tag:theconversation.com,2011:/global/topics/huawei-2672/articlesHuawei – The Conversation2024-03-15T13:28:50Ztag:theconversation.com,2011:article/2259122024-03-15T13:28:50Z2024-03-15T13:28:50ZUndersea cables for Africa’s internet retrace history and leave digital gaps as they connect continents<p><em>Large parts of west and central Africa, as well as some countries in the south of the continent, were <a href="https://www.theguardian.com/technology/2024/mar/14/much-of-west-and-central-africa-without-internet-after-undersea-cable-failures">left without internet services</a> on 14 March because of failures on four of the fibre optic cables that run below the world’s oceans. Nigeria, Côte d'Ivoire, Liberia, Ghana, Burkina Faso and South Africa were among the worst affected. By midday on 15 March the problem had not been resolved. Microsoft <a href="https://mybroadband.co.za/news/internet/528961-massive-undersea-cable-outage-fix-delayed-says-microsoft.html">warned its customers</a> that there was a delay in repairing the cables. South Africa’s News24 <a href="https://www.news24.com/fin24/economy/nine-undersea-cables-make-the-internet-work-in-sa-four-are-currently-damaged-20240315">reported</a> that, while the cause of the damage had not been confirmed, it was believed that “the cables snapped in shallow waters near the Ivory Coast, where fishing vessels are likely to operate”.</em></p>
<p><em>Jess Auerbach Jahajeeah, an associate professor at the University of Cape Town’s Graduate School of Business, is currently writing a book on fibre optic cables and digital connectivity. She spent time in late 2023 aboard the ship whose crew is responsible for maintaining most of Africa’s undersea network. She spoke to The Conversation Africa about the importance of these cables.</em></p>
<h2>1. What’s the geographical extent of Africa’s current undersea network?</h2>
<p>Fibre optic cables now literally encircle Africa, though some parts of the continent are far better connected than others. This is because both public and private organisations have made major investments in the past ten years. </p>
<p>Based on <a href="https://www.submarinecablemap.com/">an interactive map</a> of fibre optic cables, it’s clear that South Africa is in a relatively good position. When the breakages happened, the network was affected for a few hours before the internet traffic was rerouted; a technical process that depends both on there being alternative routes available and corporate agreements in place to enable the rerouting. It’s the same as driving using a tool like Google Maps. If there’s an accident on the road it finds another way to get you to your destination. </p>
<p>But, in several African countries – including Sierra Leone and Liberia – most of the cables don’t have spurs (the equivalent of off-ramps on the road), so only one fibre optic cable actually comes into the country. Internet traffic from these countries basically <a href="https://blog.cloudflare.com/undersea-cable-failures-cause-internet-disruptions-across-africa-march-14-2024">stops when the cable breaks</a>. </p>
<p>Naturally that has huge implications for every aspect of life, business and even politics. Whilst some communication can be rerouted via satellites, satellite traffic accounts for <a href="https://blog.telegeography.com/2023-mythbusting-part-3">only about 1% of digital transmissions globally</a>. Even with interventions such as satellite-internet distribution service <a href="https://www.starlink.com/">Starlink</a> it’s still much slower and much more expensive than the connection provided by undersea cables. </p>
<p>Basically all internet for regular people relies on fibre optic cables. Even landlocked countries rely on the network, because they have agreements with countries with landing stations – highly-secured buildings close to the ocean where the cable comes up from underground and is plugged into terrestrial systems. For example southern Africa’s internet comes largely through connections in Melkbosstrand, just outside Cape Town, and <a href="https://www.submarinenetworks.com/en/stations/africa/south-africa/mtunzini-cls">Mtunzini</a> in northern KwaZulu-Natal, both in South Africa. Then it’s routed overland to various neighbours. </p>
<p>Each fibre optic cable is extremely expensive to build and to maintain. Depending on the technical specifications (cables can have more or fewer fibre threads and enable different speeds for digital traffic) there are complex legal agreements in place for who is responsible for which aspects of maintenance.</p>
<h2>2. What prompted you to write a book about the social history of fibre optic cables in Africa?</h2>
<p>I first visited Angola in 2011 to start work for <a href="https://utorontopress.com/9781487524333/from-water-to-wine/">my PhD project</a>. The internet was all but non-existent – sending an email took several minutes at the time. Then I went back in 2013, after the <a href="https://www.submarinenetworks.com/en/systems/brazil-africa/sacs">South Atlantic Cable System</a> went into operation. It made an incredible difference: suddenly Angola’s digital ecosystem was up and running and everybody was online. </p>
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<p>At the time I was working on social mobility and how people in Angola were improving their lives after <a href="https://www.sahistory.org.za/article/angolan-civil-war-1975-2002-brief-history">a long war</a>. Unsurprisingly, having digital access made all sorts of things possible that simply weren’t imaginable before. I picked up my interest again once I was professionally established, and am now writing it up as a book, <a href="https://stias.ac.za/2022/03/when-a-cable-is-not-just-a-cable-fellows-seminar-by-jess-auerbach/">Capricious Connections</a>. The title refers to the fact that the cables wouldn’t do anything if it wasn’t for the infrastructure that they plug into at various points. </p>
<p>Landing centres such as Sangano in Angola are fascinating both because of what they do technically (connecting and routing internet traffic all over the country) and because they often highlight the complexities of <a href="https://www.afrobarometer.org/publication/ad582-digital-divide-who-in-africa-is-connected-and-who-is-not/">the digital divide</a>. </p>
<p>For example, Sangano is a remarkable high tech facility run by an incredibly competent and socially engaged company, Angola Cables. Yet the school a few hundred metres from the landing station still doesn’t have electricity. </p>
<p>When we think about the digital divide in Africa, that’s often <a href="https://www.bmz-digital.global/en/datacolonialism-double-interview/">still the reality</a>: you can bring internet everywhere but if there’s no infrastructure, skills or frameworks to make it accessible, it can remain something abstract even for those who live right beside it.</p>
<p>In terms of history, fibre optic cables follow all sorts of fascinating global precedents. The 2012 cable that connected one side of the Atlantic Ocean to the other is laid almost exactly <a href="https://www.slavevoyages.org/blog/volume-and-direction-trans-atlantic-slave-trade">over the route of the transatlantic slave trade</a>, for example. Much of the basic cable map is layered over the routes of the <a href="https://notevenpast.org/to-rule-the-waves-britains-cable-empire-and-the-birth-of-global-communications/">copper telegraph network</a> that was essential for the British empire in the 1800s.</p>
<p>Most of Africa’s cables are maintained at sea by the remarkable crew of the ship Léon Thévenin. I <a href="https://mg.co.za/africa/2023-11-27-down-to-the-wire-the-ship-fixing-our-internet/">joined them</a> in late 2023 during a repair operation off the coast of Ghana. These are uniquely skilled artisans and technicians who retrieve and repair cables, sometimes from depths of multiple kilometres under the ocean. </p>
<p>When I spent time with the crew last year, they recounted once accidentally retrieving a section of Victorian-era cable when they were trying to “catch” a much more recent fibre optic line. (Cables are retrieved in many ways; one way is with a grapnel-like hook that is dragged along the ocean bed in roughly the right location until it snags the cable.)</p>
<p>There are some very interesting questions emerging now about what is commonly called <a href="https://press.uchicago.edu/ucp/books/book/chicago/D/bo216184200.html?trk=public_post_comment-text">digital colonialism</a>. In an environment where data is often referred to with terms like “<a href="https://www.forbes.com/sites/nishatalagala/2022/03/02/data-as-the-new-oil-is-not-enough-four-principles-for-avoiding-data-fires/?sh=23be1821c208">the new oil</a>”, we’re seeing an important change in digital infrastructure. </p>
<p>Previously cables were usually financed by a combination of public and private sector partnerships, but now big private companies such as Alphabet, Meta and Huawei are increasingly financing cable infrastructure. That has serious implications for control and monitoring of digital infrastructure. </p>
<p>Given we all depend so much on digital tools, poorer countries often have little choice but to accept the terms and conditions of wealthy corporate entities. That’s potentially incredibly dangerous for African digital sovereignty, and is something we should be seeing a lot more public conversation about.</p><img src="https://counter.theconversation.com/content/225912/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jess Auerbach Jahajeeah receives funding from the Stellenbosch Institute of Advanced Study where she is an Iso Lomso Fellow, the National Research Foundation of South Africa and the UCT Vice Chancellor’s Future Leaders Program. </span></em></p>Fibre optic cables now literally encircle Africa, though some parts of the continent are far better connected than others.Jess Auerbach Jahajeeah, Associate Professor, Graduate School of Business, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2229052024-02-27T14:08:45Z2024-02-27T14:08:45ZAfrica needs China for its digital development – but at what price?<p>Digital technologies have many potential benefits for people in African countries. They can support the delivery of healthcare services, promote access to education and lifelong learning, and enhance financial inclusion. </p>
<p>But there are obstacles to realising these benefits. The backbone infrastructure needed to connect communities is missing in places. Technology and finance are lacking too. </p>
<p>In 2023, only <a href="https://www.itu.int/en/ITU-D/Statistics/Documents/facts/ITU_regional_global_Key_ICT_indicator_aggregates_Nov_2023.xlsx">83%</a> of the population of sub-Saharan Africa was covered by at least a 3G mobile network. In all other regions the coverage was more than 95%. In the same year, <a href="https://www.itu.int/en/ITU-D/Statistics/Documents/facts/ITU_regional_global_Key_ICT_indicator_aggregates_Nov_2023.xlsx">less than half of Africa’s population</a> had an active mobile broadband subscription, lagging behind Arab states (75%) and the Asia-Pacific region (88%). Therefore, Africans made up a substantial share of the estimated <a href="https://www.itu.int/en/mediacentre/Pages/PR-2023-09-12-universal-and-meaningful-connectivity-by-2030.aspx#:%7E:text=The%20number%20of%20people%20worldwide,global%20population%20unconnected%20in%202023.">2.6 billion</a> people globally who remained offline in 2023.</p>
<p>A <a href="https://gga.org/china-expands-its-digital-sovereignty-to-africa/">key partner</a> in Africa in unclogging this bottleneck is China. Several African countries depend on China as their main technology provider and sponsor of large digital infrastructural projects.</p>
<p>This relationship is the subject of a <a href="https://www.tandfonline.com/doi/full/10.1080/09692290.2023.2297363">study</a> I published recently. The study showed that at least 38 countries worked closely with Chinese companies to advance their domestic fibre-optic network and data centre infrastructure or their technological know-how. </p>
<p>China’s involvement was critical as African countries made great strides in digital development. Despite the persisting digital divide between Africa and other regions, 3G network coverage <a href="https://www.itu.int/en/ITU-D/Statistics/Documents/facts/ITU_regional_global_Key_ICT_indicator_aggregates_Nov_2023.xlsx">increased from 22% to 83%</a> between 2010 and 2023. Active mobile broadband subscriptions increased <a href="https://www.itu.int/en/ITU-D/Statistics/Documents/facts/ITU_regional_global_Key_ICT_indicator_aggregates_Nov_2023.xlsx">from less than 2% in 2010 to 48% in 2023</a>. </p>
