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Nothing is ever fair in war
Graphic thanks to Harvard Belfer Center for Science and International Affairs
Khalid Hussain
The United States of President Donald Trump is bent upon fighting China in his own imagined ‘Thucydides Trap’. The way Trump has been behaving towards China reminds one of an Urdu proverb: “Why do you move while kneading the flour?”
Trumps’ United States (US) obviously fears China imagining America faces a credible threat of displacement as the pre-eminent power. So war it is albeit in a form unique to the 21st century. The arrest last week in Canada of Meng Wanzhou—the chief financial officer of iconic Chinese company Huawei Technologies who is also the daughter of its billionaire founder—is a watershed event. She was granted bail by a Canadian court Tuesday only hours after a former Canadian diplomat was detained in China.
Former Canadian diplomat Michael Kovrig was detained in China. The move came after Canada arrested Meng Wanzhou. The former Canadian diplomat was detained at the same time as a Canadian court weighed her bail in Vancouver pending a US extradition request. The Canadian embassy declined to comment, referring queries to Ottawa. Ms. Meng will await her extradition hearing from Vancouver home. She will be watched over by a private security firm, an electronic tracker and several Vancouver residents who vouched for her.
She was in custody in Canada and still faces extradition to the United States on charges of conspiracy to defraud banks and violate sanctions on Iran. “JP Morgan Chase also violated U.S. sanctions, but Jamie Dimon isn’t in jail”, syndicated columnist Jeffrey D. Sachs wrote.
Trump is clearly baiting Xi Jinping to attack. The arrest places Huawei in the cross-hairs of an escalating technology rivalry between China and the US, which views the company, a critical global supplier of mobile network equipment, as a potential national security risk. Hardliners in President Donald Trump’s administration are especially keen to prevent Huawei from supplying wireless carriers as they upgrade to 5G, a next-generation technology expected to accelerate the shift to Internet-connected devices and self-driving cars.
“It gives Trump a bargaining chip,” said Mr George Magnus, an economist at Oxford University’s China Centre.” Both Huawei and ZTE are banned from most US government procurement work. An outright ban on buying American technology and components, should it come to that, would deal Huawei a crushing blow.
Earlier this year, the Trump administration imposed just such a penalty on ZTE Corp, also a Chinese telecom, and threatened its very survival before backing down. A full-blown, commercial ban in the US would not only apply to hardware components but also cut off access to the software and patents of US companies. If Huawei cannot license Android from Google, or Qualcomm’s patents in 4G and 5G radio access, it will not be able to build smartphones or 4G, 5G base stations.
Fears of dominance by a Chinese corporation like Huawei—literally translates as “China’s achievement”—has seen the US following a ‘concerted strategy’ to push allies to reject Chinese 5G equipment, Eurasia Group analyst Kevin Allison told media. He said the United States has a ‘concerted strategy’ to pressure its allies to shun Chinese tech giant Huawei’s 5G network equipment. American allies including the United Kingdom (UK), Australia, New Zealand and Japan, are keeping Huawei out because “5G technology will set the tone for the rest of the 21st century.” Japan, Australia and New Zealand have already joined the US in banning the Chinese company’s gear. UK and Canada are expected to follow suit shortly.
As China steadily overtakes America on numerous fronts, the US is bent upon luring them into the deadly trap first identified by the ancient Greek historian Thucydides who explained, “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable.” Hence President Xi Jinping of China is now attempting to manage the world’s most dangerous geopolitical relationship.
War is as unlikely as it would be unwise in this age of assured mutual destruction. No one can forget the two world wars as the year British started a slaughter on a scale hitherto unknown. Europe lay in ruins by the time war ended. The kaiser was gone from Germany. The Austro-Hungarian Empire stood dissolved. Bolsheviks overthrew the Russian tsar. France bled for a generation. And England robbed of its youth and treasure eventually lost its empire where once the sun did not set. An era ended and Europe lost its pre-eminence as the political centre of the world.
It is rather funny in a macabre way how eager Google is to throw the “Thucydides Trap” (TT) at you if you search for Sino-US relations. This TT is a historian’s metaphor for dangers when a rising power rivals a ruling power as Athens challenged Sparta in ancient Greece, or as Germany did Britain a century ago. The search engine refuses to let one forget how Graham Allison—Douglas Dillon Professor of Government in the of the Harvard Kennedy School—has found 16 cases in the past 500 years in which a rising power threatened to displace a ruling one and 12 of these ended in war.
But I imagine it is nothing but media hype. The Thucydides trap, in other words, is psychological warfare. As Xi Jinping said during his visit to Seattle on 22 September 2015, “There is no such thing as the so-called Thucydides Trap in the world. But should major countries time and again make the mistakes of strategic miscalculation, they might create such traps for themselves.”
From the standpoint of realpolitik, therefore, the defining question about global order for this generation is not whether China and the United States can escape the so-called Thucydides Trap. It is how and when the world might be rid of the United States of America!
