised concerns with allies about Huawei and 5G, but said there are limits to his powers of persuasion.
"Everybody I've spoken to is not going forward," Trump said last week at a summit with NATO leaders. "But how many countries can I speak to? Am I going to call up and speak to the whole world? It is a security risk, in my opinion, in our opinion. We're building it and we've started. But we're not using Huawei."
China has been willing to provide cash, resources and equipment to foreign governments in ways the United States is not. Foreign diplomats say it's difficult to turn down China when they desperately need cash for infrastructure and job-creating projects like new roads, telecommunications equipment and energy systems.
O'Brien said the Chinese government has made Huawei very attractive through subsidies. Western competitors like Qualcomm, Nokia, Ericsson or Cisco can't compete at the same price and still make a profit.
But O'Brien said foreign governments lured by the cheaper prices are missing the big picture.
"It's great to get a discount," O'Brien said. "It's great to get something for free. But at the end of the day, it really isn't free. There's no free lunch. And folks, our allies, need to consider the long term consequences of taking the cheap Huawei equipment now and what that's going to mean for them and their country in the long term."
FILE - This Sept. 15, 2019 file photo, shows storage tanks at the North Jiddah bulk plant, an Aramco oil facility, in Jiddah, Saudi Arabia. Saudi Arabia's state-owned oil company Aramco on Thursday, Dec. 5, 2019, set a share price for its IPO — expected to be the biggest ever — that puts the value of the company at $1.7 trillion, more than Apple or Microsoft. (AP Photo/Amr Nabil, File)Associated Press
