Vol. XLIII No. 24 June 16, 2019
Array

By Blacklisting Huawei, US Escalates Technological War on China

Prasanth

THE latest round of US measures targeting telecommunications giant Huawei is an escalation of its war against China in the field of technology. Huawei has been the subject of US measures earlier too. While those steps were aimed at restricting the company’s entry into 5G networks in various countries, this round of sanctions is an attempt to deny vital equipment and software updates to the company, effectively crippling its core business.

OFFENSIVE ON TWO FRONTS

Huawei is the world’s largest manufacturer of telecommunications equipment and the second largest manufacturer of mobile phones. It is the global leader in 5G technology and poses a significant challenge to US dominion in the tech sector. The US offensive against Huawei has been on two fronts. The first saw the US Department of Commerce announcing last week measures that would prevent US firms from supplying equipment to Huawei. The Chinese giant will not be able to source chip sets from US manufacturers that are vital for its 5G networks.  A few days later, the second aspect of this attack was revealed when Google announced that it would block Huawei’s access to its Android apps and services. This leaves Huawei with the uphill task of providing alternatives to the Google eco-system.    

Many analysts see these measures against Huawei as yet another front in the ongoing US-China trade war. In December, when Huawei’s CFO, Meng Wanzhou, was arrested in Canada at the behest of US authorities, analysts speculated that it had something to do with the latest round of US sanctions on Iran. However, US measures against Huawei and other Chinese telecommunication firms predate Donald Trump’s imposing tariffs on China last year or the sanctions on Iran. For many years, the US establishment has been preoccupied with the superiority of the Chinese telecommunications sector, especially Huawei, in the field of 5G technology. Earlier bowing to US pressure, Australia locked out Huawei from its 5G infrastructure while New Zealand made a similar announcement. The US argues that Huawei’s technology is a “security risk.” The chutzpah of this argument is remarkable considering Edward Snowden’s revelations that technology manufactured by companies such as Cisco had backdoors which were routinely exploited by US intelligence.

The efforts to dent Huawei’s dominance in the 5G sector are all the more significant considering that in the process, US chip manufacturers and other firms could lose over $11 billion annually in export revenue. This measure is also likely to affect the overall development of 5G technology across the globe. However, the US seems more worried that Huawei’s technological superiority could enable it to dominate the markets of its allies, especially in Europe. Hence, it is resorting to a crude technological assault on Huawei. This yet again demonstrates that when it comes to their own interests, western economies are happy to abandon the free trade arguments that they ardently prescribe to the countries of the global south.

The fact that the recent measures have nothing to do with “national security” is proved further by Google’s bid to cripple Huawei’s mobile phone business. Google’s actions mean that those who buy Huawei phones and even current owners may be denied access to Google’s products and security updates. Considering the extent to which millions of users across the world are enmeshed in Google’s ecosystem through products such as the Android OS, Gmail and the Google Play Store, this step could be a major setback to Huawei’s mobile phone business.

For the Chinese tech giant, the times ahead will be challenging. In the short run, it will struggle to ensure enough supplies for its products. There is the risk of the US pressurising manufacturers in other countries too to stop supplies to Huawei, a tactic that is already being deployed against Iran. Huawei has claimed it is prepared for any eventuality. The company’s founder, Ren Zhengfei, has said the sanctions will not affect the company’s core business and it will continue providing products and services. Reports indicate that Huawei has already stockpiled chips and invested in plans to develop alternatives to the Google ecosystem. However, the latter is likely to be a time-consuming process and it remains to be seen what strategies Huawei will deploy to retain its user base in the meanwhile.

It is of course possible that the measures against Huawei may be withdrawn or postponed as part of a deal between the US and China over trade. However, that would at the most be a truce in what is definitely a much larger battle. 

LESSONS OFFERED

The current confrontation offers a number of lessons. Firstly, it is clear that the US is threatened enough by China’s rising emergence in cutting edge technology to resort to such crude measures, even at the risk of harming its economy. In addition to 5G technology, China is also emerging as a major player in sectors such as Artificial Intelligence. In the coming years, as China catches up in these sectors and continues to offer its expertise to trade partners through the Belt and Road initiative and other such efforts, we are likely to see more unilateral steps by the US to restrict Chinese entry into these markets.

The US measures also demonstrate the perils of the overwhelming dominance of the Silicon Valley firms. Google and Facebook, among other firms, are almost synonymous with the internet in most countries, except China. The right amount of pressure by the US establishment is enough for Google to try to paralyse the services of the world’s second largest mobile phone manufacturer. Through the Silicon Valley behemoths, the US today can make or break the technology sectors of most countries, as well as social spaces in the digital realm. The Cambridge Analytica scandal and the revelation of the many crimes of Facebook exposed one side of this issue. Google’s action against Huawei demonstrates another aspect of the stranglehold these companies have on the internet and technology worldwide. 

That said, the fact that Huawei is able to resist these assaults is due to a well-thought out strategy by China to protect its domestic market and encourage the growth of its ‘champions.’ By virtue of this strategy, China’s tech giants have a domestic market that can help them resist assaults by the US and its allies. China perhaps has progressed the most in developing a concept of technological sovereignty, which can help it challenge the technological stranglehold of the US. This is not merely a technological issue. 5G networks, for instance, will revolutioniSe every aspect of life. For the US, maintaining its domination over these networks is an essential part of its imperialist agenda. In the various rounds of measures and counter-measures today, we see the future of imperialism and capitalism itself being shaped.

For India, this is also a reminder of opportunities that were missed. Unlike China, India did not focus on developing a powerful hardware sector. Its software sector focused on services, inextricably binding it to the economies of the west. India has thus almost no scope to achieve technological sovereignty in any meaningful sense and is thus entirely at the mercy of the US in this sector.  Whether this incident will provide the crucial wake-up call for India and other countries of the global South remains to be seen.