It is stupid to imagine that there is only one power that is rising to prominence in the world today. There are at least four: Germany, Russia, India and China. But more on that later after we take note of what the Americans are doing with help from allies: British with their Brexit and Australia, New Zealand and Canada with their own willing collusions. Japan remains an ally to the Five Eyes—America plus the four countries above—being totally dependent upon trade with these countries. It is also driven by cultural and historical animosity with China.
The four exceptions cited by the Harvard study and listed in the above graphic are dubious. Why there was no war between the United States of America and Great Britain is a simple statement of fact. England was the hegemon and America was the rising power, however, the former colonial power had no capacity to challenge the Americans to whom it had sold its erstwhile colonies. This happened in 1940 when British Prime Minister Winston Churchill met American President Franklin Delano Roosevelt offshore Pearl Harbour. He begged for American troops and accepted free and unfettered rights of trade for US corporations in lieu of the favour. The rapid “independence” for former British colonies was no more than mere operationalization of that conditionality. The Soviet Union could not fight Japan for it had American protection. The US and the Soviet Union could not fight because of assured mutual destruction. Yet it cannot be said the two did not fight or that the Americans did not finally defeat the Russians. As for the rise of Germany since the 1990s to date versus UK and France, it is a case that has interesting ramifications albeit it should not have been included in the study for it is not over. The situation is fluid in Europe still. Germany and France have become allies for their own survival as they see the wily UK going with the United States to do them both under.
Meng’s arrest has been the highest-profile of the actions to date. The pattern paints a picture of an increased focus on China’s economic actions across the US government. This isn’t to say that previous administrations haven’t addressed similar problems, but the focus by the Trump administration appears to be sending an intentional message.
“We believe this is a clear signal that the trade war is escalating to a new level,” Zhiwei Zhang, Deutsche Bank’s chief China economist, said Thursday. “We think the probability of US and China reaching a trade deal by March 1 has dropped to 30% from 40%.” While the arrest may not be directly related to the talks and a trade deal with China may still be reached—so far Chinese officials have seemed enthusiastic about reaching an agreement— the development could add a complicating factor to the talks according to Zhang. It’s also the latest example that the confrontation goes beyond trade.
While still serving as US attorney general, Jeff Sessions made the administration’s position clear in a press conference announcing the China Initiative. “As the cases, I’ve discussed have shown, Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly,” Sessions said. “We are here today to say: enough is enough. We’re not going to take it anymore.”
In a recent speech posted on the Huawei employee network, Huawei CEO called for patience with critics but rejected foreign intervention. “We will never give in or yield to pressure from outside,” he said. That maxim is now being put to the test by the US Department of Justice.
One senior international telecoms executive said told media a move to ban Huawei from 5G contracts in certain countries would be unwelcome but “not the end of the world” despite delays to 5G launches. But he said that if Ms Meng’s arrest led to a ZTE-style “denial order” where networks cannot order components, upgrade existing software in the network or work with Huawei staff, the telecoms sector would be crippled. “That would be a small nuclear weapon,” he said.
And that is what the US is now doing. Trump is reportedly considering expanding the list of technologies barred from being exported to China and introducing investment restrictions for Chinese firms in the US. The Section 301 investigation on which the US tariffs were originally predicated focuses heavily on the theft of US companies’ intellectual property and forced technology transfers.
Huawei is a linchpin in Beijing’s ambitions to be a global technological innovator by 2025. Ms Meng’s arrest in Canada has been seen in China as a move from the US to further constrain Chinese technology from competing globally. “Huawei is leading in 5G technology so the US panicked and wanted to suppress Huawei. If you want to condemn somebody, you can always trump up a charge,” said Ding Yifan, a senior researcher at National Strategy Institute, Tsinghua University. “But Huawei will not be as vulnerable as ZTE. They are better prepared.”
Huawei is a telecom giant with US$92 billion in revenue that strikes fear among some policymakers in the West. If there’s a Darth Vader in the minds of Chinese national security hawks in Washington worried about China’s rising tech power, it’s Mr Ren. In China, though, he’s feted as a national hero, who rose from humble beginnings to the pinnacle of wealth and status in Chinese society.
Huawei is the No. 1 smartphone maker in China. According to media reports, it has eclipsed Apple this year to become the second largest maker globally behind Samsung. Huawei’s revenue last year was more than Alibaba Group Holding, Tencent Holdings and Baidu Inc combined. About half of its revenue now comes from abroad, led by Europe, the Middle East and Africa.
The company had formed a fragile balance of terror with its Western counterparts. The basis of this balance is Huawei’s general strength. This stems from its technology and product development capability. Yet Huawei has never even tried to out-innovate its competitors. As long back as 2005, Founder CEO Ren Zhengfei explained, “Huawei holds the belief that we should lead the industry in terms of product technology innovation. But we should just half a step ahead because we would be the martyr if we were three steps ahead”.