<p>For governments, however, there is a risk that foreign-driven digital development will keep existing dependence structures in place.</p>
<h2>Reasons for dependence on foreign technology and finance</h2>
<p>The <a href="https://www.tandfonline.com/doi/full/10.1080/09692290.2023.2297363">global market</a> for information and communication technology (ICT) infrastructure is controlled by a handful of producers. For instance, the main suppliers of fibre-optic cables, a network component that enables high-speed internet, are China-based Huawei and ZTE and the Swedish company Ericsson. </p>
<p>Many African countries, with limited internal revenues, can’t afford these network components. Infrastructure investments depend on foreign finance, including concessional loans, commercial credits, or public-private partnerships. These may also <a href="https://www.sciencedirect.com/science/article/pii/S0308596124000107">influence a state’s choice of infrastructure provider</a>.</p>
<p>The African continent’s terrain adds to the technological and financial difficulties. Vast lands and challenging topographies make the roll-out of infrastructure very expensive. Private investors avoid sparsely populated areas because it doesn’t pay them to deliver a service there. </p>
<p>Landlocked states depend on the infrastructure and goodwill of coastal countries to connect to international fibre-optic landing stations.</p>
<h2>A full-package solution</h2>
<p>It is sometimes assumed that African leaders choose Chinese providers because they offer the cheapest technology. <a href="https://www.zdnet.com/home-and-office/networking/uganda-orders-probe-into-huaweis-fiber-project/">Anecdotal evidence suggests otherwise</a>. Chinese contractors are attractive partners because they can offer full-package solutions that include finance. </p>
<p>Under the so-called <a href="https://pdf.usaid.gov/pdf_docs/PA00TN5G.pdf">“EPC+F”</a> (Engineer, Procure, Construct + Fund/Finance) scheme, Chinese companies like Huawei and ZTE oversee the engineering, procurement and construction while Chinese banks provide state-backed finance. Angola, Uganda and Zambia are just some of the countries which seem to have benefited from this type of deal.</p>
<p>All-round solutions like this appeal to African countries. </p>
<h2>What is in it for China?</h2>
<p>As part of its <a href="https://link.springer.com/chapter/10.1007/978-1-137-57813-6_6">“go-global”</a> strategy, the Chinese government encourages Chinese companies to invest and operate overseas. The government offers financial backing and expects companies to raise the global competitiveness of Chinese products and the national economy. </p>
<p>In the long term, Beijing seeks to establish and promote Chinese digital standards and norms. Research partnerships and training opportunities expose a growing number of students to Chinese technology. The Chinese government’s expectation is that mobile applications and startups in Africa will increasingly reflect Beijing’s technological and ideological principles. That includes China’s interpretation of human rights, data privacy and freedom of speech. </p>
<p>This aligns with the vision of China’s “<a href="https://www.orfonline.org/research/the-digital-silk-road-in-the-indo-pacific-mapping-china-s-vision-for-global-tech-expansion">Digital Silk Road</a>”, which complements its <a href="https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative">Belt and Road Initiative</a>, creating new trade routes. </p>
<p>In the digital realm, the goal is technological primacy and greater autonomy from western suppliers. The government is striving for a more <a href="https://thediplomat.com/2021/04/chinas-digital-silk-road-and-the-global-digital-order/">Sino-centric global digital order</a>. Infrastructure investments and training partnerships in African countries offer a starting point. </p>
<h2>Long-term implications</h2>
<p>From a technological perspective, over-reliance on a single infrastructure supplier makes the client state more vulnerable. When a customer depends heavily on a particular supplier, it’s difficult and costly to switch to a different provider. African countries could become locked into the Chinese digital ecosystem.</p>
<p>Researchers like <a href="https://www.researchgate.net/profile/Arthur-Gwagwa">Arthur Gwagwa</a> from the Ethics Institute at Utrecht University (Netherlands) believe that China’s export of critical infrastructure components will <a href="https://www.dw.com/en/africa-embraces-huawei-technology-despite-security-concerns/a-60665700">enable military and industrial espionage</a>. These claims assert that Chinese-made equipment is designed in a way that could facilitate cyber attacks. </p>
<p>Human Rights Watch, an international NGO that conducts research and advocacy on human rights, has <a href="https://www.hrw.org/news/2023/05/09/future-technology-lessons-china-and-us">raised concerns</a> that Chinese infrastructure increases the risk of technology-enabled authoritarianism. In particular, Huawei has been <a href="https://www.wsj.com/articles/huawei-technicians-helped-african-governments-spy-on-political-opponents-11565793017">accused</a> of colluding with governments to spy on political opponents in Uganda and Zambia. Huawei has <a href="https://www.scmp.com/news/china/diplomacy/article/3023215/huawei-denies-helping-governments-uganda-and-zambia-spy">denied</a> the allegations. </p>
<h2>The way forward</h2>
<p>Chinese involvement provides a rapid path to digital progress for African nations. It also exposes African states to the risk of long-term dependence. The remedy is to diversify infrastructure supply, training opportunities and partnerships. </p>
<p>There is also a need to call for interoperability in international forums such as the <a href="https://www.itu.int/en/Pages/default.aspx">International Telecommunications Union</a>, a UN agency responsible for issues related to information and communication technologies. Interoperability allows a product or system to interact with other products and systems. It means clients can buy technological components from different providers and switch to other technological solutions. It favours market competition and higher quality solutions by preventing users from being locked in to one vendor. </p>
<p>Finally, in the long term African countries should produce their own infrastructure and become less dependent.</p><img src="https://counter.theconversation.com/content/222905/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephanie Arnold does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In sub-Saharan Africa, most governments welcome China’s investment in digital infrastructure.Stephanie Arnold, PhD Candidate, Università di BolognaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2229582024-02-13T12:45:09Z2024-02-13T12:45:09ZChina’s chip industry is gaining momentum – it could alter the global economic and security landscape<figure><img src="https://images.theconversation.com/files/574634/original/file-20240209-20-qhpgx6.jpg?ixlib=rb-1.1.0&rect=7%2C0%2C4977%2C3337&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/cropped-image-engineer-showing-computer-microchip-151125485">Dragon Images/Shutterstock</a></span></figcaption></figure><p>China’s national champions for computer chip – or semiconductor – design and manufacturing, HiSilicon and Semiconductor Manufacturing International Corporation (SMIC), are making waves in Washington. </p>
<p>SMIC was long considered a laggard. Despite being the recipient of billions of dollars from the Chinese government since its founding in 2000, it remained far from the technological frontier. But that perception — and the self-assurance it gave the US — is changing. </p>
<p>In August 2023, Huawei launched its high-end Huawei Mate 60 smartphone. According to the Center for Strategic and International Studies (an American think tank based in Washington DC), the launch <a href="https://www.ft.com/content/327414d2-fe13-438e-9767-333cdb94c7e1">“surprised the US”</a> as the chip powering it showed that Chinese self-sufficiency in HiSilicon’s semiconductor design and SMIC’s manufacturing capabilities were catching up at an alarming pace.</p>
<p>More recent news that Huawei and SMIC are scheming to mass-produce so-called 5-nanometre processor chips in <a href="https://www.ft.com/content/b5e0dba3-689f-4d0e-88f6-673ff4452977">new Shanghai production facilities</a> has only stoked further fears about leaps in their next-generation prowess. These chips remain a generation behind the current cutting-edge ones, but they show that China’s move to create more advanced chips is well on track, despite US export controls.</p>
<p>The US has long managed to maintain its clear position as the frontrunner in chip design, and has ensured it was close allies who were supplying the manufacturing of cutting-edge chips. But now it faces formidable competition from China, who’s technological advance carries profound economic, geopolitical and security implications.</p>
<h2>Semiconductors are a big business</h2>
<p>For decades, chipmakers have sought to make ever more compact products. Smaller transistors result in lower energy consumption and faster processing speeds, so massively improve the performance of a microchip. </p>
<p>Moore’s Law — the expectation that the number of transistors on a microchip doubles every two years — has remained valid in chips designed in the Netherlands and the US, and manufactured in Korea and Taiwan. Chinese technology has therefore remained years behind. While the world’s frontier has moved to 3-nanometre chips, Huawei’s <a href="https://thediplomat.com/2023/09/what-does-huaweis-homemade-chip-really-mean-for-chinas-semiconductor-industry/">homemade chip</a> is at 7 nanometres. </p>
<p>Maintaining this distance has been important for economic and security reasons. Semiconductors are the backbone of the modern economy. They are critical to telecommunications, defence and artificial intelligence.</p>
<p>The US push for <a href="https://eastasiaforum.org/2021/05/19/geopolitics-and-the-push-for-made-in-the-usa-semiconductors/">“made in the USA”</a> semiconductors has to do with this systemic importance. Chip shortages <a href="https://www.cnbc.com/2023/07/28/how-the-world-went-from-a-semiconductor-shortage-to-a-major-glut.html">wreak havoc</a> on global production since they power so many of the products that define contemporary life. </p>
<p>Today’s military prowess even directly relies on chips. In fact, according to the <a href="https://www.csis.org/analysis/semiconductors-and-national-defense-what-are-stakes">Center for Strategic and International Studies</a>, “all major US defence systems and platforms rely on semiconductors.” </p>
<p>The prospect of relying on Chinese-made chips — and the backdoors, Trojan horses and control over supply that would pose — are unacceptable to Washington and its allies.</p>
<h2>Stifling China’s chip industry</h2>
<p>Since the 1980s, the US has helped establish and maintain a distribution of chip manufacturing that is dominated by South Korea and Taiwan. But the US has recently sought to safeguard its technological supremacy and independence by bolstering its <a href="https://www.cnbc.com/2023/10/17/how-the-chips-act-is-aiming-to-restore-a-us-lead-in-semiconductors.html">own manufacturing ability</a>.</p>
<p>Through large-scale <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/">industrial policy</a>, billions of dollars are being poured into US chip manufacturing facilities, including a multi-billion dollar <a href="https://www.theguardian.com/business/2023/aug/28/phoenix-microchip-plant-biden-union-tsmc">plant in Arizona</a>. </p>
<figure class="align-center ">
<img alt="A large factory under construction on a clear, sunny day." src="https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/574637/original/file-20240209-16-wo3zz4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">TSMC, the world’s largest chipmaker, building an advanced semiconductor factory in the US state of Arizona.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/phoenix-arizona-march-08-2023-ongoing-2272665185">Around the World Photos/Shutterstock</a></span>
