A US government decision to cut Huawei out of 5G networks is entangled with broader concerns about US leadership in trade and technology.
A new executive order by US President Donald Trump effectively bars China’s Huawei Technologies from involvement in US telecom networks, on security grounds.
The order from the White House on Wednesday 15 May declares a “national emergency” around threats to US telecommunications.
It technically instructs the US commerce secretary to ban transactions posing “an unacceptable risk” without mentioning nations or companies. And White House officials are reported to have described it as “agnostic”. But Trump allies and opponents alike read it as aimed clearly at Huawei.
On the same day the US government also placed Huawei on its ‘entity list’, meaning US companies will need to seek permission before selling any technology to Huawei.
The Huawei move was welcomed by long-time critics of the Chinese company such as Senator Marco Rubio, who has called Huawei a tool for China to “spy and steal”.
— Marco Rubio (@marcorubio) May 15, 2019
Democrats as well as Republicans applauded, with US Democrat Senator Mark Warner saying that Huawei and another company, ZTE, “represent a threat to the security of US and allied communications networks”.
Huawei can claim to be the world’s leading 5G equipment vendor, offering high-performance equipment at a lower cost than competitors. It has a smaller presence in the US than in many other countries. But some US analysts worry it could take a major share of the global 5G market and develop a technological edge over rivals. That would also give it more power to influence future global telecommunications standards.
Wharton School dean Geoffrey Garrett wrote in December 2018 that Huawei “is poised to be a world leader, if not the world leader, in the rollout of 5G digital networks in the next few years — not American companies like AT&T and Verizon.” He added: “The US national security establishment believes that the Chinese Communist Party government ultimately has access to all Huawei equipment and data and could use this access not only for commercial espionage but also for cyberwarfare … Though notionally a private company, Huawei (notably its founder Ren Zhengfei) has many complex and often opaque links with the Chinese government and the Chinese military.”
Reports say the US authorities have been looking at a ban since last year. The Australian government banned Huawei from supplying equipment for Australian 5G networks in 2018, and Japan has taken similar steps. A British government agency has also published a report alleging vulnerabilities in Huawei equipment with potentially serious cybersecurity implications, although the UK government has so far declined to ban Huawei from 5G systems.
However, the latest measures follow an escalation of the US–China trade war over recent days. On Friday 10 May, Trump raised tariffs on US$200 billion of Chinese products to rates of up to 25%, and put in motion a process to impose further levies on other Chinese products.
The Financial Times quoted a former Obama administration adviser, Evan Medeiros, as saying the move was the right policy at the wrong time, because the Chinese would see it as another move to reduce China’s trading power.