The balance between Huawei and its Western Counterparts has broken as the bilateral relations between China and the United States of America has progressively worsened making the multilateral balance of strategy and tactics change for both their allies as well.
China has been willing to comprise. It is the philosophy of contingency for the rising economic giant as well as its major corporate players like Huawei. It has been considered the means to survive in the jungle of trade and economics. Not only that the market is like a jungle where only the fittest survive, but the political arena is rather limited at the top in our world dominated by the United States of America. For over 20 years, Huawei successfully applied the dialectical balance of offence and compromise to its business operations for vitality and harmony within itself and a balance of terror with its Western competitors.
“Government telecommunication infrastructure requirements are essentially locking out the Chinese supplier in critical growth markets,” media quoted Morningstar Research equity analyst Mark Cash. “Additionally, telecom providers without government imposed restrictions may start limiting their usage of Huawei equipment for their 5G network build-outs.”
“ZTE was much more dependent on US suppliers, particularly chip companies, than Huawei. The latter is in a better position because of its chip design unit, HiSilicon,” said Dan Wang, an analyst at Beijing research firm Gavekal Dragonomics. “Still, Huawei is heavily dependent on US technologies because many chips are irreplaceable and because US firms have a vast array of IP.”
Unlike ZTE, which sourced nearly all of its chips from US companies, Huawei employs more than 10,000 people at its HiSilicon R&D unit, which this year launched the Kirin 980, its first artificial intelligence-enabled mobile chip set. Huawei also relies on Micron, a US chip company, to supply memory chips that go into its smartphones. Should a US export ban be imposed, Huawei could switch to source more from South Korean memory chip companies, such as existing supplier SK Hynix.
Other American-designed components are not replaceable in the short term. Intel processors power Huawei’s personal computers, while Huawei’s mobile handsets depend on radio frequency components from US based chipmakers Skyworks and Qorvo, according to Arete Research and Goldman Sachs. Most importantly, a US export ban would delay Huawei’s plan to roll out commercial standalone 5G service by next April. “5G is a big technology strategy for China and Huawei is leading the charge, but they have a lot of hardware suppliers that are US-based in 5G that I suspect could derail their plans if any US supply ban is put in place,” media quoted Brett Simpson, co-founder of Arete Research.
Especially crucial to Huawei’s 5G ambitions is US chipmaker Broadcom, which provides networking processors that underpin telecoms networks. Huawei’s 5G base stations, the signal processing centres that link together a mobile network, incorporate FPGAs, a type of semiconductor device, sourced from US-based Xilinx. Meanwhile, Texas Instruments and Analog Devices, another American semiconductor firm specialising in signal processing, provide much of the analogue chips in 5G base stations.
Huawei struggled for market share, with foreign companies using so-called “wolf culture” of aggressive salesmanship, which sometimes materialised in the form of Huawei employees flooding sales events with several times more salespeople than competitors. The company ventured into international markets in the 2000s, with telecom equipment that was more affordable than products of competitors such as Cisco Systems.
Huawei has been stepping up the company’s research and development. Of its 180,000 employees, about 80,000 are now involved in R&D, according to the company’s 2017 report, and the company has been known to recruit some of China’s top talent out of universities. The company recently refocused on existing markets after the US government called Huawei a national security threat, and cited concerns over its possible control of 5G technologies. Mr Trump signed a Bill banning government use of Chinese tech including Huawei and has even contacted allies to get them to avoid using Huawei equipment.
AMERICA The Trump administration has been on a mission to prevent its allies from using Huawei technology for critical infrastructure, especially focusing on fellow members of the so-called Five Eyes, a group of five English speaking countries—US, Canada, New Zealand, Australia and Great Britain—whose intelligence agencies share information on a large scale. The US has also tried to dissuade other countries like Germany from allowing Huawei to provide technologies in the near future.
AUSTRALIA Australia has already banned Huawei from providing 5G technology in August of this year albeit without specifically mentioning the company by name. In a statement, the Australian government said companies “who are likely to be subject to extrajudicial directions from a foreign government” would no longer be allowed to provide 5G technology, which was clearly directed at the Chinese telecom company. Huawei is already providing Australia with its 4G network. Following Australia’s decision, Huawei said there was no fundamental difference between 4G and 5G architecture and that 5G provides better security for both privacy and security, adding that Australian allegations about security concerns were not based on facts.
NEW ZEALAND New Zealand announced in November it would take the same measures as Australia. This followed a request by a kiwi mobile carrier Spark to use Huawei equipment for its 5G networks. The Government Communications Security Bureau intelligence agency denied that request. “I have informed Spark that a significant security risk was identified,” GCS Director-General Andrew Hampton said, without going into detail about those risks.
