The US campaign to hamstring China’s Huawei Technologies Co is gaining fresh impetus as US President Donald Trump’s administration chokes off supplies of vital microchips and Beijing causes dismay on both sides of the Atlantic with its stance on Hong Kong and the coronavirus.
The UK is reconsidering its embrace of Huawei, while carriers in Denmark and Singapore have chosen other providers for their telecommunications networks.
Meanwhile, Germany and France are reassessing the role of the company that the US accuses of theft, sanctions busting and providing an avenue for espionage.
Illustration: Mountain People
Only months ago, the US was struggling to persuade its allies not to use Huawei’s equipment, but in May, Washington moved to handcuff Huawei to outdated technology by denying it chips made with US techniques.
The change could turn Huawei into a permanent laggard, unable to update and maintain cutting-edge 5G networks that will be communications backbones for decades to come.
At the same time, politics have been unkind to Huawei’s ambitions. Officials in Europe and the US have criticized China over its handling of the COVID-19 pandemic, while Beijing drew condemnation for preparing national security laws for Hong Kong, a step seen as a threat to the territory’s autonomy.
“Two years ago no one worried about buying Huawei — that’s not true anymore,” said James Lewis, director of the technology policy program at the Center for Strategic and International Studies in Washington.
He sees “some progress,” in swaying other countries to ban Huawei, “although well short of a total ban.”
Trump is boasting of success, saying in a recent interview with the Wall Street Journal: “Look how tough I’ve been on Huawei. Nobody has been tougher than me.”
The US says Huawei is a threat to security for the 5G wireless systems that are beginning to be deployed around the world. The networks promise speed and ubiquity: a thick forest of always-on links to billions of devices in homes, factories, surgical suites and autonomous vehicles.
As more devices and networks are connected, vulnerability to hacking or espionage grows apace.
Because Huawei is subject to control by the Chinese Communist Party, it can be compelled by law to cooperate with China’s security apparatus, and has been implicated in espionage, according to the US Department of State.
The Pentagon chimed in on Wednesday last week, sticking Huawei on a list of 20 companies it says are owned or controlled by China’s military, opening them up to potential new US sanctions.
Rob Manfredo, a US-based spokesman for Huawei, did not respond to a request for comment.
Huawei has denied allegations of spying, saying it would lose customers if it were not trustworthy.
The Shenzhen-based company says it is a private business that cannot be directed by Beijing, and that no Chinese law requires private national companies to engage in cyberespionage.
The US Department of Commerce’s ban in May of the sale of any silicon made with US know-how was a potentially crippling blow to China’s tech champion.
Huawei’s stockpiles of certain self-designed chips essential to telecom equipment is going to run out by early next year, people familiar with the matter have said.
While Huawei can buy off-the-shelf or commodity mobile chips from a third party such as Samsung Electronics Co, it could not possibly get enough and may have to make costly compromises on performance in basic products, they added.
The chip restrictions add “uncertainty and potential costs” that could leave Huawei unable to meet commitments to build and maintain networks, said Robert Williams, executive director of the Paul Tsai China Center at Yale Law School in New Haven, Connecticut. “The trade-offs between cost and security risks may look different now than they once did to the UK.”
Huawei’s position is sharply contested in Britain.
The UK in January barred Huawei from sensitive core network components and high-risk areas such as nuclear power sites, but said the Chinese company could still constitute as much as 35 percent of networks’ 5G and fiber equipment elsewhere.
That prompted an angry telephone call from Trump to British Prime Minister Boris Johnson.
The Trump administration has said any country that uses an “untrustworthy” 5G vendor jeopardizes intelligence sharing with the US that would strike at the heart of the traditional “Five Eyes” security alliance linking the US and UK, along with Australia, Canada and New Zealand to cooperate on espionage.
The UK’s decision also triggered a rebellion of junior lawmakers in Johnson’s Conservative Party. Since then, Hong Kong and COVID-19 have helped to harden their stance.
UK government officials now are seeking ways to phase the company out in as little as three years.
“There’s been a pretty effective relentless American campaign,” said Sam Armstrong, spokesman for the Henry Jackson Society, a London-based policy group that has argued for blocking Huawei from the UK’s 5G networks.