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<p>The second major tack is exclusion. The Committee on Foreign Investment in the United States has subjected <a href="https://theconversation.com/whats-at-stake-in-trumps-war-on-huawei-control-of-the-global-computer-chip-industry-124079">numerous investment and acquisition deals</a> to review, ultimately even blocking some in the name of US national security. This includes the high-profile case of <a href="https://www.economist.com/business/2018/03/08/cfius-intervenes-in-broadcoms-attempt-to-buy-qualcomm">Broadcom’s attempt to buy Qualcomm</a> in 2018 due to its China links.</p>
<p>In 2023, the US government issued an <a href="https://sanctionsnews.bakermckenzie.com/us-government-issues-executive-order-restricting-us-outbound-investment-in-advanced-technologies-involving-countries-of-concern-china/">executive order</a> inhibiting the export of advanced semiconductor manufacturing equipment and technologies to China. By imposing stringent export controls, the US aims to impede China’s access to critical components. </p>
<p>The hypothesis has been that HiSilicon and SMIC would continue to stumble as they attempt self-sufficiency at the frontier. The US government has called on its friends to adopt a unified stance around excluding chip exports to China. Notably, ASML, a leading Dutch designer, has <a href="https://www.theguardian.com/technology/2024/jan/02/asml-halts-hi-tech-chip-making-exports-to-china-reportedly-after-us-request#:%7E:text=1%20month%20old-,ASML%20halts%20hi%2Dtech%20chip%2Dmaking%20exports%20to,China%20reportedly%20after%20US%20request&text=A%20Dutch%20manufacturer%20has%20cancelled,government%2C%20it%20has%20been%20reported.">halted shipments</a> of its hi-tech chips to China on account of US policy. </p>
<p>Washington has also <a href="https://economictimes.indiatimes.com/tech/technology/china-quietly-recruits-overseas-chip-talent-as-us-tightens-curbs/articleshow/103004607.cms?from=mdr">limited talent flows</a> to the Chinese semiconductor industry. The regulations to limit the movements of talent are motivated by the observation that even “godfathers” of semiconductor manufacturing in Japan, Korea and Taiwan <a href="https://eastasiaforum.org/2022/09/28/washington-shores-up-friends-in-the-semiconductor-industry/">went on to work</a> for Chinese chipmakers — taking their know-how and connections with them. </p>
<p>This, and the <a href="https://www.reddit.com/r/taiwan/comments/154x9vt/tsmc_delays_us_chip_fab_opening_says_us_talent_is/">recurring headlines</a> about the need for more semiconductor talent in the US, has fuelled the clampdown on the outflow of American talent. </p>
<p>Finally, the US government has explicitly targeted China’s national champion firms: Huawei and SMIC. It banned the sale and import of equipment from <a href="https://asia.nikkei.com/Politics/International-relations/US-China-tensions/After-Huawei-5G-chip-debut-U.S.-lawmakers-call-for-tighter-export-controls#:%7E:text=After%20the%20U.S.%20government%20put,SMIC%20has%20also%20been%20blacklisted.">Huawei in 2019</a> and has <a href="https://www.aljazeera.com/economy/2023/9/15/us-republicans-demand-full-sanctions-charges-against-chinas-huawei-smic">imposed sanctions on SMIC</a> since 2020. </p>
<h2>What’s at stake?</h2>
<p>The <a href="https://ig.ft.com/sites/business-book-award/books/2022/winner/chip-war-by-chris-miller/">“chip war”</a> is about economic and security dominance. Beijing’s ascent to the technological frontier would mean an economic boom for China and bust for the US. And it would have profound security implications.</p>
<p>Economically, China’s emergence as a major semiconductor player could disrupt existing supply chains, reshape the division of labour and distribution of human capital in the global electronics industry. From a security perspective, China’s rise poses a heightened risk of vulnerabilities in Chinese-made chips being exploited to compromise critical infrastructure or conduct cyber espionage. </p>
<p>Chinese self-sufficiency in semiconductor design and manufacturing would also undermine Taiwan’s “silicon shield”. Taiwan’s status as the <a href="https://theconversation.com/the-microchip-industry-would-implode-if-china-invaded-taiwan-and-it-would-affect-everyone-206335">leading manufacturer</a> of semiconductors has so far deterred China from using force to attack the island.</p>
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Read more:
<a href="https://theconversation.com/the-microchip-industry-would-implode-if-china-invaded-taiwan-and-it-would-affect-everyone-206335">The microchip industry would implode if China invaded Taiwan, and it would affect everyone</a>
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<p>China is advancing its semiconductor capabilities. The economic, geopolitical and security implications will be profound and far-reaching. Given the stakes that both superpowers face, what we can be sure about is that Washington will not easily acquiesce, nor will Beijing give up.</p><img src="https://counter.theconversation.com/content/222958/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>China is making chip progress despite US efforts to contain its industry.Robyn Klingler-Vidra, Associate Dean, Global Engagement | Associate Professor in Entrepreneurship and Sustainability, King's College LondonSteven Hai, Affiliate Fellow, King’s Institute for Artificial Intelligence, King’s College London, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2191582023-12-17T13:41:47Z2023-12-17T13:41:47ZWhy the American technological war against China could backfire<iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/why-the-american-technological-war-against-china-could-backfire" width="100%" height="400"></iframe>
<p>The <a href="https://www.bloomberg.com/news/articles/2023-10-15/us-will-tighten-curbs-on-china-s-access-to-advanced-chip-tech">technological war</a> waged by the United States <a href="https://www.nytimes.com/2023/08/09/us/politics/biden-ban-china-investment.html">against China</a> <a href="https://www.bloomberg.com/news/newsletters/2023-09-29/are-us-technology-sanctions-against-china-backfiring">has the potential to backfire</a>, <a href="https://www.nytimes.com/2023/07/12/magazine/semiconductor-chips-us-china.html">supercharging China’s creation of an independent computer chip industry</a> <a href="https://www.youtube.com/watch?v=SUfjtKtkS2U&t=16s">that would directly compete with American manufacturers</a>. </p>
<p>U.S. President Joe Biden’s administration has employed <a href="https://www.bnnbloomberg.ca/us-lawmakers-target-china-with-export-controls-sanctions-bills-1.2011207">increasingly restrictive sanctions</a> to prevent American and allied chip manufacturers from selling their most advanced products to China.</p>
<p>These restrictions are aimed at <a href="https://asiatimes.com/2022/12/us-chip-ban-wont-short-circuit-chinas-military-power/">preventing China’s military</a> from <a href="https://www.eastasiaforum.org/2023/08/30/2099944/">developing more sophisticated weapons</a>. However, the People’s Liberation Army uses very few high-tech chips. The tech war seems designed to cripple China’s overall technological development and, by extension, its economic growth and prosperity. </p>
<h2>Cautionary tale</h2>
<p>Ongoing <a href="https://www.politico.eu/article/west-world-tour-huawei-china-telecom/">American efforts</a> to cripple the Chinese telecom company Huawei may serve as a cautionary tale for the U.S.</p>
<p>American technological sanctions damaged the company and its role as a leading global producer of cellphones, but Huawei has <a href="https://thediplomat.com/2023/01/chinas-huawei-looks-to-ports-factories-to-rebuild-sales/#:%7E:text=Huawei%20is%20reinventing%20itself%20as,sanctions%20crushed%20its%20smartphone%20brand.">reinvented itself</a> as a cloud computing network company. </p>
<p>It has also re-entered the cellphone market, introducing its <a href="https://asia.nikkei.com/Business/Technology/Huawei-Mate-60-Pro-teardown-reveals-47-Chinese-parts-in-phone">Mate 60 phone that boasts Chinese-designed and manufactured seven-nanometre</a> computer chips. American tech restrictions were meant to keep China stuck at manufacturing no more than 14-nanometre chips, keeping it at least eight to 10 years behind U.S. technology.</p>
<p>The accomplishment means that China is gaining ground on the U.S. </p>
<p>Recently, Huawei introduced <a href="https://www.gizchina.com/2023/10/31/former-tsmc-ibm-exec-reveals-huaweis-capability-to-produce-cutting-edge-5nm-chips/">a computer with five-nanometre chip</a>, further closing the gap with the West. </p>
<p>Western observers <a href="https://www.nytimes.com/2021/07/04/technology/tech-cold-war-chips.html">have argued that the production of high-end microchips</a> requires international co-operation. </p>
<p><a href="https://www.youtube.com/watch?v=08myo1UdTZ8&t=12s">The Netherlands’ ASML</a> is the only company with the advanced lithography equipment needed to make three-nanometre chips. ASML built its machine using technologies from about seven other countries and took 20 years to get to market. Therefore, China is unlikely to succeed if it’s relying only on itself to create independent capacity.</p>
<p>However, the basic understanding of how lithography works is well-known. China has pushed its existing ASML equipment beyond its original capabilities and is pioneering an <a href="https://medium.com/@thechinaacademy/china-may-be-constructing-euv-lithography-machines-on-a-massive-scale-da796ea1af73">innovative approach to lithography</a> that could see China mass-producing high-end semiconductors in the future.</p>
<h2>Chinese education prowess</h2>
<p>Most importantly, scientific knowledge cannot be contained and China has made extraordinary gains in its educational system. </p>
<p>Chinese high schoolers in four affluent provinces <a href="https://archive.ph/3KGuE">score the highest in the world in reading, science and mathematics</a>. According to <em>Times Higher Education</em>, Chinese universities are <a href="https://www.timeshighereducation.com/china-subject-ratings-2021-china-outperforms-rest-world">“outperforming institutions in the rest of the world in the vast majority of disciplines</a>.”</p>
<p><a href="https://www.usnews.com/education/best-global-universities/engineering">The <em>U.S. News & World Report</em> has ranked six of the top 10 (and 11 of the top 20) engineering schools in the world</a>, and they’re in China, with Tsinghua University in Beijing in first place. Only two of the top 10 are American. <a href="https://asiatimes.com/2023/09/china-dominates-in-high-quality-natural-science-research/">China is also projected to produce 77,000 science, technology, engineering and math (STEM) graduates by 2025</a>, more than double that of the U.S. </p>
<p>China has been saddled with the stereotype that <a href="https://hbr.org/2014/03/why-china-cant-innovate">it cannot innovate</a>. But in 2022, <a href="https://doi.org/10.1038/d41586-023-01705-7">China overtook the U.S. for the first time</a> as the country or territory publishing the most research articles in prestigious natural science journals. </p>
<p>China closed the gap remarkably quickly, <a href="https://asiatimes.com/2023/09/china-dominates-in-high-quality-natural-science-research/">increasing its share of scientific articles</a> by 21 per cent since 2021 and 152 per cent since 2016. </p>
<p>According to Japan’s National Institute of Science and Technology Policy, <a href="https://www.theguardian.com/world/2022/aug/11/china-overtakes-the-us-in-scientific-research-output">China published the highest number of scientific research papers annually between 2018 and 2020</a>, and had 27.2 per cent of the world’s top one per cent of the most frequently cited papers, compared to 24.9 per cent for the U.S. </p>
<p>A survey done by the <a href="https://www.aspi.org.au/report/critical-technology-tracker">Australian Strategic Policy Institute</a> determined that China is leading in 37 of 44 cutting-edge technologies, including nanoscale materials and synthetic biology. China is also <a href="https://asiatimes.com/2023/09/china-using-industrial-robots-at-12x-us-rate/">using industrial robots at 12 times the rate</a> as the U.S. </p>
<h2>Cannot be cut off</h2>
