The Chinese technology and electronics vendor Huawei has come under fire ever since espionage allegations against it have surfaced. Officials from the United States labeled the telecommunications company as a national security threat and prohibited all Huawei services despite Huawei’s efforts to have the country-wide ban legally declared as unconstitutional. The United States’ distrust in Huawei escalated when the company’s chief financial officer, Meng Wanzhou, was accused of breaching the United States’ sanctions on Iran by misleading U.S. banks about Huawei’s affiliation with telecommunications enterprise Skycom, which operated in Iran. The dispute between the U.S. and Huawei is an extension of Washington, D.C.’s rivalry with Beijing over global leadership.
Huawei is as one of the world’s top three smartphone vendors, alongside South Korea-based Samsung and U.S. enterprise Apple. Reaping over 100 billion USD in 2018, Huawei sold services and devices all over Europe, the Middle East, Africa, South America, and Asia. As telecommunications companies gear up for 5G networks, opinions in governments are divided as to whether Huawei’s 5G equipment is a cyberthreat.
A main reason why governments identify Huawei’s presence as a national security risk is the fact that China implemented a law in 2017 which commands that Chinese organizations have to aid and cooperate with the government in gathering intelligence. In the name of the Chinese government, Huawei allegedly tries to gain access to core networks in countries around the globe in order to supply China’s authorities with information from abroad. Despite the fact that Huawei is a private company and rejects all espionage rumors, the governments of the U.S., Australia, and New Zealand perceive this as sufficient reason to block Huawei from their countries. The two remaining members of the Five Eyes intelligence alliance, Canada and the United Kingdom, are hesitant to completely deny the Chinese company access to their markets.
Another risk that governments are worried about is Huawei’s sales strategy. The business captures markets by relying on subsidies from the Chinese government. This allows Huawei to undercut competitors by offering attractive market discounts. Driving other businesses out of the market and setting market standards is what furthers the trade rivalry between the U.S. and China. While U.S.-China hostilities and associated intelligence risks are a focal point of the Huawei case, the disadvantages for businesses in the domestic market pose additional risks. Moreover, if Huawei were to build a monopoly, it could then dictate prices and drive them up as it saw fit. Fearing these scenarios, some Western states are inclined to block out Huawei completely.
While efforts of the Chinese government to become a global leader make espionage allegations against Huawei seem plausible, the ruining of Huawei’s reputation through such scandals would impede China’s efforts to create a net of global economic reach. Declining access to the world’s markets through Huawei would therefore also imperil Beijing’s push for global leadership.
While many Western states side with the U.S. and acknowledge that utilizing Huawei’s services could be unsafe, they disagree over how to face this risk. China and the U.S. are engaging in a tug of war to win over indecisive governments in the United Kingdom, Germany, and France. In April 2019, British Prime Minister Theresa May made the decision to disallow Huawei from providing core products for the UK’s forthcoming 5G network while still allowing Huawei to provide edge infrastructure and antennas. Germany and France are taking a different approach, allowing the use of Huawei 5G equipment but strengthening security controls and regulations at the same time. As a member of the Five Eyes intelligence sharing partnership, Canada takes a less conclusive stance. It is considering banning Huawei while also managing its diplomatic relations with China. Cautious of Huawei’s 5G network, Japan followed the lead of long-term ally the United States and banned Chinese telecommunication businesses from the country in December 2018. In contrast, India’s government granted Huawei access to its territory to conduct 5G trials.
To conclude, the issue of Huawei’s 5G revolves largely around the extent of risk perception, U.S.-China antagonism, and market competition. While governments need to make sure that Huawei’s 5G products do not pose a threat to national intelligence and data privacy, mitigating cybersecurity risks from any 5G network provider in times of increasing online data theft and cyberattacks should be a key point to consider.
