Despite the truce in the United States-China trade wars, the tech wars between Washington and Beijing are intensifying. Most immediate is the struggle over who will build the new, superfast fifth-generation, or 5G, cellular networks that will revolutionize the way we live by empowering the use of artificial intelligence and other cutting-edge technologies.
Huawei is a name you should know.
As China’s leading telecoms company, Huawei is the global leader in the race to build 5G networks, followed by the European firms Nokia and Ericsson. However, Washington is trying to ban Huawei from doing business with the U.S. or our allies for fear that the Chinese military could insert a “backdoor” into its equipment for spying.
Yet, sad to say, the United States has no telecoms giant to compete with Huawei. This is as important a part of the story as the curbs on the tech company.
In November, I traveled to the high-tech city of Shenzhen to visit Huawei, see its products, and talk to senior officials — and sense the reaction to a U.S. ban.
The Huawei campus is an immense, sprawling set of low-slung buildings and extensive greenery, bustling with cranes constructing new facilities. I was ushered into an ornate building with marble floors, a ceiling three stories high and an Italianate sculpture of three nymphs arm in arm on a lobby fountain.
Then I was wrenched into the 21st-century tech wars as I whisked around the Galileo showroom and got briefed on Huawei’s ongoing 5G rollout in China. Xi Jinping has pushed for a speedy rollout as part of his pledge to make China the dominant player in 10 key technologies by 2025.
One statistic that caught my attention: Huawei spent $15.3 billion on research and development in 2018, beating Microsoft, Apple and Intel, and helping to give it an edge in 5G technology. Despite the Trump administration’s ban, the company’s 2019 revenues surged 18% (no doubt in part because Huawei phones, also banned in the United States, have such a crisp, gorgeous screen at half or one-fourth the price of an iPhone).
I asked Catherine Chen, a senior vice president and Huawei board member, what would happen if President Donald Trump eliminates all loopholes in the ban on Huawei purchases of U.S. components. “I don’t think it will have much of an impact on us, especially not for 5G,” she said. (U.S. tech experts say Huawei has stockpiled at least a year’s worth of such components and Huawei is also working on developing its own components.)
Chen was also optimistic about Huawei’s global prospects. (It now operates in 170 countries with 194,000 workers.) I asked about future problems for Huawei phones, if they are denied access by the ban to the Google ecosystem of apps, such as Google Maps. This would seriously impact exports.
Chen said the company is seeking foreign partners and app developers to work on an alternative ecosystem to Google’s. Just since my visit, the Dutch digital mapping company TomTom closed a deal with Huawei.
Not surprisingly, Chen was at the ready when I asked about China’s 2017 national security law that requires Chinese companies to cooperate with the government and army.
“I really like this question,” she said. She pulled out materials explaining Huawei’s structure as a private shareholding company, and insisted that the 2017 law “doesn’t require any Chinese company to install backdoors or collect intelligence.”
Yet every U.S. expert on digital security I’ve asked is skeptical about this answer, given Xi Jinping’s focus on top-down controls over everything. “The security issue is real,” says Adam Segal, director of the Digital and Cyberspace Policy Program at the Council on Foreign Relations. “The administration is right to ban it from U.S. networks. The question is how do you weigh the security concerns vs. the costs.”
A NATIONAL DISGRACE
Those nations that wish to install 5G as rapidly as possible know that Huawei can move forward quickly and at less cost than Nokia or Ericsson. (Cheaper Chinese hardware has been used, for example, by small U.S. carriers in rural areas where large U.S. telecom companies won’t go.)
Such factors have attracted countries from Hungary to India, which is why administration emissaries are getting pushback. The European Union is undecided, and even Britain is questioning whether risk can be mitigated by keeping Huawei out of “core” parts of the network.
What is most apparent is that, if the United States wants to ban suspect Chinese technology, it must have a robust strategy to provide competition. “It’s not enough to hobble Huawei,” says Segal. “We have to start to think differently.”
That would require strong, focused White House leadership on funding basic research, encouraging private-public collaboration and keeping talented foreign Ph.D. scholars in this country.
There are government and think tank studies that lay out the way forward, and even bipartisan bills pending in Congress. Yet there is still no Sputnik moment, no Manhattan Project for 5G, let alone for 6G. Much easier just to denounce China.
This is a national disgrace.
No surprise, then, that when Huawei CEO Ren Zhengfei suggested he was willing to license Huawei’s 5G technology to an American company, there were no takers. “It is not clear that any U.S. company could make a competitive product,” says Segal.
I was struck by Chen’s self-confidence that, despite the ban, Huawei will keep developing new technologies and selling its products worldwide. If the United States wants to set 5G standards, it has to look beyond Huawei security issues. What’s required is a White House leader with a plan to get the country back in the competitive game.
© 2020 Trudy Rubin
Distributed by Tribune Content Agency, LLC.