<p>This is not a country that <a href="https://www.wsj.com/articles/u-s-sanctions-drive-chinese-firms-to-advance-ai-without-latest-chips-f6aed67f">can be contained by cutting it off from technology</a>. When it comes to the use and production of knowledge-based industries, China has more advantages than any other country in the world. </p>
<p>American actions will create a new generation of Chinese high-tech firms that will compete directly with the U.S. and western businesses from whom they used to buy their products. These firms will produce more affordable products than their western counterparts, and <a href="https://asiatimes.com/2022/11/blocked-in-the-west-huawei-eyes-emerging-markets/">could dominate technological infrastructure</a> in the Global South.</p>
<p>Chinese electric vehicles are the <a href="https://asia.nikkei.com/Spotlight/Electric-cars-in-China/China-s-GAC-breaks-1-000-km-range-barrier-with-new-EV">most advanced</a> <a href="https://www.nytimes.com/2023/12/08/business/china-electric-vehicles.html">in the world</a>, and <a href="https://www.thecooldown.com/green-tech/byd-seagull-ev-cheap-electric-car/">spreading to the rest of the globe</a>. Even as direct U.S.-China trade has declined, <a href="https://www.worldbank.org/en/news/feature/2023/08/29/protectionism-is-failing-to-achieve-its-goals-and-threatens-the-future-of-critical-industries">China’s overall importance to world trade has increased</a>. </p>
<p>Over the past year, <a href="https://www.nytimes.com/2023/03/14/opinion/ezra-klein-podcast-dan-wang.html">numerous pundits</a> <a href="https://www.nytimes.com/2023/08/26/opinion/china-economy-xi-jinping.html">have declared</a> <a href="https://www.nytimes.com/2023/08/24/business/china-economy-safety-net.html">that China’s economic collapse</a> is imminent. There’s no question <a href="https://asiatimes.com/2023/11/chinas-economic-miracle-turns-to-fiscal-crisis/">China is experiencing economic headwinds</a> as it deals with deflationary pressures linked to real estate, high local government debt and reduced consumer confidence. </p>
<h2>No collapse imminent</h2>
<p>But China’s critics have been predicting its collapse for decades. China keeps confounding them, and <a href="https://foreignpolicy.com/2023/10/17/china-economy-optimists-property/?tpcc=recirc_trending062921">it probably will once again</a>. <a href="https://www.reuters.com/world/china/imf-upgrades-chinas-2023-2024-gdp-growth-forecasts-2023-11-07/">The International Monetary Fund (IMF) has adjusted China’s predicted GDP growth rate upwards for 2023 to 5.4 per cent, and expects 4.6 per cent growth in 2024</a>. </p>
<p>The IMF expects China’s growth to continue slowing in the future, but this forecast doesn’t account for the technological potential that the country is unlocking. </p>
<p>China may be using the present debt crisis <a href="https://asiatimes.com/2023/08/property-shakeout-beijings-tool-to-fight-fiefdoms/">to redirect domestic investment</a> away from a volatile property market and towards a productive and sustainable high tech economy. </p>
<p>If so, American efforts to stifle China may have created the conditions needed to ensure its success.</p><img src="https://counter.theconversation.com/content/219158/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Shaun Narine does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Chinese technology advancements cannot be contained, and the country is increasingly an education and research powerhouse.Shaun Narine, Professor of International Relations and Political Science, St. Thomas University (Canada)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2094612023-07-21T13:54:00Z2023-07-21T13:54:00ZHere’s how China is responding to US sanctions – with blocking laws and other countermeasures<figure><img src="https://images.theconversation.com/files/538636/original/file-20230720-29-6r6648.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">U.S. sanctions have further strained relations between the two superpowers.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/cargo-containers-with-chinese-and-united-states-royalty-free-image/943639230">narvikk/iStock/Getty Images Plus</a></span></figcaption></figure><p>After a recent meeting between U.S. Treasury Secretary Janet Yellen and officials in Beijing, China released a statement <a href="https://www.reuters.com/world/china-urges-practical-us-action-sanctions-after-yellen-talks-2023-07-10/#:%7E:text=BEIJING%2C%20July%2010%20(Reuters),with%20senior%20officials%20in%20Beijing.">demanding “practical action”</a> over the issue of sanctions. The implication was that the punitive measures – imposed by the U.S. government on <a href="https://www.forbes.com/sites/anthonytellez/2023/02/08/here-are-all-the-us-sanctions-against-china/?sh=37ae897115b4">hundreds of Chinese individuals and entities</a> over the past few years – impede any alleviation of the strained relations between the two economic giants.</p>
<p>The statement followed a <a href="https://www.nbcnews.com/news/world/china-rejects-meeting-defense-chiefs-lloyd-austin-li-shangfu-rcna86732">testy encounter in May 2023</a> in which Chinese Defense Minister Li Shangfu refused to meet his American counterpart because of sanctions. Clearly, the economic measures are hurting China – prompting not only tough words but also countermeasures to limit their impact.</p>
<p>As a professor of law and an <a href="https://scholar.google.ae/citations?user=PSk6YAUAAAAJ&hl=en">expert on international trade</a>, I study both how the U.S. sanctions China and how China attempts to counter these sanctions. I also analyze whether China’s countermeasures are working.</p>
<h2>How sanctions work</h2>
<p>Economic sanctions are considered an important <a href="https://www.gao.gov/assets/nsiad-92-106.pdf">foreign policy tool</a> that can be used to influence and change the behavior of countries. </p>
<p>The sanctions on China have been imposed for a myriad of reasons, including as punishment for <a href="https://home.treasury.gov/news/press-releases/jy0070">human rights abuses</a>, <a href="https://www.cnbc.com/2023/02/10/us-sanctions-six-chinese-tech-companies-for-supporting-spy-balloon-programs.html">espionage activities</a> and <a href="https://apnews.com/article/china-russia-us-ukraine-sanctions-59fa76b79b69b7489039b4d0ee5dd14b">supporting Russia’s war efforts in Ukraine</a>. Some sanctions are intended to restrict China’s technological capabilities by <a href="https://carnegieendowment.org/2022/10/27/biden-s-unprecedented-semiconductor-bet-pub-88270">limiting access to key tech suppliers</a>.</p>
<p>To be successful, the sanctioning country must have the economic clout to inflict economic damage on the other country and thus force change. </p>
<p>In the case of China, sanctions have harmed <a href="https://www.imf.org/en/Blogs/Articles/2019/05/23/blog-the-impact-of-us-china-trade-tensions">producers and consumers</a> in both countries. They have also benefited certain third countries – for example, through <a href="https://unctad.org/publication/trade-and-trade-diversion-effects-united-states-tariffs-china">trade diversion</a> that replaces Chinese exporters with suppliers from other countries.</p>
<p>Traditionally, sanctions have targeted entire countries. For example, since February 2022 the U.S. has imposed <a href="https://home.treasury.gov/news/press-releases">sweeping sanctions against Russia</a> for its invasion of Ukraine. In addition, the U.S. has imposed <a href="https://www.state.gov/cuba-sanctions/">multiple sanctions against Cuba</a> over the past 65 years in a failed attempt to force regime change.</p>
<p>Economic sanctions can be primary or secondary. With <a href="https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=5792&context=flr">primary sanctions</a>, the U.S., for example, forbids imports of any product from the country being sanctioned. Primary sanctions also bar all U.S. companies from doing any business with the country or entities within it. </p>
<p>In <a href="https://www.cnas.org/publications/reports/sanctions-by-the-numbers-u-s-secondary-sanctions">secondary sanctions</a>, the U.S. refuses to engage in business with any company that has a business relationship with the country being sanctioned. In its most extreme form, <a href="https://ustr.gov/sites/default/files/2013%20NTE%20Arab%20League%20Final.pdf">these sanctions also prohibit</a> conducting business with a company that has a relationship with another company that in turn has a relationship with the sanctioned country.</p>
<h2>Targeting individuals and businesses</h2>
<p>In recent years, U.S. sanctions against China have become more targeted against specific individuals, products and companies. For example, the Office of Foreign Assets Control of the Treasury Department publishes a <a href="https://ofac.treasury.gov/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists">list of Specially Designated Nationals</a> against which sanctions apply. Individuals and businesses on the list have their assets blocked, and U.S. citizens are prohibited from dealing with them. There are <a href="https://www.treasury.gov/ofac/downloads/ctrylst.txt">hundreds of Chinese individuals and businesses</a> on the list, including <a href="https://www.reuters.com/world/asia-pacific/us-sanctions-seven-chinese-individuals-over-hong-kong-crackdown-2021-07-16/">officials in China’s Hong Kong liaison office</a> and major corporations such as <a href="https://www.steptoeinternationalcomplianceblog.com/2020/12/ofac-adds-chinese-tech-company-ceiec-to-sdn-list-issues-general-license-38-authorizing-wind-down-activities/">China National Electronic Import-Export Company</a>. </p>
<p>Also, the U.S. Commerce Department, through its Bureau of Industry, <a href="https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158-2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file">implemented export controls</a> in October 2022 on certain exports to China, such as advanced computing equipment and semiconductor parts. These export controls were put in place because of concerns over <a href="https://www.csis.org/analysis/choking-chinas-access-future-ai">China’s defense modernization</a>.</p>
<p>In response to the secondary sanctions and the <a href="https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=1151&context=jil">complex enforcement and compliance issues</a> they create for governments and businesses alike, the <a href="https://finance.ec.europa.eu/eu-and-world/open-strategic-autonomy/extraterritoriality-blocking-statute_en">European Union</a> and countries including <a href="https://laws-lois.justice.gc.ca/eng/acts/f-29/page-1.html">Canada</a> and the <a href="https://www.gov.uk/guidance/protection-of-trading-interests">U.K.</a> have enacted what are called blocking statutes. Blocking statutes typically allow an individual or business to not comply with U.S. laws and require individuals and businesses to notify authorities about any U.S. sanction enforcement measures.</p>
<figure class="align-center ">
<img alt="Pedestrian walks past a Huawei store and billboard" src="https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/538565/original/file-20230720-19-nhjvk8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Chinese telecom giant Huawei reported a decline in revenue due to U.S. sanctions.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/pedestrians-pass-a-sign-of-huawei-mobile-phone-in-yichang-news-photo/1246320157">CFOTO/Future Publishing via Getty Images</a></span>
</figcaption>
</figure>
<h2>China’s countermeasures</h2>
<p>The Chinese government has taken several countermeasures to retaliate against U.S. sanctions in recent years. </p>
<p>In 2020, the Ministry of Commerce in China issued the <a href="http://english.mofcom.gov.cn/article/policyrelease/questions/202009/20200903002580.shtml">Unreliable Entity List</a>. A person or company is designated as “unreliable” if Chinese authorities deem them to be harming national security or development interests of China or applying discriminatory measures against a Chinese entity. Punitive measures – such as trade and investment restrictions and fines – may be imposed on them for conduct that is contrary to China’s national interests. So far, <a href="https://sanctionsnews.bakermckenzie.com/china-added-two-us-companies-to-the-unreliable-entities-list/">two U.S. aerospace and defense companies</a> have been listed as unreliable entities.</p>