GREAT BRITAIN As the second most important member in the Five Eyes intelligence sharing group, Great Britain is soon expected to ban Huawei from its 5G infrastructure. So far the United Kingdom has not officially done so, but the government is debating special measures. Head of intelligence agency MI6 said earlier this week, he had his doubts about the telecom company. His comments followed the 2013 Foreign involvement in the Critical National Infrastructure report that concluded, although no direct evidence was found that Huawei did anything malicious, considerable risks were involved with having the Chinese company be partially responsible for such critical technologies. Ahead of any decision by the UK government, British telecommunication company BT announced on Wednesday it would not use Huawei technologies as the backbone of its soon-to-be-deployed 5G network and that it would be removing Huawei parts from its existing 3G and 4G networks.
CANADA Canada is another country expected to react to “the risk Huawei’s technologies could possibly pose”. The immediate neighbour to the US has been under pressure from its Five Eyes allies to ban the Chinese company from its 5G infrastructure. According to reports in Canadian media, US lawmakers have been talking to Canadian officials and companies about barring Huawei technology from being implemented in Canada’s new 5G network. “While Canada has strong telecommunications security safeguards in place, we have serious concerns that such safeguards are inadequate given what the United States and other allies know about Huawei,” Senators Mark Warner and Marco Rubio wrote in a letter to Canadian Prime Minister Justin Trudeau, Reuters reported.
JAPAN Japan is one of several countries who at the moment rely heavily on Huawei hardware for its networks. The US has communicated its security concerns over 5G equipment manufactured by Huawei in recent months, reported the Wall Street Journal. It is, therefore, interesting to note three leading telcos in Japan has decided not to use Huawei equipment in its 5G network, Kyodo news agency reported. On Friday, local media reported that the Japanese government would also ban Huawei from future purchases for its upcoming 5G infrastructure. Japan’s but chief government spokesman Yoshihide Suga is on record saying Japan had been in talks with the US about the issue.
ITALY and INDIA The US has also voiced concern over Huawei purchases to Italy, another country that currently uses the Chinese company’s products for its mobile internet infrastructure. Indian media reported in September, Huawei was banned from participating in 5G trials in the country. However, shortly afterwards Huawei and India both said the company had been invited to test its equipment in the second-largest mobile market in the world.
GERMANY Germany is a key ally of the Five Eyes intelligence group. It is another country that currently uses Huawei technology but has not yet decided on its future. Behind this very public drama is a long-running, behind-the-scenes one centred on Western intelligence agencies’ fears that Huawei poses a significant threat to global security.
Telecom companies around the world are about to roll out the next generation of cellular wireless, known as 5G. As well as speeding up data transfers, 5G networks will enable self-driving cars to talk to each other and to things like smart traffic lights. They’ll also connect and control a vast number of robots in factories and other locations. And the military will use them for all kinds of applications, too. This will dramatically expand the number of connected devices—and the chaos that can be caused if the networks supporting them are hacked. It will also ramp up the amount of corporate and other data that hackers can target.
The fallout from her arrest will surely mean, at the very least, an even more difficult relationship for the handful of US tech giants that have found great fortune in China. In particular, Apple, the poster child for US tech success, and a company that relied on China for 20% of its revenues this past year.
Despite Huawei’s woes, China is moving ahead with 5G mobile development plans. China Mobile, China Unicom and China Telecom have been granted 5G radio frequency spectrum allocations to pursue trials in the next-generation mobile system ahead of its wide roll-out from 2020. China is moving rapidly to develop 5G services nationwide after allocating radio frequency spectrum for the next-generation mobile system to the country’s three telecommunications carriers.
The central government awarded China Mobile, China Unicom and China Telecom with 5G spectrum licences on Friday, enabling them to conduct final trials for the new mobile system before its wide commercial roll-out from 2020. “This sends a clear signal to the industry that we aim to promote the maturity and development of China’s 5G industry,” the Ministry of Industry and Information Technology (MIIT) said in a statement posted on its website on Monday. The MIIT said the trials would ensure the compatibility of the various types of radio frequency spectrum ahead of the launch of 5G mobile services.
America has strong-armed its allied but it cannot dictate to the whole world. Other 5G stakeholders are now worried there will be increasing bifurcation between 5G technology from Chinese and western companies. Once the rest of the world starts understanding that by doing business with the Chinese companies, not only can they have a 5G network that the Americans and the English fear, but that in the process they can also be rid of their spying as well, then business will go the Chinese way. It is, therefore, a solid opportunity to work with the Chinese to upgrade the national system to 5G at the earliest possible.
Meanwhile, the rest of the world is also watching how the Five Eyes are moving. It is not only China that is at risk. France, Germany, Italy and Russia are actually in the same boat. Although the focus is on China in the media, yet all these countries have the capacity to challenge the technological and economic domination of the United States that appears to have forgotten that it cannot go it alone. Five Eyes versus the rest is not winnable.
