After first issuing a presidential decree to prohibit the purchase by American companies of technologies developed by Huawei, the US Department of Commerce finally grants a 3-month reprieve to the Chinese manufacturer. On the surface, these changes of course may have suggested that the US government was sailing on sight. However, Donald Trump announced on Friday that he was not shutting down the possibility of including the Huawei case in negotiations for a trade agreement with China. Despite the firmness of the measures adopted, the United States is showing its hand: to exploit the Huawei affair to establish a favorable balance of power in the trade war waged against China.
On the basis of the International Emergency Economic Powers Act, the executive order on securing information and communications technologies and services in the Supply chain signed by Donald Trump, prohibits American telecom operators from obtaining supplies from of certain foreign firms considered to pose a risk to national security. It is the responsibility of the Secretary of Commerce to judge whether or not individuals or corporations pose a risk to the United States. It is not specified whether the selection criteria or the motivations to ban or not will be made public. In any case, although not explicitly appearing in the executive decree, Huawei and China are obviously the first to be targeted and impacted by this ban.
« Despite the firmness of the measures adopted, the United States is showing its hand:
exploit the Huawei affair to establish a favorable balance of power
in the trade war waged against China«
At the same time, Huawei and 68 of its subsidiaries were placed on the “Entity List” of the Bureau of Industry and Security (BIS) of the Ministry of Commerce. This list requires the granting of an authorization license for the “export, re-export or transfer” of specific items to the persons, companies, organizations or countries listed therein. If they do not obtain explicit authorization from the US government, Huawei and its subsidiaries will have to do without American components to manufacture their smartphones.
On a practical level, Huawei is brutally denied access to the Android operating system developed by the American company Google for its future models as well as to strategic components manufactured by Qualcomm, Broadcomm and Xilinx. Thus, it is not only government agencies but also private actors who are disengaging. Taiwanese (Chungwa Telecom), Japanese (Ymobile, KDDI, etc.) and British (EE) operators have announced that they are no longer ordering the latest versions of Huawei phones.
« If they do not get explicit permission from the U.S. government, Huawei and
its subsidiaries will have to do without American components to manufacture their smartphones.«
Song of the Swan of the United States?
If the situation seems to get worse for Huawei, the Chinese manufacturer seems far from falling from the clouds. Two internal letters made public and acknowledged by Huawei reveal that HiSilicon, its semiconductor subsidiary, has for several years devoted resources to drawing up business continuity plans if the United States were to ever cut power. access to key technologies for the manufacture of their products.
On both sides of the Pacific, the American and Chinese technology industries are interdependent. It is true that no competitor can provide components of similar quality to American products for the same price. Chinese equipment manufacturers will have to be satisfied with less efficient and probably more expensive products. This does not mean, however, that China will lose. Ren Zhengfei, founder of the Chinese giant, assured that the United States underestimated the capabilities of the firm, particularly in terms of its ability to produce itself the chips previously supplied by American industry.
On the other side of the Pacific, it is also difficult to imagine that American technology firms such as Apple could do without Chinese manufacturing. Likewise, Huawei has a head start on the competition in terms of 5G. If the United States closes the doors to the American market, they will also have to be satisfied with a second best option in terms of 5G. From a historical perspective, the mere fact that Washington is putting so much effort into protecting its territory against the importation of foreign technology may reveal an admission of weakness.
In the long term, we can legitimately ask ourselves, which of the American or Chinese industry,
will have the most to lose?
This decision, as media-friendly as it may be, should therefore not prevent us from taking a step back and adopting an overall view. This radical decision follows a long list of strong mutual accusations between Beijing and Washington over the past year. After unsuccessful diplomatic negotiations, the American government increased its customs duties on Chinese goods in May 1, increasing the tax from 2019% to 10%. China, for its part, took retaliatory measures by in turn increasing its own tariffs. Last December, the daughter of Huawei's founder and financial director was arrested in Canada at the request of the United States on suspicion of violating sanctions against Iran. These successive crises are part of a broader context of technological competition between two of the most powerful states in the world with direct consequences in the field of defense and national security.
Focus on technological issues in the field of Defense and National Security
At the origin of the decree, an observation made by Washington: the increase in the creation and exploitation of vulnerabilities of information and communications technologies and services by foreign powers increased by the acquisition or use of equipment from foreign powers. The security concerns expressed by the United States to justify the outcry against Chinese advances are far from being just a rhetorical construction. The polarization of the debate around Huawei is symptomatic and revealing of technological and national security issues.