<p>In addition, in 2021 the Chinese Ministry of Commerce issued the <a href="http://english.mofcom.gov.cn/article/policyrelease/questions/202101/20210103029708.shtml">Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures</a>. A Chinese blocking statute, the rules require any Chinese citizen, business or other organization that is restricted or prohibited by U.S. sanctions from engaging in normal economic activities with a third nonsanctioning country to report such matters to the Chinese authorities. </p>
<p>China also enacted the <a href="https://oxfordpoliticalreview.com/2022/08/30/china-should-not-over-rely-on-its-anti-foreign-sanctions-law/">Anti-Foreign Sanctions Law</a> in 2021. This law authorizes China to take action – such as restrictions on visas and who can enter or exit the country – when a foreign country adopts what China sees as discriminatory measures against any Chinese citizen or organization. In addition, censured individuals or businesses can be slapped with a freezing of assets and prevented from doing business in China. Also, a Chinese individual or business can bring a case before Chinese courts and ask for an injunction from or damages for having to comply with foreign sanctions. </p>
<p>Unfortunately, the effectiveness of these countermeasures is unclear. There are no available statistics to determine whether they have mitigated the impact of U.S. sanctions. </p>
<h2>Caught in the middle</h2>
<p>The U.S. and China are <a href="https://www.belfercenter.org/sites/default/files/files/publication/GreatEconomicRivalry_Final_2.pdf">economic superpowers</a>. Imposing sanctions and countersanctions can <a href="https://www.piie.com/blogs/trade-and-investment-policy-watch/coming-clash-over-hong-kong-sanctions">make it difficult</a> for any foreign country or company that wants to do business in both countries. It is, in effect, asking them to pick sides.</p>
<p>Some individuals and companies within both China and the U.S. may opt to adopt a pragmatic approach to the sanctions and continue to do business either directly or indirectly. But by doing so they risk being fined by U.S. authorities. </p>
<p>Or, they may try to circumvent these sanctions and countersanctions by working with businesses in other countries instead, or find different ways to <a href="https://foreignpolicy.com/2023/06/21/china-united-states-semiconductor-chips-sanctions-evasion/">inoculate themselves from the effects of sanctions</a>. Both the U.S. and China are likely to not push sanctions too hard, so as not to engage in a full-blown trade war.</p>
<p>Workarounds for businesses that trade with both the U.S. and China are critical when the sanctioning country – typically the U.S. – has a monopoly over the particular goods or technology in question. For example, there is no short-term fix for Chinese telecom giant Huawei when the U.S. denies it access to critical semiconductors, since <a href="https://thediplomat.com/2022/07/bidens-uphill-battle-to-restructure-the-global-semiconductor-sector/">the U.S. has a monopoly on semiconductors</a>. Eventually, semiconductors will be produced in China, but not for several years. In the meantime, <a href="https://www.nytimes.com/2023/03/31/business/huawei-annual-earnings-2022.html">Huawei has seen a decline in revenue</a> and shifted money toward more research and development.</p>
<p>The <a href="https://www.cnbc.com/2021/04/26/huawei-focuses-on-software-as-us-sanctions-hurt-hardware-business.html">experience of Huawei</a> underscores why Beijing is eager to find a way to counter U.S. sanctions. It seems that at least for now China has settled on a policy of blocking tactics at home while upping rhetoric on the international stage.</p><img src="https://counter.theconversation.com/content/209461/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bashar Malkawi does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>China has responded to US sanctions with its own set of punitive measures. An expert on international trade explains the standoff and what it means for countries and companies caught in the middle.Bashar Malkawi, Professor of Law, University of ArizonaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2016792023-03-20T13:03:50Z2023-03-20T13:03:50ZUS-China tensions: how Africa can avoid being caught in a new Cold War<figure><img src="https://images.theconversation.com/files/515740/original/file-20230316-24-i50sjb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Chinese President Xi Jinping (R) and then U.S Vice President Joe Biden shakes hands in Beijing on December 4, 2013. </span> <span class="attribution"><span class="source">Lintao Zhang/Getty Images</span></span></figcaption></figure><p>China’s foreign ministry published a 4,000-word analysis entitled <a href="https://www.fmprc.gov.cn/mfa_eng/wjbxw/202302/t20230220_11027664.html">US Hegemony and its Perils</a> on 20 February. It’s an indictment of alleged US foreign interference, intimidation and interventions that began 200 years ago. </p>
<p>This was followed by President Xi Jinping’s <a href="https://edition.cnn.com/2023/03/07/economy/china-two-sessions-xi-jinping-speech-us-challenges-intl-hnk/index.html">accusation</a> at the Communist Party National Congress in March that the US was pursuing an <a href="https://www.lemonde.fr/en/international/article/2023/03/07/china-s-xi-condemns-us-led-suppression-of-china_6018440_4.html">unprecedented</a> global policy to contain and suppress Chinese development. </p>
<p>US official reaction to the Chinese accusations has been muted. But the recent US shooting down of an alleged Chinese spy balloon <a href="https://apnews.com/article/politics-united-states-government-china-antony-blinken-51e49202f2a0a50541cde059934c4cfb">escalated tensions</a>. There are fears that escalating US-Chinese tensions <a href="https://theconversation.com/when-two-elephants-fight-how-the-global-south-uses-non-alignment-to-avoid-great-power-rivalries-199418">might threaten the independence</a> of African and other nonaligned nations.</p>
<p>This essay seeks to contribute to an overdue debate among Africans about how to avoid being entangled in US-China global rivalry, while maintaining productive partnerships with both nations. It draws on my <a href="https://saiia.org.za/people/john-stremlau/">many years of teaching and research </a>on Africa’s changing international relations. </p>
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Read more:
<a href="https://theconversation.com/africa-can-use-great-power-rivalry-to-its-benefit-here-is-how-172662">Africa can use great power rivalry to its benefit: Here is how</a>
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<p>I hope it will encourage other scholars and policy makers across Africa to assess the hegemony statement in the light of their own interests and values. Finally, this essay is intended to encourage debate about what each topic realistically implies for Africa continent. </p>
<p>The topics in the statement are: </p>
<ul>
<li><p>political hegemony – (America) throwing its weight around</p></li>
<li><p>military hegemony – wanton use of force</p></li>
<li><p>economic hegemony – looting and exploitation</p></li>
<li><p>technological hegemony – monopoly and suppression</p></li>
<li><p>cultural hegemony – spreading false narratives.</p></li>
</ul>
<p>Although Chinese rhetoric is harsh, the initiatives and interactions of China and the US in Africa under each heading illustrate my general belief that their competition in Africa has been – and can be – both peaceful and productive. </p>
<h2>Political hegemony</h2>
<p>China’s indictment ranges from US efforts at hemispheric domination <a href="https://www.history.com/this-day-in-history/monroe-doctrine-declared">beginning in the early 19th century</a> to fomenting the <a href="https://www.routledge.com/The-Colour-Revolutions-in-the-Former-Soviet-Republics-Successes-and-Failures/Beachain-Polese/p/book/9780415625470">“colour revolutions”</a> – non-violent protests that overthrew autocratic regimes in the three post-Soviet republics Georgia, Ukraine and Kyrgyzstan.</p>
<p>But, China’s vision of the US glosses over the volatility of US <a href="https://www.foreignaffairs.com/united-states/iraq-war-vietnam-syndrome-leaders?utm_medium=newsletters&utm_source=fatoday&utm_campaign=The%20Strange%20Case%20of%20Iraq%20Syndrome&utm_content=20230315&utm_term=FA%20Today%20-%20112017">domestic politics</a>. Domestic concerns can alter foreign policy, a leader’s ideology, and political and historical circumstances.</p>
<p>Domestically, China too has undergone several political upheavals since the civil war that brought the Communist Party to power in <a href="https://www.journalofdemocracy.org/articles/china-in-xis-new-era-the-return-to-personalistic-rule/">1949</a>. If China underestimates US domestic swings, US analysts may exaggerate the global impact of Chinese <a href="https://www.nytimes.com/2023/01/24/opinion/ezra-klein-podcast-yuen-yuen-ang.html">internal pressures</a>. During my election work for the Carter Centre in Africa, <a href="https://theconversation.com/jimmy-carter-the-american-president-whose-commitment-to-africa-went-beyond-his-term-200745">from 2006-2015</a>, I was impressed by Chinese and American representatives able to seek common ground and learn from each other. </p>
<p>At higher levels of diplomacy, China and the US have used summits with African leaders to set broad guidelines of cooperation in trade and investment, climate, public health, building infrastructure and other areas. These should help African leaders decide areas of comparative advantage for them, in dealing with the two major powers. The <a href="http://www.focac.org/eng/">Forum on China-Africa Cooperation</a> differs from US initiatives, the most recent being the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/12/15/fact-sheet-u-s-africa-partnership-in-promoting-peace-security-and-democratic-governance/">US-Africa Partnership in Promoting Peace, Security, and Democratic Governance</a>. Neither major power appears to me to harbour hegemonic presumptions, as African leaders test their abilities to be productively nonaligned. </p>
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Read more:
<a href="https://theconversation.com/us-africa-summit-four-things-african-leaders-should-try-to-get-out-of-it-196429">US-Africa summit: four things African leaders should try to get out of it</a>
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<p>These high-level channels to both superpowers might yield more if African regional economic communities and the African Union made more concerted efforts to develop complementary and cumulative strategies for pressing African priorities. Extending the US <a href="https://agoa.info/about-agoa.html">African Growth and Opportunity Act</a> to ensure favourable access to US markets is one example. Managing debt obligations for China’s important <a href="https://theconversation.com/where-africa-fits-into-chinas-massive-belt-and-road-initiative-78016">“Belt and Road”</a> investments in African infrastructure is another. </p>
<h2>Military and economic hegemony</h2>
<p>The differences in what Africa had to contend with during the US-Soviet <a href="https://www.britannica.com/event/Cold-War">Cold War</a> and today’s <a href="https://www.cfr.org/timeline/us-china-relations">US-China rivalry</a> are most pronounced in areas of military and economic hegemony.</p>
<p>Neither China nor the US seem poised to use Africa to test political military resolve, as the US and Soviets did when they fought <a href="https://ahf.nuclearmuseum.org/ahf/history/proxy-wars-during-cold-war-africa/">proxy wars in Angola</a> during the 1970s, for example.</p>
<p>African national and multilateral bodies should lobby China and America to back <a href="https://www.cfr.org/backgrounder/role-peacekeeping-africa">African-led peace operations</a> within African states.</p>
<p>Globally, economic interdependence between China and the US will remain <a href="https://www.brookings.edu/blog/order-from-chaos/2021/08/12/the-new-normal-in-us-china-relations-hardening-competition-and-deep-interdependence/">vital</a> for sustained growth and prosperity for both nations. Presidents Joe Biden and Xi Jinping are committed to reviving their domestic economies. They both want greater equality, less corruption, and sustained growth. Neither appears to want or need to foment conflicts in Africa.</p>
