ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter

US must learn from anti-Huawei campaign struggle

Washington should play security card only when evidence is strong, or risk alienating allies

| North America

The United States won a skirmish in its campaign against Chinese telecoms giant Huawei Technologies when Canada's courts agreed on March 1 to extradite Meng Wanzhou, the group's chief financial officer and daughter of its founder -- escalating a row between Beijing and Washington sparked by her arrest last December on charges of violating Iranian sanctions.

Yet while President Donald Trump's administration looks set to win this particular battle, it is clearly struggling in the wider war to dissuade other nations from using Huawei's equipment to build fifth-generation telecoms networks. The question is whether it will learn the right lessons from these setbacks.

The U.S. has issued stark warnings about the security risks posed by Huawei, the world's leading supplier of mobile network hardware, and thus a natural contender to supply countries building the new super-fast telecoms infrastructure.

5G matters because it will power a host of next-generation mobile services, from self-driving cars and drones to electric power grids. Rather than being a manufacturer of dumb equipment, Huawei will provide the ever-changing software updates upon which networks run, as is now common for cutting-edge hardware suppliers. For its U.S. critics, who assume Huawei and the Chinese state work in concert, this will give Beijing unprecedented abilities to spy upon, and potentially to disrupt, other societies.

Some of these warnings may be accurate. At the very least Huawei is in a position to cooperate with China's security agencies. But the company vehemently denies actually having done so and the U.S. authorities have so far provided little in the way of compelling evidence. Meng's extradition case, has nothing to do with espionage. If the CIA has a clear espionage case it has either not shared it even with its closest allies, like the U.K., or that information has so far failed to convince many of its partners.

The point was stressed by Huawei co-chairman Guo Ping in a feisty speech in late February at the Mobile World Congress, a big telecom gathering in Barcelona. Guo accused the U.S. of hypocrisy, referring to whistleblower Edward Snowden revelations of America's global surveillance. Elsewhere, he suggested the U.S. campaign was mostly designed to protect the U.S. National Security Agency's existing access to global networks via American tech groups. "The more Huawei gear is installed in the world's telecommunications networks, the harder it becomes for the NSA," he wrote last week.

To be fair to Washington, whatever spying may or may not have done in the past is far from the whole story. The legal framework matters. U.S. tech companies are not obliged by law to cooperate with government surveillance. Apple and others have at times refused to hand over information on data encryption to federal bodies. By contrast, China's 2017 National Intelligence Law does require companies to cooperate with state surveillance requests. Chinese Communist Party cells in every company, state-run or not, are in a position to enforce such requests.

It is a matter of judgment -- involving politics, economics as well as security -- as to how to handle the potential threats this might imply. Given Trump is readying for a new era of geopolitical competition with China, his own decision to prohibit Huawei makes sense. Yet so far only Australia and New Zealand have followed his lead in full, while Japan is imposing a de facto ban. The United Kingdom, a close U.S. ally, sounds unconvinced that a total ban is needed. Germany appears to be veering that way too.

American friends are left to weigh a tricky balance. On the one hand there are potential but vague long-term security risks. On the other are the immediate benefits of using Huawei's competitively-priced kit, and not alienating China, an important economic partner. Many seem to be deciding that Huawei's security risks can be managed.

The odds look slim that the U.S. will win over many others in Asia either. Last week the United Arab Emirates, normally a close U.S. friend, said it would push ahead with a Huawei deal. Telecoms groups in U.S.-allied nations like the Philippines are doing likewise. India is mulling a final decision. Asian nations know it is rarely in their interest to irk China without very good reason. And they don't seem to see one here.

The anti-Huawei campaign echoes the ultimately fruitless U.S. push to stop allies signing up to the Asian Infrastructure Investment Bank, a Beijing-based multilateral financial group set up in 2016. Dozens of countries ultimately decided they had more to gain from currying favor with Beijing than towing Washington's line. In retrospect the U.S. might have been wiser to encourage allies to join, and even to sign up itself, in an attempt to shape the institution rather than obstruct it.

Huawei matters more broadly because as well as the security issues at stake the company is likely to be involved in battles over future global technology standards. Huawei vexes the U.S. because it proves China's growing technology prowess. No U.S. company is a serious contender to build 5G networks. Huawei's nearest competitors are Nokia of Norway and Ericsson of Sweden. The Chinese group's equipment is often just as advanced and generally cheaper, hence why so many want to buy it.

In other industries where China is a leading player, like solar energy or high voltage power equipment, its businesses are already beginning to set international standards. The U.S. must learn either to cooperate with China in these cases, or risk a future in which geopolitical fissures create technological divisions, potentially splintering global regulation.

In Huawei's case, the U.S. is in effect asking the world whether China should be involved in designing the infrastructure that will power the next stage of globalization. So far, major allies are saying yes, damaging U.S. credibility. The conflict points to three conclusions. First, and most obviously, the U.S. is still struggling to come to terms with the fact that it is no longer able to dictate global rules. Second, it should be cautious about playing the security card in commercial matters, unless it is able to marshal compelling evidence. And finally, if Washington still wants to push back against Beijing, it must get better at picking battles it can win.

James Crabtree is an associate professor in practice at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He is author of "The Billionaire Raj."

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media