__________________________________________________________________________________________________________________
Khalid Hussain is Resident Editor of TLTP – You may contact Khalid Hussain at Resident.Editor@lawtoday.com.pk
https://lawtoday.com.pk/2018/12/12/nothing-is-ever-fair-in-war/
- December 12, 2018
Graphic thanks to Harvard Belfer Center for Science and International Affairs
Khalid Hussain
The United States of President Donald Trump is bent upon fighting China in his own imagined ‘Thucydides Trap’. The way Trump has been behaving towards China reminds one of an Urdu proverb: “Why do you move while kneading the flour?”
Trumps’ United States (US) obviously fears China imagining America faces a credible threat of displacement as the pre-eminent power. So war it is albeit in a form unique to the 21st century. The arrest last week in Canada of Meng Wanzhou—the chief financial officer of iconic Chinese company Huawei Technologies who is also the daughter of its billionaire founder—is a watershed event. She was granted bail by a Canadian court Tuesday only hours after a former Canadian diplomat was detained in China.
Former Canadian diplomat Michael Kovrig was detained in China. The move came after Canada arrested Meng Wanzhou. The former Canadian diplomat was detained at the same time as a Canadian court weighed her bail in Vancouver pending a US extradition request. The Canadian embassy declined to comment, referring queries to Ottawa. Ms. Meng will await her extradition hearing from Vancouver home. She will be watched over by a private security firm, an electronic tracker and several Vancouver residents who vouched for her.
She was in custody in Canada and still faces extradition to the United States on charges of conspiracy to defraud banks and violate sanctions on Iran. “JP Morgan Chase also violated U.S. sanctions, but Jamie Dimon isn’t in jail”, syndicated columnist Jeffrey D. Sachs wrote.
Trump is clearly baiting Xi Jinping to attack. The arrest places Huawei in the cross-hairs of an escalating technology rivalry between China and the US, which views the company, a critical global supplier of mobile network equipment, as a potential national security risk. Hardliners in President Donald Trump’s administration are especially keen to prevent Huawei from supplying wireless carriers as they upgrade to 5G, a next-generation technology expected to accelerate the shift to Internet-connected devices and self-driving cars.
“It gives Trump a bargaining chip,” said Mr George Magnus, an economist at Oxford University’s China Centre.” Both Huawei and ZTE are banned from most US government procurement work. An outright ban on buying American technology and components, should it come to that, would deal Huawei a crushing blow.
Earlier this year, the Trump administration imposed just such a penalty on ZTE Corp, also a Chinese telecom, and threatened its very survival before backing down. A full-blown, commercial ban in the US would not only apply to hardware components but also cut off access to the software and patents of US companies. If Huawei cannot license Android from Google, or Qualcomm’s patents in 4G and 5G radio access, it will not be able to build smartphones or 4G, 5G base stations.
Fears of dominance by a Chinese corporation like Huawei—literally translates as “China’s achievement”—has seen the US following a ‘concerted strategy’ to push allies to reject Chinese 5G equipment, Eurasia Group analyst Kevin Allison told media. He said the United States has a ‘concerted strategy’ to pressure its allies to shun Chinese tech giant Huawei’s 5G network equipment. American allies including the United Kingdom (UK), Australia, New Zealand and Japan, are keeping Huawei out because “5G technology will set the tone for the rest of the 21st century.” Japan, Australia and New Zealand have already joined the US in banning the Chinese company’s gear. UK and Canada are expected to follow suit shortly.
As China steadily overtakes America on numerous fronts, the US is bent upon luring them into the deadly trap first identified by the ancient Greek historian Thucydides who explained, “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable.” Hence President Xi Jinping of China is now attempting to manage the world’s most dangerous geopolitical relationship.
War is as unlikely as it would be unwise in this age of assured mutual destruction. No one can forget the two world wars as the year British started a slaughter on a scale hitherto unknown. Europe lay in ruins by the time war ended. The kaiser was gone from Germany. The Austro-Hungarian Empire stood dissolved. Bolsheviks overthrew the Russian tsar. France bled for a generation. And England robbed of its youth and treasure eventually lost its empire where once the sun did not set. An era ended and Europe lost its pre-eminence as the political centre of the world.
It is rather funny in a macabre way how eager Google is to throw the “Thucydides Trap” (TT) at you if you search for Sino-US relations. This TT is a historian’s metaphor for dangers when a rising power rivals a ruling power as Athens challenged Sparta in ancient Greece, or as Germany did Britain a century ago. The search engine refuses to let one forget how Graham Allison—Douglas Dillon Professor of Government in the of the Harvard Kennedy School—has found 16 cases in the past 500 years in which a rising power threatened to displace a ruling one and 12 of these ended in war.
But I imagine it is nothing but media hype. The Thucydides trap, in other words, is psychological warfare. As Xi Jinping said during his visit to Seattle on 22 September 2015, “There is no such thing as the so-called Thucydides Trap in the world. But should major countries time and again make the mistakes of strategic miscalculation, they might create such traps for themselves.”
From the standpoint of realpolitik, therefore, the defining question about global order for this generation is not whether China and the United States can escape the so-called Thucydides Trap. It is how and when the world might be rid of the United States of America!
