In the first section of this piece I argued that the anti-Huawei litany only makes sense when one realizes that the Chinese state, not a global telecommunication equipment manufacturer based in China, is the target of this attack.

China, in this view, is an integrated monolith and any Chinese firm can be ordered to do the government’s will without any legal, political or economic checks and balances. Mike Pompeo came right out and said it: “Huawei is an instrument of the Chinese government.” So if network operators buy Huawei equipment, it is claimed, someone in Beijing can flip a switch or issue an order and any network operator who uses Huawei gear will become helpless pawns of Xi Jinping.

Technically, this claim is ridiculous. It only resonates with people who do not understand how software and equipment vulnerabilities play out. It assumes that major network operators who buy and implement the equipment relinquish total control to their vendors. It assumes that these capabilities and their use could never be discovered. It assumes that vulnerabilities and hidden control logics would work holistically across an entire operator or even the entire country, when in fact network segmentation, the idiosyncrasies of topology and systems integration would confine problems to specific pieces of the network or specific applications. The claim is ridiculous economically, as well. It assumes that a company whose very survival as an enterprise depends on gaining trust and market share in a globalized market would throw it all away in order to advance the political objectives of the CCP. It assumes that the foreign divisions of Huawei are subject to Chinese law and not the other country’s law. Indeed, the more outlandish theories seem to imply that Huawei only wants to sell us this equipment as part of an ultra-long term conspiracy to gain control of our communications. Billions of dollars invested on research, factories and labor, all to build an elaborate disguise for a Manchurian network.

But this isn’t a debate about technology, it’s a debate about geopolitical power. For its main advocates, the attack on Huawei is part of a power struggle for global supremacy between the U.S. and China. These people see the rise of China’s economic clout as an existential threat, and they believe (wrongly, I am convinced) that we can stop it by undermining their leading industries in strategic sectors. They believe (wrongly, again) that the U.S. dominance of the post-Cold War world can be perpetuated not by out-competing our rivals economically and technologically, but by suppressing China.

Confused tactics

This mix of strategic objectives with economic policy leads to a very confused tactics. Competition in technology goods and services is quite different from military and strategic competition. One is positive sum, the other zero sum. Policies that promote economic success cannot be based on a punitive military conflict logic. This is why US policy is so irretrievably botched. Some actors, e.g. Trump himself, are merely confused and opportunistic protectionists; others are focused purveyors of a U.S.- China cold war, and believe that we need to cripple Huawei to diminish China’s power.

You can’t pursue both objectives at the same time. You want growth, peace, and beneficial trade between the world’s two biggest economies? You take the path wherein China’s growth and development helps the U.S. economy. You want a military power struggle? You take another, diverging path which seeks to cripple and destroy.

The gap between the two forms of competition became blindingly obvious when Trump imposed sanctions on Huawei. A video from the Wall Street Journal notes that there are more US suppliers than Chinese suppliers represented in a Huawei smartphone. The US companies include software and app provider Google, circuit board maker Rogers, storage chip maker Micron and Corning glass. Even core networking equipment from Huawei relies heavily on US chips.

The Huawei sanctions immediately cost U.S. firms $11 billion in sales. Longer term, the damage will be compounded as supply chains are reorganized and substitute products are developed. Think of the impact on Google if the Android operating system forks into incompatible Eastern and Western versions, and the Eastern version is out of their hands.

The immediate Chinese response to these poorly thought out initiatives provide further evidence of the clash between economic and military competition. A few years ago China alarmists were holding up the Made in China 2025 plan to become self-sufficient in high-tech areas as a threat. But the U.S. sanctions, the bite of which rests on China’s need for US-manufactured chips, only intensified and accelerated Chinese plans for self-sufficiency. If China is guilty of mercantilism, then the attack on Huawei is certain to make it worse, not better.

Let’s tot up the score: American protectionists have cut global growth rates in half; their tech nationalist wing has given us huge short-term losses in the ICT sector; their actions promise to accelerate divisions in the tech ecosystem and deliver decades of continued losses; and the ultimate result is to reinforce tech nationalism in China. What, exactly, is the U.S. bargaining for here? What are we achieving?

Favored national technology companies?

But it gets worse. A recent paper released by the Center for a New American Security (CNAS) attacks China for providing “financial support and political backing” to “favored national technology companies.” And the response they recommend is… for the United States to provide “financial support and political backing” to favored national technology companies. CNAS calls for the creation of a “Digital Development Fund” (DDF) that would subsidize information connectivity projects in the developing world. CNAS rather openly calls for the DDF to prioritize projects “of strategic importance to the United States.”

These projects should be vetted in collaboration with the intelligence community, the Department of Defense, and the State Department. At the same time, the DDF should make its lines of credit contingent on efforts by recipient companies to advance broader US development priorities such as women’s empowerment and digital inclusion.