<p>African governments rightly pursue support from both China and the US for regional integration and cooperation, such as the <a href="https://au-afcfta.org/">African Continental Free Trade Area</a>. Greater Chinese and US economic engagement in response to African collective appeals could also become a confidence building measure between China and the US. This rarely happened during the Cold War. Back then, the US was aligned with European colonial powers and the apartheid regime in South Africa. The Soviets <a href="https://theconversation.com/history-may-explain-south-africas-refusal-to-condemn-russias-invasion-of-ukraine-178657">backed liberation forces</a>. Today, such polarisation doesn’t exist.</p>
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<strong>
Read more:
<a href="https://theconversation.com/peace-and-security-in-africa-how-china-can-help-address-weaknesses-156219">Peace and security in Africa: how China can help address weaknesses</a>
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<p>The Chinese statement on US hegemony rightly notes the US is plagued by <a href="https://time.com/guns-in-america/">domestic violence</a> and has a history of failures in military interventions. [<a href="https://www.brookings.edu/research/the-use-and-abuse-of-military-force/">US analysts acknowledge</a>] this. </p>
<p>But US domestic resistance to new foreign military adventures <a href="https://www.thenation.com/article/archive/new-poll-shows-public-overwhelmingly-opposed-to-endless-us-military-interventions/">became bipartisan and popular for the past decade</a>. </p>
<p>African nations should hold America and China to account for their avowed commitments to respecting core <a href="https://www.un.org/en/about-us/un-charter">UN principles</a> of sovereign equality and territorial integrity. Equally, they must hold Russia to account for blatantly violating those principles <a href="https://foreignpolicy.com/2022/02/28/russia-ukraine-biden-eu-when-diplomacy-fails/">by invading Ukraine</a>.</p>
<h2>Technological hegemony</h2>
<p>Benefits and risks of new technologies are <a href="https://www.brookings.edu/events/emerging-technologies-and-the-future-of-work-in-africa/">well known</a>. Communication, data retrieval and collection, and artificial intelligence bring both <a href="https://www.brookings.edu/techstream/the-promises-and-perils-of-africas-digital-revolution/">promise and peril</a> that Africa must navigate carefully. This is becoming all the more pressing as progress in artificial intelligence <a href="https://www.aljazeera.com/news/2023/3/15/how-do-ai-models-like-gpt-4-work-and-how-can-you-start-using-it">accelerates</a>. Neither China nor the US need to be hegemonic in making available technologies that spur Africa’s development. </p>
<p>More issues of contention need to be resolved with the help of scientists and scholars from China, US, and Africa. The availability of Huawei 5G is a <a>particularly contentious issue</a>. Perhaps interested scientists and members of the <a href="https://arua.org.za/about/#:%7E:text=The%20African%20Research%20Universities%20Alliance%20(ARUA)%20was%20inaugurated%20in%20Dakar,but%20with%20a%20common%20vision">African Research Universities Alliance</a> could work with their Chinese and US counterparts to establish guidelines and mediation capabilities. </p>
<h2>Cultural hegemony</h2>
<p>US crimes against Africans began in earnest in <a href="https://time.com/5653369/august-1619-jamestown-history/">1619</a> with the <a href="https://theconversation.com/why-the-west-is-morally-bound-to-offer-reparations-for-slavery-153544">trans-Atlantic slave trade</a>. Its sediments persist <a href="https://blacklivesmatter.com/">today</a>. </p>
<p>But? The African diaspora has become a <a href="https://press.princeton.edu/ideas/why-are-blacks-democrats">key political constituency</a> of the Democratic Party. It is a fast growing <a href="https://www.pewresearch.org/social-trends/fact-sheet/facts-about-the-us-black-population/#:%7E:text=In%202021%2C%20there%20were%20an,Black%20Americans%20are%20div">demographic</a>. In music, sports, arts, these Americans are invaluable conveyors of <a href="https://www.atlanticcouncil.org/blogs/africasource/africa-is-americas-greatest-geopolitical-opportunity-does-the-us-know-it/">soft power in Africa</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-china-us-rivalry-is-not-a-new-cold-war-it-is-way-more-complex-and-could-last-much-longer-144912">The China-US rivalry is not a new Cold War. It is way more complex and could last much longer</a>
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<p>China does not have similar ties with Africa. But, it has recently become more active culturally across the continent, as evident in its network of <a href="http://www.news.cn/english/2021-11/26/c_1310334064.htm#:%7E:text=61%20Confucius%20Institutes%2C%2048%20Confucius%20Classrooms%20established%20in%20Africa%3A%20white%20paper,-Source%3A%20Xinhua%7C%202021">Confucius Institutes</a>. China has also become the biggest donor of <a href="https://www.universityworldnews.com/post.php?story=2020112410303875">foreign scholarships</a>, enabling future African leaders to study in China. Graduates enrich African universities and, interacting with graduates of US institutions of higher education, represent potential channels to explore options for three way, useful collaboration in their fields of applied research. </p>
<h2>Looking forward</h2>
<p>This essay reflects my belief in the value and prospects for greater African agency in response to rising tensions between China and America. I have used China’s indictment of alleged US hegemony only to debunk fear of Africa becoming a pawn in another Cold War. There is no evidence I have seen to suggest that will happen.</p><img src="https://counter.theconversation.com/content/201679/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John J Stremlau does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are fears that escalating US-Chinese tensions could threaten the independence of African and other nonaligned nations.John J Stremlau, Honorary Professor of International Relations, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1958742023-01-19T12:08:50Z2023-01-19T12:08:50ZHow Chinese companies are challenging national security decisions that could delay 5G network rollout<figure><img src="https://images.theconversation.com/files/502949/original/file-20230103-90208-uqlgqy.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C997%2C634&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">National security concerns could affect the cost and delay the rollout of 5G networks in some countries.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/male-engineer-uses-smartphone-connect-5g-2106316100">chalermphon_tiam / Shutterstock</a></span></figcaption></figure><p>British prime minister Rishi Sunak recently declared that the “<a href="https://www.gov.uk/government/speeches/pm-speech-to-the-lord-mayors-banquet-28-november-2022">golden era</a>” of UK-China relations is over. The next day, the government removed <a href="https://www.gov.uk/government/news/uk-government-takes-major-steps-forward-to-secure-britains-energy-independence">China General Nuclear Power Group</a>, a Chinese state-owned company, from the construction of the UK’s Sizewell C nuclear power station.</p>
<p>Other countries have made similar moves in recent years. In 2020, for example, then-US president Donald Trump attempted to ban social media platform TikTok in the US. The move was <a href="https://www.npr.org/2020/12/07/944039053/u-s-judge-halts-trumps-tiktok-ban-the-2nd-court-to-fully-block-the-action">subsequently stopped by two US judges</a> following a lawsuit by TikTok, and eventually <a href="https://www.bbc.co.uk/news/technology-57413227">dropped by current president, Joe Biden</a>. </p>
<p>But such government decisions based on national security concerns could affect the future international growth of Chinese business. This is particularly important given that international investment and trade by China has increased in recent years, enabling it to emerge as a powerful challenger to the global economic order. </p>
<p>Indeed, Chinese companies and investors often refuse to take such national security changes lying down. With varying degrees of success, firms have mounted a range of <a href="https://www.ft.com/content/a7e1d9cf-9d86-4a87-8e03-37a6a2327390">formal and informal challenges</a> in recent years. This includes lobbying, media campaigns and diplomatic assistance or support from business associations, but also <a href="https://www.nytimes.com/2020/02/19/business/huawei-us-court.html">contesting national security decisions</a> in <a href="https://nationalpost.com/news/canada/chinese-controlled-firm-loses-court-bid-to-pause-ottawas-divestment-order">domestic courts</a>.</p>
<p>A relatively new strategy for China, however, is to challenge national security decisions before international tribunals using a method called <a href="https://www.csis.org/analysis/investor-state-dispute-settlement-0">investor-state dispute settlement</a>. These tribunals are usually set up to handle specific disputes, with arbitrators appointed and paid for by one or both of the parties involved. The suits tend to claim that national security decisions have breached host countries’ obligations to Chinese investors under <a href="https://uk.practicallaw.thomsonreuters.com/4-502-2491?transitionType=Default&contextData=(sc.Default)&firstPage=true">bilateral investment treaties</a> (BITs). These treaties grant foreign investors certain standards of treatment and allow them to sue host states for alleged violations.</p>
<p>Most recently, Chinese tech giant Huawei made an <a href="https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1208/huawei-v-sweden">investment treaty claim against the Swedish government</a> over its exclusion from the rollout of the country’s 5G network. And <a href="https://scholarlycommons.law.emory.edu/eilr/vol37/iss1/1/">my research shows</a> that Huawei’s legal challenge to Sweden’s ban might only be the tip of the iceberg since Huawei equipment is also <a href="https://www.channele2e.com/business/enterprise/huawei-banned-in-which-countries/">currently banned in other countries</a> that have signed BITs with China. In the UK, for example, the government has <a href="https://www.gov.uk/government/news/huawei-to-be-removed-from-uk-5g-networks-by-2027">committed to exclude</a> Huawei’s technology from the country’s 5G public networks by the end of 2027. </p>
<p>The outcome of Huawei’s dispute with Sweden could affect public interest there and in other countries like the UK. If the tribunal finds in Sweden’s favour, preventing the use of Huawei equipment could <a href="https://www.theguardian.com/technology/2020/jul/14/huawei-decision-may-delay-5g-rollout-by-three-years-and-cost-uk-7bn-">delay 5G rollout by years</a> and inflate <a href="https://www.oxfordeconomics.com/resource/the-economic-impact-of-restricting-competition-in-5g-network-equipment/">prices for mobile phone users</a>.</p>
<p>It’s also worth noting a 2019 tribunal decision that ordered Pakistan to pay <a href="https://www.reuters.com/article/us-pakistan-mine-military-idUSKCN1U80GT">US$6 billion in compensation</a> to an injured foreign investor, mining company Tethyan Copper. If Huawei wins this or any other similar legal challenge, financial liabilities could be passed on to taxpayers.</p>
<h2>Defining ‘national security’</h2>
<p>Huawei’s challenge of Sweden’s national security decision shows how brewing tensions and increasing distrust between China and western countries is affecting international trade and business.</p>
<p>Indeed, when countries adopt an expansive concept of “national security” in domestic law, companies might see it as a pretext for protectionism or a tool of geopolitical rivalry. Certainly, there is no conclusive evidence that Huawei products, for example, are inherently unsafe versus similar products from other companies, or that Huawei poses a national security threat. </p>
<p>To complicate matters further, some early Chinese BITs – between <a href="https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/6042/download">China and Sweden</a>, and <a href="https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/793/download">China and the UK</a> for example – do not explicitly allow host states to prohibit foreign investment based on national security concerns. And so Huawei’s recent legal challenge should help determine: </p>
