ANTHONY PUN. Understanding the battle for telecommunications supremacy.

Apr 25, 2019

Sam Byford’s article, on the Huawei chairman accusing American critics of hypocrisy over NSA hacks, represents the current battlefront in the US-China trade war over “telecommunications” (telecoms) and its battle plan objective.  This article takes a deeper dive into the matter in order to understand the nature of this Huawei battle for telecoms supremacy, as part of the US-China trade war and the reaction of US allies to this battle.

China, as a rising economic power with soft power influence and potential military power, is a great concern for the US as it sees China as a challenge to her hegemony in trade, military might and influence in global politics.

On the economic front, China’s Belt & Road Initiative (BRI) [1] to date has the participation of 60 countries containing two thirds of the world’s population.  The largest project so far is the China-Pakistan Economic corridor ($68 billion) and Morgan Stanley has predicted that the project value could reach $1.2-$1.3 trillion by 2027.

The US has led the world in telecommunications since the invention of a single line electric telegraph (Samuel Morse 1837) and the telephone (Alexander Graham Bell 1876).   US Motorola is credited with the invention of the first mobile phone in 1973.  From 1995 to the present, US telecoms have diversified, merged domestically and internationally with European telecoms companies Alcatel (France) and Nokia (Finland).  The changes ended up in Nokia being the multinational telecoms company in the US by 2016.[2]

In contrast Huawei, founded by Ren Zhenfei in 1987, launched the wireless GSM based solution in 1997.  In 2004 it scored well by landing a contract with Dutch Telefort for Euro 230 million.  The quite achiever went on to become the world largest telecommunications company in 2018, with sales revenue in excess of $100 billion. The reasons for the lack of challenge to Huawei can be found in the article [2], however one other reason could be complacency.

From the above discussion, one could form the opinion that the US is countering a perceived threat to its hegemony and retaliated with the creation of a US-China tariff trade war.  A battle of the trade war is the battle for telecoms supremacy which involved the destruction of Huawei business globally, starting with the arrest of Meng (Huawei CFO) in Canada pending US extradition.

One of the main reasons used by the US in persuading her allies to side with her on the Huawei issue was the creation of the perception that Huawei 5G technology is under the control of the Chinese government and it can be used to spy on everything.

The Australian involvement in siding with the US on the Huawei issue is best illustrated in an interview of former PM Turnbull with the South China Morning Post (SCMP 2017) [3]

This article “Australia bans China’s Huawei and ZTE from its 5G network on national security grounds” quoted Turnbull saying that his government “decided not to allow 5G networks to be built out by companies that have an obligation to their own country to assist the intelligence services of those countries … We have to, in an uncertain world, hedge against contingencies where people who we have friendly relations with, we may not necessarily be friends with in the future”.

Hence, Australia, in alliance with the US, has stuck herself in the middle of two sparring superpowers with speculation that the ban on Chinese 5G has resulted in economic repercussions from Beijing, ie. delay on coal shipments from Australia at Chinese ports which was like the ban of canola oil shipment from Canada.

In Asia, a dominant English language newspaper, the SCMP, published an article that zeroed in on the China panic in Australia with the headline “What’s driving China conspiracy theories in Australia?” [4] :

“China remains Australia’s largest trading partner and the latest figures show Chinese tourists made up about 15 per cent of all international visitors Down Under. About 1.3 million mainland Chinese spent A$11.3 billion (US$8 billion) in Australia between June 2017 and June 2018. There are also 190,000 Chinese students in Australian schools, and about 1.2 million Australians of Chinese ancestry.”

Asian readers in SE Asia countries would no doubt be puzzled by the report and wonder why are we biting the hand that feeds us?  What Asians do not realise is the existence of an anti-China narrative led by the media in Australia and, even if they do, they would still be puzzled!

However, the article did not explicitly say it was the fear of a rising China promoted by US geopolitical conflict with China.

A review of the media covering this battle shows interesting variations by US allies:

  • Ex-Singapore Minister George Yeow said that the Huawei ban will not stop spy threats when US and others are doing it too. The solution is not to shut out Huawei but to be protected against all telecoms providers.
  • New Zealand leader Jacinda Ardern talks trade and Huawei on whirlwind trip to China.
  • Huawei challenges competitors to subject themselves to the same regulatory scrutiny, to allow source code testing. [5]
  • UK chides Huawei for equipment security flaws but rules out Chinese state interference.
  • EU ignores US calls for a blanket ban on Huawei in Europe as Chinese company’s 5G expertise helps its cause. [6]
  • A victory for Huawei as EU ignores US calls to ban it in 5G security blueprint, despite ‘worry’ about Chinese security law.
  • China to speed 5G commercialisation even as Huawei faces US-led pushback. “Huawei simply makes world class 5G equipment…” said Kevin Curran, a professor of cybersecurity at Ulster University in Northern Ireland. “Competitors such as Ericsson cannot compete on price.”
  • Robert Delaney: Beijing’s supporters won’t have a strong case against Washington if they focus on legal rights of individuals. They need to ask different questions, like what gives the US the right to ban foreign companies from doing business with Iran? [7]

With these developments in the recent months, China has edged slightly ahead in the battle and this would account for the new Huawei Chairman’s strident on-stage speech described in Sam Byford’s article.  The European Union would be pivotal to the outcome of the battle.









Dr Anthony Pun, OAM, is National President of Chinese Community Council of Australia Inc.




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