« an observation made by Washington: the increase in the creation and exploitation of vulnerabilities in information and communications technologies and services by foreign powers”
Huawei is accused of spying and serving as a Trojan horse for the Chinese government. In the crosshairs: a 2017 Chinese law that would require companies in the territory to cooperate with Chinese intelligence services if they so request. Faced with these accusations, Liang Hua tried to reassure the British government by adopting a response that was audacious to say the least: if the concerns raised by this law are legitimate, there is however no law that would sanction the equipment manufacturer if it refused to comply with the request of intelligence agencies. In practice, the law could therefore not apply. However, this assurance seems very thin in the face of the disadvantages that a renewed tension with the USA would cause if the United Kingdom welcomed the Huawei 5G network on your territory. Lacking proven evidence of collusion with the Chinese government or acts of espionage, the United Kingdom nevertheless refused to outright ban the Chinese equipment manufacturer but limited it to its non-essential activities.
Ignoring the warnings of her Ministers of Defense (sent away immediately for an accusation of leaking), of the Interior and of Foreign Affairs, Theresa May gave the green light to the Chinese giant to participate in the national 5G network in regarding non-critical equipment. The British rule out a pure and simple ban in favor of something in between. For its part, Huawei is renewing its acts of good faith, notably promising to sign a “No-spy agreement” with the British government. “No spying, no back doors” assures Huawei president Liang Hua.
Aware of the progress of the Chinese company within the Five Eyes Community, Washington went so far as to threaten to review its strategic intelligence partnerships if its allies opted for the Chinese 5G network. In this case, for the United States the distinction between the essential and non-essential elements of the 5G network is of no importance in view of the issues of cybersecurity and national security. Intelligence sharing will certainly be reassessed with the British, warns Washington. They also took the opportunity to remind that the same measures will be taken for all of their partners who open their doors to the 5G network of Huawei or any other unreliable supplier.
« Aware of the progress of the Chinese company within the Five Eyes Community, Washington went so far as to threaten to review its strategic intelligence partnerships if its allies opted for the Chinese 5G network.«
Faced with what Beijing denounces as an enterprise of unfair competition by the United States, Huawei is launching a vast “white paw” operation vis-à-vis the West. On March 5, 2019, Huawei opened a Cybersecurity Transparency Center in the heart of Europe in Brussels. The objective of this center is to get closer to key stakeholders in European cybersecurity. Huawei seeks to demonstrate its good practices in terms of security and transparency to strengthen dialogue and trust with institutions. As a show of good faith, Huawei went so far as to reveal its source code to reassure about the implementation of secure Chinese 5G in Europe and against accusations of integrated backdoors.
At the same time, the brand is multiplying initiatives to strengthen its soft-power, in particular by remaining very active on social networks to highlight publications that are favorable to it and oppose a counter-discourse to its criticisms.
For these same allies, with the exception of New Zealand and Australia, 5G Huawei and national security do not seem incompatible. Regarding France, Emmanuel Macron assures that the ban on Huawei on national territory is not on the agenda. “Our position is different from the Americans on this subject,” declared Bruno Le Maire, Minister of the Economy. The French government adopts a position similar to the British in that it prefers a compromise strategy: taking advantage of the technological innovation of Chinese 5G for its industry while ensuring guarantees to preserve its sovereignty and protect itself from possible interference.
From an operational point of view, the deployment of a Chinese 5G network in Europe is a subject of serious concern. In addition to the risks of espionage and intellectual property theft, 5G technology is a dual technology by nature. As the battlefield becomes more and more connected, the maturity in terms of infrastructure that China is developing will translate into an undeniable operational advantage (information systems that are more reliable, faster and able to interconnect more 'elements, etc.).
Conclusion
It would be extremely misleading to think that Beijing would comfort itself in a victim position. This Tuesday, May 21, President Xi Jinping paid a visit noticed by the Chinese media to the company JL Mag, specialized in rare earths and whose products are used in numerous electronic components and in advanced weapons. In a sort of snub to the United States, Beijing thus recalled American dependence on Chinese supplies. François Lenglet, journalist at RTL, recalls that
« China produces 61% of the world's silicon, 67% of germanium, 84% of the world's tungsten and 95% of rare earths » which now makes it “ the most influential country in the global supply of many critical raw materials”[1].
[1] https://www.rtl.fr/actu/conso/huawei-pourquoi-le-monde-entier-est-il-dependant-de-la-chine-7797680048