It is stupid to imagine that there is only one power that is rising to prominence in the world today. There are at least four: Germany, Russia, India and China. But more on that later after we take note of what the Americans are doing with help from allies: British with their Brexit and Australia, New Zealand and Canada with their own willing collusions. Japan remains an ally to the Five Eyes—America plus the four countries above—being totally dependent upon trade with these countries. It is also driven by cultural and historical animosity with China.
The four exceptions cited by the Harvard study and listed in the above graphic are dubious. Why there was no war between the United States of America and Great Britain is a simple statement of fact. England was the hegemon and America was the rising power, however, the former colonial power had no capacity to challenge the Americans to whom it had sold its erstwhile colonies. This happened in 1940 when British Prime Minister Winston Churchill met American President Franklin Delano Roosevelt offshore Pearl Harbour. He begged for American troops and accepted free and unfettered rights of trade for US corporations in lieu of the favour. The rapid “independence” for former British colonies was no more than mere operationalization of that conditionality. The Soviet Union could not fight Japan for it had American protection. The US and the Soviet Union could not fight because of assured mutual destruction. Yet it cannot be said the two did not fight or that the Americans did not finally defeat the Russians. As for the rise of Germany since the 1990s to date versus UK and France, it is a case that has interesting ramifications albeit it should not have been included in the study for it is not over. The situation is fluid in Europe still. Germany and France have become allies for their own survival as they see the wily UK going with the United States to do them both under.
Meng’s arrest has been the highest-profile of the actions to date. The pattern paints a picture of an increased focus on China’s economic actions across the US government. This isn’t to say that previous administrations haven’t addressed similar problems, but the focus by the Trump administration appears to be sending an intentional message.
“We believe this is a clear signal that the trade war is escalating to a new level,” Zhiwei Zhang, Deutsche Bank’s chief China economist, said Thursday. “We think the probability of US and China reaching a trade deal by March 1 has dropped to 30% from 40%.” While the arrest may not be directly related to the talks and a trade deal with China may still be reached—so far Chinese officials have seemed enthusiastic about reaching an agreement— the development could add a complicating factor to the talks according to Zhang. It’s also the latest example that the confrontation goes beyond trade.
While still serving as US attorney general, Jeff Sessions made the administration’s position clear in a press conference announcing the China Initiative. “As the cases, I’ve discussed have shown, Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly,” Sessions said. “We are here today to say: enough is enough. We’re not going to take it anymore.”
In a recent speech posted on the Huawei employee network, Huawei CEO called for patience with critics but rejected foreign intervention. “We will never give in or yield to pressure from outside,” he said. That maxim is now being put to the test by the US Department of Justice.
One senior international telecoms executive said told media a move to ban Huawei from 5G contracts in certain countries would be unwelcome but “not the end of the world” despite delays to 5G launches. But he said that if Ms Meng’s arrest led to a ZTE-style “denial order” where networks cannot order components, upgrade existing software in the network or work with Huawei staff, the telecoms sector would be crippled. “That would be a small nuclear weapon,” he said.
And that is what the US is now doing. Trump is reportedly considering expanding the list of technologies barred from being exported to China and introducing investment restrictions for Chinese firms in the US. The Section 301 investigation on which the US tariffs were originally predicated focuses heavily on the theft of US companies’ intellectual property and forced technology transfers.
Huawei is a linchpin in Beijing’s ambitions to be a global technological innovator by 2025. Ms Meng’s arrest in Canada has been seen in China as a move from the US to further constrain Chinese technology from competing globally. “Huawei is leading in 5G technology so the US panicked and wanted to suppress Huawei. If you want to condemn somebody, you can always trump up a charge,” said Ding Yifan, a senior researcher at National Strategy Institute, Tsinghua University. “But Huawei will not be as vulnerable as ZTE. They are better prepared.”
Huawei is a telecom giant with US$92 billion in revenue that strikes fear among some policymakers in the West. If there’s a Darth Vader in the minds of Chinese national security hawks in Washington worried about China’s rising tech power, it’s Mr Ren. In China, though, he’s feted as a national hero, who rose from humble beginnings to the pinnacle of wealth and status in Chinese society.
Huawei is the No. 1 smartphone maker in China. According to media reports, it has eclipsed Apple this year to become the second largest maker globally behind Samsung. Huawei’s revenue last year was more than Alibaba Group Holding, Tencent Holdings and Baidu Inc combined. About half of its revenue now comes from abroad, led by Europe, the Middle East and Africa.
The company had formed a fragile balance of terror with its Western counterparts. The basis of this balance is Huawei’s general strength. This stems from its technology and product development capability. Yet Huawei has never even tried to out-innovate its competitors. As long back as 2005, Founder CEO Ren Zhengfei explained, “Huawei holds the belief that we should lead the industry in terms of product technology innovation. But we should just half a step ahead because we would be the martyr if we were three steps ahead”.