<ul>
<li>when and why a host country can stop a foreign investment based on national security concerns</li>
<li>and how international arbitral tribunals are likely to review national security decisions in the future.</li>
</ul>
<figure class="align-center ">
<img alt="Telecommunication tower with 5G cellular network antenna on city skyline background." src="https://images.theconversation.com/files/502946/original/file-20230103-105030-49uzt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/502946/original/file-20230103-105030-49uzt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/502946/original/file-20230103-105030-49uzt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/502946/original/file-20230103-105030-49uzt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/502946/original/file-20230103-105030-49uzt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/502946/original/file-20230103-105030-49uzt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/502946/original/file-20230103-105030-49uzt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A 5G cellular network antenna.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/telecommunication-tower-5g-cellular-network-antenna-1786888505">Suwin / Shutterstock</a></span>
</figcaption>
</figure>
<h2>Challenging national security decisions</h2>
<p>But what could this case mean for 5G rollout? In this specific example, Huawei is likely to fight an uphill battle to persuade a tribunal that Sweden’s decision is inconsistent with the China-Sweden treaty, for three reasons. </p>
<p>First, any potential threat to the security of 5G networks constitutes a national security risk because it means a country’s communications could be brought down by espionage, sabotage or system failure. Second, 5G networks are so complex that it is virtually impossible to find and eliminate every significant vulnerability. This means attempts by Huawei to argue for screening and control of software, for example, may not defuse national security concerns. And third, tribunals usually defer to a host country’s national security decisions. </p>
<p>Of course, tribunal decisions can go the other way. For example, several tribunals found against the Argentinian government that the country’s <a href="https://www.italaw.com/sites/default/files/case-documents/ita0184.pdf">financial crisis in the 2000s</a> was severe enough to qualify as a national security issue. But generally, these tribunals tend to decide that governments are best placed to make such judgements. </p>
<p>Huawei has not brought a case against the UK yet, but western countries generally should think about how to maintain and improve technology infrastructure – even if innovation comes from regions with which tensions are strained. Failure to do so could significantly impact consumer costs and access to cutting-edge technology.</p><img src="https://counter.theconversation.com/content/195874/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ming Du does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Chinese tech giant Huawei is among companies adopting new strategies to challenge national security reviews.Ming Du, Professor in Chinese law, Durham UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1882422022-08-04T15:00:00Z2022-08-04T15:00:00ZTaiwan dominates the world’s supply of computer chips – no wonder the US is worried<p>One aspect of Nancy Pelosi’s trip to Taiwan that has been largely overlooked is <a href="https://fortune.com/2022/08/03/nancy-pelosi-taiwan-tsmc-mark-liu-china-market/">her meeting</a> with Mark Lui, chairman of the Taiwan Semiconductor Manufacturing Corporation (TSMC). Pelosi’s trip coincided with US efforts to convince TSMC – the world’s largest chip manufacturer, on which the US is heavily dependent – to establish a manufacturing base in the US and to stop making advanced chips for Chinese companies.</p>
<p>US support for Taiwan has historically been based on Washington’s opposition to communist rule in Beijing, and Taiwan’s resistance to absorption by China. But in recent years, Taiwan’s autonomy has become a vital geopolitical interest for the US because of the <a href="https://www.theregister.com/2022/04/26/trendforce_foundry_capacity/#:%7E:text=Taiwan%20dominates%20the%20world's%20semiconductor,to%20market%20intelligence%20firm%20TrendForce.">island’s dominance</a> of the semiconductor manufacturing market.</p>
<p>Semiconductors – also known as computer chips or just chips – are integral to all the networked devices that have become embedded into our lives. They also have advanced military applications. </p>
<p>Transformational, super-fast 5G internet is enabling a world of connected devices of every kind (the “<a href="https://theconversation.com/uk/topics/internet-of-things-1724">Internet of Things</a>”) and a new generation of networked weapons. With this in mind, US officials began to realise during the Trump administration that US semiconductor design companies, such as Intel, were heavily dependent on Asian-based supply chains for the manufacturing of their products.</p>
<p>In particular, Taiwan’s position in the world of semiconductor manufacturing is a bit like Saudi Arabia’s status in OPEC. TSMC has <a href="https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf">a 53% market share</a> of the global foundry market (factories contracted to make chips designed in other countries). Other Taiwan-based manufacturers claim a further 10% of the market. </p>
<p>As a result, the Biden administration’s <a href="https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf">100-Day Supply Chain Review Report</a> says, “The United States is heavily dependent on a single company – TSMC – for producing its leading-edge chips.” The fact that only TSMC and Samsung (South Korea) can make the most advanced semiconductors (five nanometres in size) “puts at risk the ability to supply current and future [US] national security and critical infrastructure needs” .</p>
<p>This means that China’s long-term goal of reunifying with Taiwan is now more threatening to US interests. In the 1971 Shanghai Communique and the 1979 Taiwan Relations Act, the US recognised that people in both mainland China and Taiwan believed that there was “One China” and that they both belonged to it. But for the US it is unthinkable that TSMC could one day be in territory controlled by Beijing.</p>
<h2>‘Tech war’</h2>
<p>For this reason, the US has been trying to attract TSMC to the US to increase domestic chip production capacity. In 2021, with the support of the Biden administration, the company bought a site in Arizona on which to build a US foundry. This is scheduled to be completed in 2024.</p>
<p>The US Congress has just passed the <a href="https://www.bloomberg.com/opinion/articles/2022-08-01/chips-and-science-act-could-become-a-280-billion-boondoggle">Chips and Science Act</a>, which provides US$52 billion (£43 billion) in subsidies to support semiconductor manufacturing in the US. But companies will only receive Chips Act funding if they agree not to manufacture advanced semiconductors for Chinese companies. </p>
<p>This means that TSMC and others may well have to choose between doing business in China and in the US because the cost of manufacturing in the US is deemed to be too high without government subsidies.</p>
<p>This is all part of a broader “tech war” between the US and China, in which the US is aiming to constrain China’s technological development and prevent it from exercising a global tech leadership role. </p>
<p>In 2020, the Trump administration imposed <a href="https://www.dw.com/en/us-boosts-sanctions-for-china-tech-giant-huawei/a-54599763">crushing sanctions</a> on the Chinese tech giant Huawei that were designed to cut the company off from TSMC, on which it was reliant for the production of high-end semiconductors needed for its 5G infrastructure business. </p>
<p>Huawei was the world’s leading supplier of 5G network equipment but the <a href="https://2017-2021.state.gov/huawei-and-its-siblings-the-chinese-tech-giants-national-security-and-foreign-policy-implications/index.html">US feared</a> its Chinese origins posed a security risk (though this claim has been <a href="https://www.cnas.org/publications/reports/myths-and-realities-of-chinas-military-civil-fusion-strategy">questioned</a>). The sanctions are still in place because both Republicans and Democrats want to stop other countries from using Huawei’s 5G equipment. </p>
<p>The British government had initially decided to use Huawei equipment in certain parts of the UK’s 5G network. The Trump administration’s sanctions forced London to <a href="https://www.reuters.com/article/us-britain-huawei-idUSKCN24E30P">reverse that decision</a>.</p>
<p>A key US goal appears to be ending its dependency on supply chains in China or Taiwan for “emerging and foundational technologies”, which includes advanced semiconductors needed for 5G systems, but may include other advanced tech in future.</p>
<p>Pelosi’s trip to Taiwan was about more than just Taiwan’s critical place in the “tech war”. But the dominance of its most important company has given the island a new and critical geopolitical importance that is likely to heighten existing tensions between the US and China over the status of the island. It has also intensified US efforts to “reshore” its semiconductor supply chain.</p><img src="https://counter.theconversation.com/content/188242/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Maria Ryan receives funding from the British Academy.</span></em></p>Taiwan dominates the global market for microchips – something that Washington is well aware of.Maria Ryan, Associate Professor in US History, University of NottinghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1681902021-10-25T19:12:03Z2021-10-25T19:12:03ZChina is accused of exporting authoritarian technology. But the west has done so, too, more covertly<figure><img src="https://images.theconversation.com/files/428142/original/file-20211025-19717-bx6kc0.jpg?ixlib=rb-1.1.0&rect=498%2C9%2C5902%2C4416&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Ng Han Guan/AP</span></span></figcaption></figure><p>China’s 5G technology has now been banned in many countries, including Australia, New Zealand, the US and many in the European Union. In 2019, a <a href="https://ccdcoe.org/library/publications/huawei-5g-and-china-as-a-security-threat/">NATO Cyber Defence Centre report</a> identified Huawei’s 5G technology as a security risk.</p>
<p>Since September, telecommunications providers in the US have been able to apply for compensation through a US$1.9 billion program designed to “<a href="https://www.scmp.com/news/china/article/3150345/us-instructs-rural-carriers-how-apply-funding-remove-huawei-and-zte">rip and replace</a>” Huawei and ZTE equipment, due to perceived <a href="https://consumer.huawei.com/ph/community/details/US-FCC-votes-to-advance-proposed-ban-on-Huawei-ZTE-gear/topicId_133468/">risks to national security</a>.</p>
<p>But fears over China’s attempts to export its digital and surveillance technologies go far beyond just Huawei and 5G. China has been accused of exporting “<a href="https://www.washingtonpost.com/opinions/china-is-exporting-its-digital-authoritarianism/2020/08/05/f14df896-d047-11ea-8c55-61e7fa5e82ab_story.html">digital authoritarianism</a>” and spreading “<a href="https://www.hrw.org/news/2021/04/08/chinas-techno-authoritarianism-has-gone-global">techno-authoritarianism globally</a>”. It’s been declared a danger to the rest of the world. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/428150/original/file-20211025-15-pc3d9v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/428150/original/file-20211025-15-pc3d9v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/428150/original/file-20211025-15-pc3d9v.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/428150/original/file-20211025-15-pc3d9v.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/428150/original/file-20211025-15-pc3d9v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/428150/original/file-20211025-15-pc3d9v.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/428150/original/file-20211025-15-pc3d9v.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A visitor has her face scanned by a face recognition system during a technology exhibition in Beijing.</span>
