Fernando Alcoforado*
Harold Thibault et Simon Leplâtre have published article in Le Monde on 02/01/2019, under the title Chine: avec Huawei, la guerre de la 5G est déclarée (China: with Huawei, 5G war is declared), available on the website <https://www.lemonde.fr/international/article/2019/02/01/chine-avec-huawei-la-guerre-de-la-5g-est-declaree_5417769_3210.html#xtor=AL-32280270>, which reports that the meteoric rise of Huawei and its ties to Chinese power have put it at the center of the commercial and geopolitical war between China and the United States. Donald Trump accuses Huawei of being a threat to US security and warns his allies.
With its Artificial Intelligence Research lab, Huawei, the Chinese company, ranked second in smartphone sales that before was occupied by Apple, but is still behind the Samsung whom it hopes to surpass in 2020. Its devices are cheaper than competitors Korean or American. Since 2017, it is a world leader in mobile network equipment manufacturer, providing antennas, relays and other infrastructure for mobile operators to connect customers anywhere. That same year, Huawei became the company with the largest number of patents in Europe. Its spending on research and development – US$ 13.8 billion (€$ 12 billion) in 2017 – is at the level of the giants of Silicon Valley.
Huawei develops with the artificial intelligence autonomous car prototypes and is working with Audi in the autonomous direction of connected vehicles. Its rise, in a strategic field, places this new giant at the center of the war for the commercial and technological domination that China and the United States are involved. In late November 2018, the Wall Street Journal revealed that the United States government was carrying out a massive diplomatic offensive to convince governments and telephone operators in allied countries to refrain from installing Huawei equipment. The host countries of bases of the United States are particularly asked to choose between Chinese technology or American protection.
Why do some countries suspect Huawei? Diplomats and intelligence officials from the United States insist with their European, Australian or Japanese partners warning about the dangers inherent in 5G developed by Huawei. This new generation of mobile networks is expected to be deployed by 2020 in France. With the 5G, speeds increase considerably, allowing a “revolution” of mobile Internet uses by instantly transmitting information such as the movement and behavior of a standalone car when previously having a time lapse in data transmission was considered a hazard. The 5G is enabled by the installation of a larger number of antennas, to exchange larger volumes of data, with mobile terminals that multiply: smartphones, vehicles, medical devices, drones. A thickening of the network where everything passes through “intelligent” antennas. In this network are “base stations”, condensed technologies that offer opportunities for espionage and sabotage, according to Le Monde article. According to Le Monde, the transition to 5G involves major technological changes. From now on, sensitive data will also be accessible on relay antennas. Everyone should be aware that the risks of capturing data are real.
The US market has been closed to Huawei since 2012, after the Congressional Intelligence Committee concluded that Huawei poses a threat to national security. The United States is now counterattacking outside its borders. US Justice has ordered the arrest of the group’s financial director and daughter of Huawei founder Meng Wanzhou. In December 2018, the Chinese businesswoman was arrested in Vancouver, Canada, where she owns two homes. She is accused of using a front company to sell equipment from Huawei to Iran, violating US sanctions against that country. An increasing number of countries are turning their backs on Huawei. Huawei has been excluded from the bid for 5G in the United States, Australia, New Zealand and may be excluded in Japan, the United Kingdom and Canada. As for France, without naming the company, it announced, by means of an official, on 25 January that, from then on, all the infrastructure equipment of the 5G networks will be subject to prior administrative authorization.
The Le Monde article informs that the United States is attacking Huawei because it is the most advanced company and one of the largest in China. The Trump government has formulated policies to curb the development of China’s high-tech industry, and its measures are becoming tougher. The attacks on Huawei are the materialization of this strategy, said Shi Yinhong, professor of international relations at Peking University and an advisor to the Chinese government. Security services in other countries fear that Huawei’s telecommunications networks will facilitate spying in China’s service. The particular link between the Chinese government and corporations – public or private – is what worries, in particular, the functioning of the Chinese political system and its very specific capitalism. Companies, even private ones such as Huawei, must follow the official policies of the Chinese government by investing overseas.
In Brussels, Huawei has a large lobby office. The European Union is its first market outside China. The ban on Huawei would delay the deployment of the 5G in Europe within two years, according to an internal evaluation by Deutsche Telekom. But big players like Orange in France have said they will be without Huawei by 5G. On January 11, Poland announced the arrest of Huawei’s Chinese executive Wang Weijing and a former Polish national security official, Piotr Durbajlo, who became a consultant to Orange’s local branch that deploys a Huawei 5G network for testing . Both are accused of espionage “on behalf of the Chinese services to the detriment of Poland”. Among the allies of the United States, Warsaw is very zealous and for good reason: Poland, distrustful of Russian appetites, would like to shelter a permanent United States base on its territory. She has already proposed paying US$ 2 billion for her creation and calling it “Fort Trump.” Warsaw should soon ban Huawei for 5G.
