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Behind Huawei: The Battle for Communication Networks

  • The debate over Huawei highlights that control over global communications technologies has always been crucial for world leadership
  • Communications networks will continue to become even more important to global leadership as they come to underpin nearly every facet of modern infrastructure
  • In China, international pushback on Huawei will intensify the debate on strengthening self-reliance and leading on international standards-setting, especially in communications

Meng: It might have caught many by surprise that Huawei, a Chinese technology company that was founded three decades ago as a telecom equipment supplier, would become so deeply implicated in global geopolitics. With the recently escalated U.S. sanctions barring Huawei and its suppliers from using American technology and software, the company has now become not only the focal point of U.S.-China trade negotiations, but more crucially, the unexpected battleground of two global superpowers. Further, given that Huawei’s CFO Meng Wanzhou remains under house arrest in Canada due to allegations of bank fraud in violation of U.S sanctions against Iran, and the UK government’s decision to remove Huawei technology from its 5G network by 2027, the company’s leading position in 5G technology seems to represent an existential threat to the liberal West. Even for many of those who work at Huawei, with whom you and I have talked over the years, this sudden attention from international media and Western politicians came as a surprise.

Liebenau: There are many ironies about this situation, as well as layers of veiled practices on all sides. For most of its history, Huawei tried to keep a prudent distance from government intervention into its practices and was suspicious of Chinese Communist Party attention. They worked with standards-setters and telecommunications regulators as part of their engagement with the domestic market, but their main competitor domestically has been the state-owned ZTE. In March 2017 ZTE pleaded guilty to violating trade sanctions by exporting US technology to Iran and North Korea and was fined and reprimanded. Fourteen months later President Trump, in an opaque move, largely reversed the penalties, effectively saving the company from near-collapse.  Huawei thought it had stayed largely out of the firing line but it was longer-term trends that brought its foreign critics to focus sharply on it. These include the increased engagement of Chinese companies in international standards setting bodies; the conspicuous technological successes Huawei enjoyed after around ten years of massive investment in R&D staff, facilities, and collaborations; and the concomitant atrophying of Cisco, the main American competitor. The irony of the Western coalition’s suspicions about Huawei is that many make assumptions about what it could be doing based not on evidence, but on what we know it is capable of doing because we saw, in the Edward Snowden revelations, what US companies actually did. I am not holding my breath waiting for a Chinese equivalent of Snowden to emerge!

Meng: Indeed, ironies and veiled practices are very useful lenses through which we can examine the Huawei story! One of my informants working at Huawei 2012 Lab[1] once said to me with incredulity: “I don’t understand how the US could accuse us of violating the rules. From day one since I started working at Huawei, the message constantly being driven home to us is that we must follow international standards, both technologically and legally.”

There are probably two assumptions underpinning the U.S. allegation. The first is the omnipotence of Chinese government – that it can demand compliance of any private companies. The doomsday scenario is repeatedly depicted by Western politicians that “even if everything is fine now, one day the Chinese government could ask Huawei to open a backdoor to its network and the company will have to follow the order”. The second is based on the long but veiled tradition of the collusion between U.S. government and private companies of strategic importance.

If we step back from the current controversies and cast our eyes on a longer historical trajectory, we can see that control over communication networks has always been crucial to world leadership. From the 19th century British reign over intercontinental submarine cable networks to the U.S. effort of circumventing such predominance in the early 20th century with radiotelegraphy; from the dominance of global news agencies such as Reuters, Agence France-Presse, and Associated Press, to the fraught movement of establishing a New World Information and Communication Order (NWICO) in the 1970s and 1980s, contestations over the command of communication networks, regardless of the type of technology involved, has never stopped. The question we should be asking is twofold: what is the historical continuation and how is 5G different?

Liebenau: The strategic role of communications remains, but the extent to which it has become an infrastructure that underlies all others magnifies its significance as a critical utility.  One feature of this broadening of its role is that, in capitalist nations, government constitutes a smaller proportion of the  overall value of the whole economy and so also the communications infrastructure. Most of the value of 5G will be from private sector use and it is differentiated from 4G in that it extends further beyond entertainment and video communications into factory processes, logistics and supply chain management, device monitoring and eventually advanced uses such as autonomous vehicle controls. Sensor networks, security, transport and other immediate applications span public and private value creating applications, and governments will have more direct concerns about where these uses threaten public welfare.

Otherwise the key concerns of governments are with the value that accrues to their domestic economies. Concerns for the integrity of military communications and more arcane uses by intelligence services seem a red herring for now--these have almost always been set apart from civil communications uses.  Similarly, there seems little spillover between the technical architectures of communications systems and control of content other than at the level of conglomerate companies.  For example, Huawei had not invested in major media businesses in the way that Microsoft held shares in MSNBC or that Jeff Bezos owns the Washington Postor that Sony owns Columbia Pictures. This problem is also rather distantly related to the problem that defines the legal status of Facebook or Twitter as a publisher potentially responsible for content, as opposed to a postal service which is not liable for what might be put inside an envelope.

Meng: What you said reminds me of a short but telling exchange at the Munich Security Conference earlier this year between Nancy Pelosi and Fu Ying, the former Chinese Ambassador to the UK and the current Chairperson of the Foreign Affairs Committee of National People’s Congress. After Pelosi accused China for “seeking to export its digital autocracy through its telecommunication giant Huawei”, Fu Ying offered a rebuttal by saying that ever since the start of China’s economic reform, the country had introduced all sorts of Western technologies while being able to maintain its political system. She then asked whether “the democratic system is so fragile that it could be threatened by this single high-tech company of Huawei?”. Even though Huawei has not, nor do I believe it tends to in the future, veered into the realm of content production, it is now portrayed by many Western politicians as a significant threat to liberal democracy due to alleged cyber-espionage and technology theft despite the lack of evidence on both accusations.

The debates on the Chinese side – among policymakers, business elites, technologists and opinion leaders on Chinese social media – have understandably different focuses. One part of the discussion centres around global supply chains and whether the company can survive, given the blanket sanctions on both the hardware and the software needed to sustain its production. Another heated debate breaks out on the policy front, including trade policy, technology policy and standard setting.  Issues such as weighing the balance between importing the most cutting-edge technologies and strengthening self-reliance, as well as between following the international standard and taking more control over setting the rules.

Liebenau: In February I wrote about ‘What we can learn from the controversy around Huawei’ and the only significant change has been in US policies, clearly interpreted by the UK National Cyber Security Centre report that changed the policy recommendation. In a related blog post, the technical director set out alternative possible responses, none of which are very encouraging for either customers or suppliers.

In what follows, we will tackle the Huawei controversy from different perspectives that might be of interest to various constituencies, including policy makers, business communities and academic researchers. In a series of four blog posts, we consider the historical trajectory of major global powers fighting over the control of communication networks; public discussions on different sides about the trade war and Chinese technology capabilities; issues around technological standards and standards setting; and trade policy and supply chain effects.

[1] This is Huawei’s basic research department comprised of multiple research labs. The name came from the 2009 Hollywood movie 2012, in which China collaborated with G8 nations to save humanity from a series of extreme natural disasters.
 
This article gives the views of the authors, and not the position of the China Foresight Forum, LSE IDEAS, nor The London School of Economics and Political Science.