This is exactly the wrong response. It taints American information technology products and services with exactly the same suspicions that we are now aiming at Huawei. It cynically smears human rights lipstick over the pig of military objectives. It reinforces China’s tendency to promote national champions. And it is based on the hallucinatory viewpoint that the developing world is interested in inviting our intelligence community and State Department into their infrastructure. Worst of all, it explicitly wants to lure Americans and their partners into a long-term technology cold war in which ICT vendors and states are invited to pick sides in a fragmented system.

The focus of our policy should be on opening or expanding access to China’s market for Western companies, not on restricting and excluding Chinese firms from Western markets. Yet our current approach is doing just the opposite.

Trading with an authoritarian state

Trade in ICT goods and services does not have to mean that we support the other country’s political system. Indeed, while convergence between Chinese authoritarianism and American liberal democracy will not happen, the communication and interdependence fostered by trade certainly makes relations between the two societies more peaceful and beneficial. The confrontation and decoupling promoted by the American China hawks will only make China more insecure and more authoritarian.

American sentiment towards China is at an all-time low. In this regard, China’s Communist Party is its own worst enemy. The PRC’s reaction to the NBA executive’s tweet supporting Hong Kong protests couldn’t have done a better job of helping the U.S. tech nationalists’ cause. FCC Chairman Ajit Pai, an apologist for the Trump administration’s anti-Huawei campaign, used the NBA incident to enlist the American people’s support. Pai tweeted:

If this is how China is willing to use its leverage over basketball, e-sports, and flag emojis, imagine what could happen if we let Chinese companies’ equipment into America’s #5G networks.

This is a totally false equivalence, of course. China systematically censors its domestic information economy, and gate-keeps the flow of entertainment and news content into its domestic media and has done so for decades. This is wrong, but we’re not going to change it with trade barriers or a tech-nationalist Cold War.

Buying the products of a Chinese company for domestic use, on the other hand, does not give the Chinese the same sort of leverage they have over access to their domestic market. Claiming that purchases of Huawei equipment by U.S. operators will somehow make the country subject to their political control is like claiming that buying Lenovo laptops or Haier refrigerators will make us subject to their control. It’s an absurd and phony claim.

But the most important point is this: Far from signaling an aggressive threat to the U.S., China’s reaction to the NBA is a sign of great weakness. China has a serious problem on its hands. The CCP have lost the allegiance of Hong Kong, and as that happens they also lose any chance of incorporating Taiwan into their sovereignty. What China faces in Hong Kong is not violent “rioters,” or “terrorism,” or separatism, but a people fed up with the authoritarian model. They have had enough of China’s refusal to respect their freedoms and the legal autonomy granted to them under the Basic Law. There is a total breakdown of trust in the mainland central government and in its local puppet government. The so-called “motherland” is exposed as stepping into the shoes of the British and behaving as a colonial power. What an accomplishment for the PRC: they have made the Cantonese nostalgic for British rule!

But contrary to Pai’s tweet, how the Chinese state stifles dissent and abridges human rights inside its own sovereign territory is not relevant to how we assess the risks of American buyers of a private Chinese company’s goods.

Let’s also keep in mind that the human rights concerns expressed by China hawks such as Mike Pompeo are opportunistic and hypocritical. The Trump administration’s defense of Saudi Arabia and its refusal to do anything about Mohammed bin Salman’s murder of an American journalist shows that they only play the human rights card when it serves a geopolitical objective.

When China’s economy spawns a multinational company that makes good telecommunications equipment at a competitive price, it is playing by the rules of the game and helping the global economy, especially when that company is a major buyer of advanced U.S. technologies.  Huawei is the wrong target for anyone concerned about human rights inside and outside China.

Conclusion

At its heart, the anti-Huawei campaign is a fraud. It is being sold to us as part of the trade war or as a strike for cybersecurity, but it is really part of a military-strategic cold war strategy that most Americans would reject if it were presented to them honestly. Technology and trade are being used as pawns. Mike Pompeo, Marco Rubio, Mike Rogers and others pushing this campaign are not trying to achieve fair trade, a more secure cyberspace and a prosperous America; they are after global supremacy and confrontation. In their mindset dominance cannot be shared, so they see China as an obstacle to their plans. They have singled out Huawei for more than a decade, not because it is an instrument of the Chinese Communist Party, but because it is a successful global enterprise and its dependence on a globalized economy makes it vulnerable to attack. If China did the same thing to Apple or Microsoft we would be furious. If we keep going down the tech nationalist path, we may well get to that point.

2 thoughts on “Part 2: Let’s have an honest conversation about Huawei

  1. Thanks for the clear words, it helps somehow reading rational arguments in this fraud story about technological and market success born from smart and dedicated innovations.

  2. As I mentioned on Twitter, Milton, thank you for your clear rationale about this matter, Milton. If I know anything about you it’s that you wouldn’t be so steadfast in this opinion if it were not backed up by integrity and good arguments. My bias is deep, but you have definitely made me rethink my perspective!

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