The Le Monde article reports that Huawei employs 11,000 people in Europe and has established numerous partnerships with European universities – a mathematical research center in Boulogne-Billancourt, cooperation with universities such as the Humboldt in Berlin and the Royal Institute of Technology, KTH, in Stockholm. However, the prestigious University of Oxford announced in mid-January that it does not accept funding from Huawei for research projects. Vice President of the European Digital Single Market Commission, Andrus Ansip, believes the time has come for European states to assess the risks. “If Chinese companies have to cooperate with their intelligence agencies, it needs to be taken into account”.
The ability of Western countries to build their mobile networks regardless of China in the future is at stake. In 2008, as carriers prepared to install 4G, Huawei was only the fourth company in the world. Its climb to the top was achieved in just a decade, that is, the average life expectancy of a mobile “generation” network. For the first time, China is taking a strong lead in the most strategic technology area in a context of tensions between Beijing and Washington and their allies. For Europeans, it is not a question of using the word “protectionism”, since it is the practice that they systematically criticize of China. But what will remain of the competition if Huawei keeps the same pace of progression up to the sixth generation? This situation can lead to the parallel development of two distinct and hostile technological ecosystems. Already, because of the censorship that blocks access to US competitors in China, Chinese Internet users mainly use local platforms: the WeChat application instead of Facebook, Weibo instead of Twitter, or Baidu instead of Google.
The Le Monde article reports that Huawei has established itself where major network equipment vendors have not ventured: inland in China, then in poorer countries. Huawei settled in less developed countries, which established players neglected. This did not prevent Huawei from gaining a real technological advantage. In addition to industrial espionage, several corruption cases involving Huawei officials have been unveiled in Algeria and Ghana. When a private company such as Huawei acquires an international dimension in a strategic sector, he is forced to take into account the party-state, said Paul Clifford, author of The China Paradox. Although in its day-to-day management, Huawei has a high degree of independence and is in competition with other Chinese companies, such as the ZTE telecommunications group, the ruling party in China can give orders as needed. And under the chairmanship of Xi Jinping, the party’s influence on large Chinese private enterprises has increased.
When he came to the head of the party and state in China in November 2012, Xi Jinping said that the key to the survival of the single party is to ensure control over all components of society: universities, the press, lawyers, but also companies. In 2017, it passed a law on intelligence, Article 7 states: “Any organization or citizen must, according to law, support, cooperate with national intelligence and maintain secrecy about any intelligence activity of which he is aware.” China’s restrictions, regulations and governance stifle private companies and are a burden on the country’s efforts to develop global business and gain “soft power,” says Duncan Clark, showing the limits to the country’s internationalization.
While China and the United States are waging their trade war, most economists assume that China will achieve global economic supremacy. After all, with a population four times larger than the United States and a program designed to catch up after centuries of technological stagnation, it is not inevitable that China will definitely assume the responsibility of being the hegemonic economic power. Undoubtedly, one can hardly say that China’s rise is a mirage. Its rapid success is not based solely on population size. India, for example, has a similar population (both are about 1.3 billion people), but, at least for the time being, it is far behind. China’s economic leadership must be credited with the miraculous work of taking hundreds of millions of people out of poverty into the middle class.
But China’s rapid growth has been driven mainly by progress and investment in technology. And while China, unlike the Soviet Union, has shown exceptional local technological innovation. Not surprisingly, Chinese companies are already leading the way in the next generation of 5G mobile networks and their capacity for cyber warfare with the United States is high. China’s achievements still stem, in large part, from the adoption of Western technology and, in some cases, the appropriation of intellectual property. China is following its own path by demonstrating that centralized political systems are capable of driving development faster and faster than anyone could imagine, far from being simply a country with a rising average income. China can lead the digital future even if the United States does its part. The impending era of intelligent machines may be a turning point in China’s favor in the battle for global hegemony with the United States.
* Fernando Alcoforado, 79, holder of the CONFEA / CREA System Medal of Engineering Merit, member of the Bahia Academy of Education, engineer and doctor in Territorial Planning and Regional Development by the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning and planning of energy systems, is the author of 14 books addressing issues such as Globalization and Development, Brazilian Economy, Global Warming and Climate Change, The Factors that Condition Economic and Social Development, Energy in the world and The Great Scientific, Economic, and Social Revolutions that Changed the World.
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