In the Era that is defined by 4th Industrial Revolution where Artificial Intelligence, Big Data and Internet of Things are increasingly expected to play major roles, having the advantage over 5G technology is likely to be a key determinant of an upcoming great power rivalry.
However, geopolitical developments during the ongoing COVID-19 pandemic is likely to either dampen or delay China’s grand global 5G strategy that is also critical to Beijing’s Digital Silk Road Plans.
The relatively small group of nations led by the United States (US) that acted against Chinese plans in the pre-COVID period may expand as increasingly more nations are concerned about Beijing’s reliability due to its behaviour involves accountability, responsibility and propaganda during the current pandemic.
Gaining technological supremacy has been one of the key features of geopolitical rivalries in modern history, and it is no different for the ongoing US-China rivalry. Realising this, President Donald Trump has waged a global campaign against Huawei main Chinese 5G player, other one is ZTE since the last couple of years alleging China of 5G technology-related intellectual property theft and raised national security issues due to espionage-related concerns.
Consequently, to limit Huawei’s capacity to provide 5G equipment, specifically at affordable rates, in the US and beyond, the Trump administration has announced several measures against Huawei, including the most recent one during the pandemic that restricts “Huawei’s ability to use US technology and software to design and manufacture its semiconductors abroad” as the US alleged Huawei of undermining its export control measures.
The US government has used rising anti-China sentiments during the pandemic domestically and externally to its advantage and imposed new restrictions.
This new measure by the US is likely to impact Huawei’s R&D work and raise its business costs substantially as chipmakers are not allowed to supply chips to Chinese company if they are based on the American technology; moreover, there are no Chinese technological alternatives at present.
The measure will also impact the companies that are associated with Huawei components across the world, including the EU, thereby, damaging Huawei’s main international sales pitch, affordability. This action has attracted so much attention that the Chinese government has threatened to retaliate against American companies that have a big presence in China if the US continues with any such further measures.
While the Trump administration has been maintaining the consistent act against Huawei domestically, it has also been persuading its partners across the globe to ban Huawei in gaining access to their respective telecommunication networks. Some of its allies like Japan, Australia and New Zealand have gone forward with the US plans in banning Huawei, some like Canada and the European Union (EU) were still under discussion before the pandemic.
EU Member States were divided over the issue as China holds influence over several nations of the Union. Further, in disappointment to the US before the pandemic, the United Kingdom (UK) reluctantly provided limited access to Huawei some months ago.
Nonetheless, as the questions against China arise over its accountability towards the virus origins, reliability over the supply chains dependence and propaganda through global media blitzkrieg, the anti-Chinese lobby in the UK seems to have lapped up the opportunity to convince Boris Johnson administration to act against Huawei as British media suggests.
The Financial Times last week reported that the UK government is making plans “to force a full phase-out of Huawei from Britain’s 5G networks” in the next three years. This is a strong shift in the UK’s approach towards Huawei in just a few months.
In the last week of January 2020, the European Commission recommended strict rules, instead of an outright ban, against any high-risk 5G suppliers including “exclusions for key assets considered as critical and sensitive”, and “strategies… to ensure the diversification of vendors”.
Similarly, in February 2020, German ruling party’s members supported a position paper that called for limiting the participation of foreign vendors in 5G network rollout in a compromise as an anti-Chinese group among the Christian Democratic Union (CDU) have been piling up pressure on the Merkel administration for an outright ban of Huawei.
Further, CDU’s coalition partner, Social Democratic Party, is asking for equipment suppliers’ political reliability vis-à-vis their home countries’ governing system, which can dampen chances of companies like Huawei when the draft bill that asks for additional requirements from 5G network suppliers will face the parliamentary test.
Handelsblatt has reported that Deutsch Telekom and Vodafone are already considering to remove Huawei equipment from the sensitive core of their networks considering domestic political preferences and rising business costs due to the US actions.
While these suggestions do not call for an outright ban as the US would have liked, they nonetheless are in favour of more stringent regulatory regime against the foreign vendors like Huawei.
Moreover, it should come as no surprise if local EU 5G players like Nokia and Ericsson are prioritised over the foreign ones by EU member states as the industrial strategy under the new French-German COVID-19 recovery plan suggests. The French-German deal calls for strengthening “screening towards non-EU investors in strategic sectors”, and “accelerating the adaptation of state aid and competition rules” in the European competition policy.
Further, in sort of a policy priority, Josep Borrell Fontelles, High Representative of the EU for Foreign Affairs and Security Policy, recently in a column that was published in several media outlets suggested that the state-centric Chinese approach stands opposite to the “the EU’s multi-stakeholder approach based on respect for fundamental rights and freedoms” in the cyber domain; also, he called for avoiding dependence on China in strategic sectors. These developments suggest that Huawei’s access to most of the OECD market is likely to get restricted, which would limit China’s ambitions both politically and economically.
ASEAN is one region where Huawei is likely to have better run among high-value markets, except in Vietnam. While Vietnam has not banned Huawei, it claims to have developed native 5G tech through Viettel, Vietnam’s largest telecommunications company operated by the country’s Defence Ministry, which experts suggest provides an incentive to bypass China’s Huawei.
The company has suggested that it doesn’t have plans to work with Huawei for now. The situation isn’t likely to change much as China ramps up the aggression in the South China Sea. Also, other major emerging economies like Brazil and India are yet to take a call in this regard.
India was one of the early countries to raise espionage-related concerns over Huawei almost a decade ago. While the government has allowed Huawei for trials, it is facing ambiguity over the issue as the country’s strategic community is seriously worried about national security issues.
The situation is only likely to get tight due to ongoing border skirmishes at India-China border and also the Indian government’s plans to bring strong data protection law, which talks about localising data.
Moreover, there have been a couple of interesting developments over Indian 5G in the recent past.
First, Airtel, which have an advocate of Huawei, has inked a $1 billion deal with Nokia, as uncertainty over Huawei’s access prevails to modernise and expand its 4G network, which will also be used for the future 5G purposes.
Second, Reliance Jio, currently India’s largest telecommunications company, claimed to have developed own in-house 5G tech. Also, Jio has proudly claimed that it is the only company in the world that doesn’t use any Chinese equipment in its 4G and 5G networks and will maintain this going forward.
All these events suggest the growing hardship for Chinese 5G plans across the world as it faces the campaign led by the US. As the geopolitics during the pandemic unravels, one should not expect the situation to get any better for Huawei; especially when China has ramped up the military aggression in the East China Sea, South China Sea, Taiwan Strait, Hong Kong and India-China border region.
The International Community, especially stakeholders at the receiving end of the Chinese aggression and the West that cares for international norms and human rights is not likely to ease its stance anytime soon if the pandemic hostility prevails.