Commuters walk a Huawei advert in Beijing. Photo: AP

America risks being real loser in decision to shut out Huawei

Donald Trump’s executive order declaring national IT emergency threatens a global downturn in technological momentum with US firms losing the Chinese market

Published: 10:20pm, 17 May 2019

The absence of proof or even any evidence to support spying accusations against Huawei has been very frequently cited, and it is a defence being raised again in response to the latest instalment of the American campaign to block the Chinese tech giant’s participation in the development of 5G networks – President Donald Trump’s executive order declaring a national IT emergency and barring the use of telecoms equipment made by companies deemed a threat to US national security. Two things set this escalation apart: the irony of the United States resorting to the same measures of restrictive state controls and trade barriers that it accuses China of using in their trade war; and ultimately the harm it threatens to America’s own interests.

Concerns Huawei’s equipment may have a back door that enables spying by the Chinese government are serious, but cannot rest purely on the origins of the company. This risks setting a precedent that China can deploy against American products without evidence, potentially leading to the Balkanisation or fragmentation of technology development and a global loss of momentum.

Excluding a product or country from a market on national security grounds without evidence is a grave step that has split many of America’s European allies, with Britain’s foreign intelligence chief unconvinced of the need for an outright ban, Italy’s intelligence service reportedly having no security concerns, and a German minister saying any restrictions cannot target specific companies.

These reservations are understandable. Technological development is globalised. There are few instances of one country owning every component, creating the need for cross licensing and collaboration. Trump’s move would hinder Huawei’s efforts to expand into the critical 5G market, giving the US a chance to play catch-up. But American tech firms are worried, and not just because a tech cold war would halt sales of core components to China by companies dependent on them, such as Qualcomm and Intel.

In the longer term, it is detrimental to America’s own interests. At present US tech companies have the advantage of making money from global trade and reinvesting it in research and development. As a result they can maintain an edge. But if the tech world becomes Balkanised and US firms lose the mainland market, Chinese firms will fill the gap in domestic market share. Chinese tech development may slow and China may continue to lag the US in the short term, but gradually mainland tech companies will be able to invest their domestic gains in R&D and catch up. Then hindsight will vindicate consultants to US tech firms who say the Huawei lockout does not make sense and is detrimental to America’s own interests.

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