“The evidence in parliament and the threats to Five Eyes intelligence-sharing arrangements have all contributed to a sense that this has had a seriously undermining effect on our trans-Atlantic relationship,” he said.
Despite the storm clouds obscuring its future in the UK, Huawei committed on Thursday last week to invest US$1.2 billion in a research and development center near Cambridge, drawing criticism from a former leader of the Conservative party.
It said the timing was coincidental and the plans had been in the works for years.
The issue is fraught in other European countries, too. The company is losing luster in Europe after winning contracts across the continent, said John Strand, a consultant based in Copenhagen.
“Around Europe, there is a growing focus on the use of Chinese equipment including Huawei,” Strand said in an interview. “When it comes to Hong Kong, it obviously has an impact.”
Strand predicted other countries would follow paths such as those taken by Denmark, where the biggest phone company, TDC A/S, in March chose Stockholm-based Ericsson AB to build its 5G network, rather than its existing supplier Huawei.
Earlier, Danish Minister of Climate and Energy Lars Christian Lilleholt highlighted security considerations for 5G, without mentioning Huawei.
Such moves would represent a change of momentum for a beleaguered US campaign, said Justin Sherman, a fellow at the Atlantic Council’s cyberstatecraft initiative.
“There are many countries that have not done what the US wanted,” including Germany, France and Italy, Sherman said.
“There’s legitimate reason to be concerned about Huawei’s position on the 5G networks,” he said.
US diplomats say Ericsson and Finland’s Nokia Oyj build 5G gear and can be alternatives to Huawei. The European providers have struggled to compete with Huawei and ZTE Corp. equipment that is often cheaper and at least as capable.
“5G systems carry the most private information and intellectual property. It comes down to one question: Who do you trust?” US Undersecretary of State for Economic Affairs Keith Krach said in an interview. “People are realizing that Huawei’s 5G is the backbone of that surveillance state.”
US officials point to progress in persuading allies, citing the EU’s January adoption of a policy that said companies based in non-democratic countries could be excluded from parts of the network.
However, the EU stopped short of an outright ban on Huawei.
OTHER NATIONS’ REACTION
The German government is struggling to settle on rules that would require security certification for vendors in the 5G network.
Earlier senior Chinese officials highlighted German car companies — the crown jewel of Europe’s biggest economy — as a potential target for retaliation if Huawei is banned from their markets.
China is the biggest single market for Volkswagen AG, BMW AG and Mercedes-Benz maker Daimler AG.
German Chancellor Angela Merkel has resisted a blanket ban on Huawei from 5G networks.
France will not ban any equipment maker from its 5G network, but will seek to protect critical infrastructure, French Minister of Finance Bruno Le Maire said earlier this year.
With a spectrum auction set for September, carriers including Bouygues SA, await a decision from the French cybersecurity agency Anssi on whether Huawei can be part of their plans.
In a tweet last week, US Secretary of State Mike Pompeo praised France’s leading phone company Orange SA, calling it a “clean” telecom carrier after it picked “trusted” 5G equipment suppliers Nokia and Ericsson in January.
Italy has not moved against Huawei, although it has adopted rules to closely monitor telecommunications equipment suppliers, and scrutinize gear that comes from outside Europe.
Italy has pursued a friendly approach with Chinese investors and especially with Huawei, which has poured money into the country, financing research centers, universities and schools.
Canadian Prime Minister Justin Trudeau has been stalling a decision on whether to ban Huawei from his nation’s 5G wireless networks.
Tensions between the two countries have been rising since Canadian authorities arrested Huawei chief financial officer Meng Wanzhou (孟晚舟) on a US extradition request in late 2018.
After her arrest, China put two Canadian citizens in jail, halted billions of dollars in Canadian imports and put two other Canadians on death row.
On June 2, two major Canadian wireless companies — BCE and Telus Corp — said they would build out their 5G wireless networks with equipment from Ericsson and Nokia.
India has allowed Huawei to participate in trials, but the company’s entry into the country’s 5G commercial network could be blocked as tensions persist following border clashes with China.
India is the largest wireless market outside China by number of subscribers, and has been a focus for investment by Huawei.
“The tide is turning against Huawei as citizens around the world are waking up to the danger of the Chinese Communist Party’s surveillance state,” Pompeo said in a statement on Wednesday last week.
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