What’s the big deal about Huawei?

International Relations, Politics, Quick Reads, Quick Reads
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Forgot Johnson and Johnson’s, or Wells Fargo, Huawei has been the most notorious and controversial company of at least the last few years. Boris Johnson’s decision on 28 January to allow Huawei, a Chinese telecoms giant, to build 35% of Britain’s 5G infrastructure caused uproar, both domestically and internationally. Senior Tories, including Ian Duncan Smith and David Davis, wrote a letter criticising the decision, while Mike Pence said he was ‘profoundly disappointed’ and Australian MPs cancelled a scheduled visit to the UK. In some sense, Johnson’s decision is understandable. Financially, Huawei is the obvious option. It is the global leader in telecoms infrastructure, with a 31% market share in the 2G, 3G and 4G hardware infrastructure (ahead of rivals Ericsson and Nokia). Huawei has already signed at least 60 5G contracts around the world, and would be able to provide the infrastructure to the UK cheaper and faster than its competitors. Furthermore, with Britain’s departure from the world’s largest free-trade bloc (the EU and its trading affiliates) just months away, Johnson does not want to alienate the world’s second biggest, and fastest growing, economy. So, what is all the controversy about? What is everyone’s problem with Huawei?

The reasons behind why many Western companies have taken such harsh stances against Huawei are not, generally, financial ones. Perhaps the most important reason is that many Western governments view Huawei with great suspicion due to security concerns. Many believe that Huawei sends its data to the Chinese government (on request) and that, if Huawei were allowed to build parts of the 5G systems which handle classified intelligence, national secrets may be passed on to the Chinese government. However, governments’ suspicion over Huawei, particularly the US and Indian governments, is derived from multiple other events. Huawei first found itself in hot water over who it was supplying telecoms to. Namely, in the 1990s, one of Huawei’s main clients was the PLO, while, in 2001, India blacklisted Huawei over alleged involvement with the Taliban and began investigating. While nothing ultimately came of India’s investigation, many countries, including the US, remain suspicious that Huawei developed telecoms equipment for the Taliban.  More recently, Huawei has been criticised for dealing with countries such as Iran, Cuba and North Korea.

In short, Huawei violates many of ‘our’ rules. In addition to potential national security breaches and violations of sanctions on blacklisted countries, it has also been accused of fraud and, like many other companies in China, IP theft. The US’ qualms over Huawei’s disregard of IP laws have been a particularly long-running battle and have primarily concerned the two US firms Cisco and T-Mobile. Indeed, as far back as 2003, Huawei admitted to stealing code from Cisco. On December 1 2018, these various issues came to a head when Meng Wanzhou, Huawei’s CFO and daughter of Ren Zhengfei (Huawei’s CEO and founder), was arrested in Vancouver for extradition to the US on the grounds of fraud and violation of US sanctions on Iran. She is currently awaiting trial.

However, the spat over Huawei is now about much more than just Huawei’s actions: Huawei has also become a symbol of the trade war between the US and China. With its disregard of IP laws, poor transparency and close relationship with the Chinese communist government, Huawei represents many of the things that the US, and Trump, resent about China. Indeed, Huawei has often been used as a bargaining chip in the trade war negotiations. For example, on May 15, the Trump administration effectively banned US companies from working with Huawei (e.g. Huawei could no longer use Google’s Android system), before then providing a 90-day exemption after China agreed to negotiate. Nor is this a stance taken exclusively by Trump supporters – all the remaining candidates for the Democrat nomination want to continue to take an uncompromising stance on Huawei and China.

In this way, the choice over whether or not to use Huawei for 5G systems has become a choice not just about balancing cost of installation with security concerns, but also about America vs China in the trade war. Trump has already issued stern warnings to the UK over its decision to allow some parts of the 5G system to be built by Huawei and, undoubtedly, this will be a major sticking point of any future trade deal with the world’s biggest economy. Thus, it seems very bizarre that Johnson, who prides himself on his close relationship with Trump and being able to quickly forge a trade deal with the US, would then opt for Huawei. Certainly, some leading Tories, who recently challenged Johnson in parliament, think so too. Johnson’s decision is a high risk one and whether or  not he has just diplomatically isolated himself from America remains to be seen.

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