The balance between Huawei and its Western Counterparts has broken as the bilateral relations between China and the United States of America has progressively worsened making the multilateral balance of strategy and tactics change for both their allies as well.
China has been willing to comprise. It is the philosophy of contingency for the rising economic giant as well as its major corporate players like Huawei. It has been considered the means to survive in the jungle of trade and economics. Not only that the market is like a jungle where only the fittest survive, but the political arena is rather limited at the top in our world dominated by the United States of America. For over 20 years, Huawei successfully applied the dialectical balance of offence and compromise to its business operations for vitality and harmony within itself and a balance of terror with its Western competitors.
“Government telecommunication infrastructure requirements are essentially locking out the Chinese supplier in critical growth markets,” media quoted Morningstar Research equity analyst Mark Cash. “Additionally, telecom providers without government imposed restrictions may start limiting their usage of Huawei equipment for their 5G network build-outs.”
“ZTE was much more dependent on US suppliers, particularly chip companies, than Huawei. The latter is in a better position because of its chip design unit, HiSilicon,” said Dan Wang, an analyst at Beijing research firm Gavekal Dragonomics. “Still, Huawei is heavily dependent on US technologies because many chips are irreplaceable and because US firms have a vast array of IP.”
Unlike ZTE, which sourced nearly all of its chips from US companies, Huawei employs more than 10,000 people at its HiSilicon R&D unit, which this year launched the Kirin 980, its first artificial intelligence-enabled mobile chip set. Huawei also relies on Micron, a US chip company, to supply memory chips that go into its smartphones. Should a US export ban be imposed, Huawei could switch to source more from South Korean memory chip companies, such as existing supplier SK Hynix.
Other American-designed components are not replaceable in the short term. Intel processors power Huawei’s personal computers, while Huawei’s mobile handsets depend on radio frequency components from US based chipmakers Skyworks and Qorvo, according to Arete Research and Goldman Sachs. Most importantly, a US export ban would delay Huawei’s plan to roll out commercial standalone 5G service by next April. “5G is a big technology strategy for China and Huawei is leading the charge, but they have a lot of hardware suppliers that are US-based in 5G that I suspect could derail their plans if any US supply ban is put in place,” media quoted Brett Simpson, co-founder of Arete Research.
Especially crucial to Huawei’s 5G ambitions is US chipmaker Broadcom, which provides networking processors that underpin telecoms networks. Huawei’s 5G base stations, the signal processing centres that link together a mobile network, incorporate FPGAs, a type of semiconductor device, sourced from US-based Xilinx. Meanwhile, Texas Instruments and Analog Devices, another American semiconductor firm specialising in signal processing, provide much of the analogue chips in 5G base stations.
Huawei struggled for market share, with foreign companies using so-called “wolf culture” of aggressive salesmanship, which sometimes materialised in the form of Huawei employees flooding sales events with several times more salespeople than competitors. The company ventured into international markets in the 2000s, with telecom equipment that was more affordable than products of competitors such as Cisco Systems.
Huawei has been stepping up the company’s research and development. Of its 180,000 employees, about 80,000 are now involved in R&D, according to the company’s 2017 report, and the company has been known to recruit some of China’s top talent out of universities. The company recently refocused on existing markets after the US government called Huawei a national security threat, and cited concerns over its possible control of 5G technologies. Mr Trump signed a Bill banning government use of Chinese tech including Huawei and has even contacted allies to get them to avoid using Huawei equipment.
AMERICA The Trump administration has been on a mission to prevent its allies from using Huawei technology for critical infrastructure, especially focusing on fellow members of the so-called Five Eyes, a group of five English speaking countries—US, Canada, New Zealand, Australia and Great Britain—whose intelligence agencies share information on a large scale. The US has also tried to dissuade other countries like Germany from allowing Huawei to provide technologies in the near future.
AUSTRALIA Australia has already banned Huawei from providing 5G technology in August of this year albeit without specifically mentioning the company by name. In a statement, the Australian government said companies “who are likely to be subject to extrajudicial directions from a foreign government” would no longer be allowed to provide 5G technology, which was clearly directed at the Chinese telecom company. Huawei is already providing Australia with its 4G network. Following Australia’s decision, Huawei said there was no fundamental difference between 4G and 5G architecture and that 5G provides better security for both privacy and security, adding that Australian allegations about security concerns were not based on facts.
NEW ZEALAND New Zealand announced in November it would take the same measures as Australia. This followed a request by a kiwi mobile carrier Spark to use Huawei equipment for its 5G networks. The Government Communications Security Bureau intelligence agency denied that request. “I have informed Spark that a significant security risk was identified,” GCS Director-General Andrew Hampton said, without going into detail about those risks.
GREAT BRITAIN As the second most important member in the Five Eyes intelligence sharing group, Great Britain is soon expected to ban Huawei from its 5G infrastructure. So far the United Kingdom has not officially done so, but the government is debating special measures. Head of intelligence agency MI6 said earlier this week, he had his doubts about the telecom company. His comments followed the 2013 Foreign involvement in the Critical National Infrastructure report that concluded, although no direct evidence was found that Huawei did anything malicious, considerable risks were involved with having the Chinese company be partially responsible for such critical technologies. Ahead of any decision by the UK government, British telecommunication company BT announced on Wednesday it would not use Huawei technologies as the backbone of its soon-to-be-deployed 5G network and that it would be removing Huawei parts from its existing 3G and 4G networks.
CANADA Canada is another country expected to react to “the risk Huawei’s technologies could possibly pose”. The immediate neighbour to the US has been under pressure from its Five Eyes allies to ban the Chinese company from its 5G infrastructure. According to reports in Canadian media, US lawmakers have been talking to Canadian officials and companies about barring Huawei technology from being implemented in Canada’s new 5G network. “While Canada has strong telecommunications security safeguards in place, we have serious concerns that such safeguards are inadequate given what the United States and other allies know about Huawei,” Senators Mark Warner and Marco Rubio wrote in a letter to Canadian Prime Minister Justin Trudeau, Reuters reported.
JAPAN Japan is one of several countries who at the moment rely heavily on Huawei hardware for its networks. The US has communicated its security concerns over 5G equipment manufactured by Huawei in recent months, reported the Wall Street Journal. It is, therefore, interesting to note three leading telcos in Japan has decided not to use Huawei equipment in its 5G network, Kyodo news agency reported. On Friday, local media reported that the Japanese government would also ban Huawei from future purchases for its upcoming 5G infrastructure. Japan’s but chief government spokesman Yoshihide Suga is on record saying Japan had been in talks with the US about the issue.
ITALY and INDIA The US has also voiced concern over Huawei purchases to Italy, another country that currently uses the Chinese company’s products for its mobile internet infrastructure. Indian media reported in September, Huawei was banned from participating in 5G trials in the country. However, shortly afterwards Huawei and India both said the company had been invited to test its equipment in the second-largest mobile market in the world.
GERMANY Germany is a key ally of the Five Eyes intelligence group. It is another country that currently uses Huawei technology but has not yet decided on its future. Behind this very public drama is a long-running, behind-the-scenes one centred on Western intelligence agencies’ fears that Huawei poses a significant threat to global security.
Telecom companies around the world are about to roll out the next generation of cellular wireless, known as 5G. As well as speeding up data transfers, 5G networks will enable self-driving cars to talk to each other and to things like smart traffic lights. They’ll also connect and control a vast number of robots in factories and other locations. And the military will use them for all kinds of applications, too. This will dramatically expand the number of connected devices—and the chaos that can be caused if the networks supporting them are hacked. It will also ramp up the amount of corporate and other data that hackers can target.
The fallout from her arrest will surely mean, at the very least, an even more difficult relationship for the handful of US tech giants that have found great fortune in China. In particular, Apple, the poster child for US tech success, and a company that relied on China for 20% of its revenues this past year.
Despite Huawei’s woes, China is moving ahead with 5G mobile development plans. China Mobile, China Unicom and China Telecom have been granted 5G radio frequency spectrum allocations to pursue trials in the next-generation mobile system ahead of its wide roll-out from 2020. China is moving rapidly to develop 5G services nationwide after allocating radio frequency spectrum for the next-generation mobile system to the country’s three telecommunications carriers.
The central government awarded China Mobile, China Unicom and China Telecom with 5G spectrum licences on Friday, enabling them to conduct final trials for the new mobile system before its wide commercial roll-out from 2020. “This sends a clear signal to the industry that we aim to promote the maturity and development of China’s 5G industry,” the Ministry of Industry and Information Technology (MIIT) said in a statement posted on its website on Monday. The MIIT said the trials would ensure the compatibility of the various types of radio frequency spectrum ahead of the launch of 5G mobile services.
America has strong-armed its allied but it cannot dictate to the whole world. Other 5G stakeholders are now worried there will be increasing bifurcation between 5G technology from Chinese and western companies. Once the rest of the world starts understanding that by doing business with the Chinese companies, not only can they have a 5G network that the Americans and the English fear, but that in the process they can also be rid of their spying as well, then business will go the Chinese way. It is, therefore, a solid opportunity to work with the Chinese to upgrade the national system to 5G at the earliest possible.
Meanwhile, the rest of the world is also watching how the Five Eyes are moving. It is not only China that is at risk. France, Germany, Italy and Russia are actually in the same boat. Although the focus is on China in the media, yet all these countries have the capacity to challenge the technological and economic domination of the United States that appears to have forgotten that it cannot go it alone. Five Eyes versus the rest is not winnable.
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Khalid Hussain is Resident Editor of TLTP – You may contact Khalid Hussain at Resident.Editor@lawtoday.com.pk
https://lawtoday.com.pk/2018/12/12/nothing-is-ever-fair-in-war/
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