<span class="attribution"><span class="source">Song Fan/AP</span></span>
</figcaption>
</figure>
<p>In <a href="https://www.crimejusticejournal.com/article/view/1908">my research</a>, I argue the story of digital authoritarianism is not that straightforward. </p>
<p>Technologies that help authoritarian leaders collect information and control their populations have been exported with few restrictions for decades. Although China does export ready-made surveillance systems to governments deemed as oppressive, countries in Europe and North America have also done so, albeit more covertly.</p>
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<strong>
Read more:
<a href="https://theconversation.com/chinas-surveillance-creep-how-big-data-covid-monitoring-could-be-used-to-control-people-post-pandemic-164788">China's 'surveillance creep': how big data COVID monitoring could be used to control people post-pandemic</a>
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<h2>China supports surveillance exports, regardless of the destination</h2>
<p>China falls in the direct line of fire for criticism on this front. </p>
<p>First, the country follows an authoritarian system. In a <a href="http://www.xinhuanet.com/english/2018-04/15/c_137112987.htm">compilation of speeches</a> by President Xi Jinping from 2012-18, he critiqued western political systems and called for greater “<a href="http://www.chinadaily.com.cn/a/202107/09/WS60e6957ca310efa1bd66094e.html">South-South collaboration</a>” between China and countries in the developing world. </p>
<p>These views have since been incorporated as part of a new national ideology and China’s influential Belt and Road Initiative.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/428137/original/file-20211024-19-opsokb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/428137/original/file-20211024-19-opsokb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/428137/original/file-20211024-19-opsokb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/428137/original/file-20211024-19-opsokb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/428137/original/file-20211024-19-opsokb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/428137/original/file-20211024-19-opsokb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/428137/original/file-20211024-19-opsokb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Chinese President Xi Jinping, right, walks with South African President Cyril Ramaphosa during a 2018 China-Africa summit.</span>
<span class="attribution"><span class="source">Lintao Zhang/AP</span></span>
</figcaption>
</figure>
<p>Second, both Chinese <a href="https://www.globaltimes.cn/content/1146179.shtml">companies</a> and the Chinese <a href="http://www.xinhuanet.com/english/2018-04/15/c_137112987.htm">government</a> have firmly maintained that countries are free to decide what they want to do with the technologies they purchase from China. They are neutral actors selling neutral technologies to other countries.</p>
<p>China is the largest exporter of <a href="https://www.wto.org/english/res_e/statis_e/statis_bis_e.htm">telecommunications equipment</a>, computers, and telephones in the world, with the <a href="https://oec.world/en/profile/country/chn?viztypeSelector=trendsType1">US as its biggest destination</a>. It has also exported digital infrastructure to more than <a href="https://www.washingtonpost.com/opinions/china-is-exporting-its-digital-authoritarianism/2020/08/05/f14df896-d047-11ea-8c55-61e7fa5e82ab_story.html">60 mostly developing countries</a> through its Belt and Road Initiative.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/keep-calm-but-dont-just-carry-on-how-to-deal-with-chinas-mass-surveillance-of-thousands-of-australians-146103">Keep calm, but don't just carry on: how to deal with China's mass surveillance of thousands of Australians</a>
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<p>Some of the most problematic exports of Chinese surveillance technologies include: </p>
<ul>
<li><p><a href="https://www.aspi.org.au/report/mapping-more-chinas-tech-giants">CloudWalk’s</a> facial recognition database in Zimbabwe, which opponents <a href="https://www.thestandard.co.zw/2020/03/01/creating-surveillance-state-ed-govt-zooms-critics-chinese-help/">say</a> may be used to monitor government critics</p></li>
<li><p>technicians from Huawei <a href="https://www.wsj.com/articles/huawei-technicians-helped-african-governments-spy-on-political-opponents-11565793017">engaging</a> in political espionage in Uganda and Zambia </p></li>
<li><p>the development of a controversial new “<a href="https://www.reuters.com/investigates/special-report/venezuela-zte/">fatherland card</a>” to monitor civilian activities in Venezuela</p></li>
<li><p>the sale of smart <a href="https://www.nytimes.com/2019/04/24/technology/ecuador-surveillance-cameras-police-government.html">video surveillance technologies</a> to the previous authoritarian government of Ecuador.</p></li>
</ul>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"985953873922875393"}"></div></p>
<h2>The ‘tech neutrality’ cloak for western companies</h2>
<p>However, Chinese companies are not the only actors in the global trade arena that benefit from the argument of “technological neutrality”. </p>
<p>Companies from Europe and North America jumped at the first chance they got to sell surveillance systems to China in the early 2000s. Many of those technologies strengthened China’s online censorship system.</p>
<p>In a watershed report in 2001, an independent researcher, <a href="https://publications.gc.ca/site/eng/9.696199/publication.html">Greg Walton</a>, showed that international companies started marketing their products to Chinese public security agencies as early as 2000 during a large security expo in Beijing. The same <a href="http://www.chinaexhibition.com/Official_Site/11-9828-CPSE_2019_-_The_17th_China_Public_Security_Expo.html">expo</a> continued to attract international companies until the COVID-19 travel disruptions in 2020.</p>
<p>In <a href="https://www.jamestgriffiths.com/">2006</a>, Cisco was investigated by a US House subcommittee for selling surveillance technologies to China. The company defended itself by stressing its right to international trade and technological neutrality. </p>
<p>A couple of years later, Cisco <a href="https://www.crn.com/news/networking/207801396/cisco-denies-aiding-chinese-web-censorship.htm">again defended its right</a> to sell to China in a meeting with the US Senate Judiciary Subcommittee on Human Rights. A representative of the company <a href="https://www.forbes.com/2007/11/01/cisco-china-investments-markets-equity-cx_ml_1101markets17.html?sh=43e3cf8d4e74">argued</a>:</p>
<blockquote>
<p>One thing tech companies cannot do, in my opinion, is involve themselves in politics of a country.</p>
</blockquote>
<p>Earlier this year, investigative journalist Mara Hvistendahl also <a href="https://theintercept.com/2021/05/25/oracle-social-media-surveillance-protests-endeca/">reported</a> that Oracle (the same company that <a href="https://www.nytimes.com/2020/09/13/technology/tiktok-microsoft-oracle-bytedance.html">won the bid</a> to co-host TikTok’s data in the US) had pitched its predictive policing analytics to public security agencies in China.</p>
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<p>And in 2019, the UK <a href="https://www.globaljustice.org.uk/resource/exporting-repression-how-britain-supplying-surveillance-technology-human-rights-abusing/">was found</a> to have exported telecommunications interception equipment to multiple countries, including Saudi Arabia and the United Arab Emirates.</p>
<p>A political science researcher at the University of Cape Town, <a href="https://blogs.lse.ac.uk/africaatlse/2021/09/09/dont-blame-china-for-rise-of-digital-authoritarianism-africa-surveillance-capitalism/">Mandira Bagwandeen</a>, argues it’s easy to point fingers to China, diverting attention from other countries.</p>
<blockquote>
<p>Let’s face it, if the US was really serious about restricting the spread of so-called ‘authoritarian technology’, then it should also impose comprehensive measures and restrictions on both democratic and autocratic producers.</p>
</blockquote>
<h2>We need better monitoring of the surveillance tech trade</h2>
<p>The fact is surveillance technologies with the capability to gather and analyse information about people are <a href="https://www.crimejusticejournal.com/article/view/1908/1107">inherently political</a>. </p>
<p>Princeton University Professor Xu Xu <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/ajps.12514">argues</a> that digital surveillance resolves the “information problem” in authoritarian countries by allowing dictators to more easily identify those with anti-regime beliefs.</p>
<hr>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/police-access-to-covid-check-in-data-is-an-affront-to-our-privacy-we-need-stronger-and-more-consistent-rules-in-place-167360">Police access to COVID check-in data is an affront to our privacy. We need stronger and more consistent rules in place</a>
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<p>But regulating new technologies is difficult even in democratic countries. Australia is seeing this play out with the unregulated use of <a href="https://theconversation.com/number-plate-recognition-the-technology-behind-the-rhetoric-17572">number plate recognition technologies</a> by the police to monitor lockdown compliance. </p>
<p>The police have also <a href="https://www.smh.com.au/politics/federal/contact-tracing-and-nothing-else-greens-bid-to-ban-police-from-qr-code-data-20211006-p58xmo.html">tried to use</a> COVID QR code check-in data numerous times as part of criminal investigations.</p>
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<p>Unlike other electronics goods, surveillance technologies have the capability to shape and restrict people’s lives, rights and freedoms. This is why it is important they are regulated. </p>
<p>While it may be difficult to enact a <a href="https://www.oecd-ilibrary.org/sites/bb167041-en/1/3/1/index.html?itemId=/content/publication/bb167041-en&_csp_=509e10cb8ea8559b6f9cc53015e8814d&itemIGO=oecd&itemContentType=book#section-14">unified set of rules internationally</a> given the current tensions between China and the west, better monitoring and regulations at the domestic level could be the way forward.</p>
<p>One large initiative is a multi-year project run by the Australian Strategic Policy Institute to map the <a href="https://chinatechmap.aspi.org.au/#/homepage">international expansion of Chinese technology companies</a>. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1402114458793635844"}"></div></p>
<p>This is helping to monitor the activities of Chinese surveillance tech companies and providing data for government policy briefs. When iFlytek, a Chinese artificial intelligence technology company tied to surveillance of Uyghurs in Xinjiang, marketed its products in New Zealand, the <a href="https://interactives.stuff.co.nz/2021/03/new-zealand-links-to-iflytek/">media relied on ASPI’s findings</a> to pressure a New Zealand company to cease its collaborations with the company. </p>
<p>And the European Parliament commissioned and published an extensive report on <a href="https://www.europarl.europa.eu/RegData/etudes/STUD/2021/662926/IPOL_STU(2021)662926_EN.pdf">artificial intelligence</a> in June 2021, which recommended establishing a security commission and new research centre devoted to AI issues. It remains to be seen whether the report has any teeth, but it is the kind of start we need.</p><img src="https://counter.theconversation.com/content/168190/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ausma Bernot does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While it may be difficult to enact a global set of regulations on surveillance technologies, individual countries can take the lead with enhanced monitoring and stronger laws.Ausma Bernot, PhD Candidate, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1687392021-09-27T20:49:59Z2021-09-27T20:49:59ZMeng and the two Michaels: Why China’s hostage diplomacy failed<figure><img src="https://images.theconversation.com/files/423403/original/file-20210927-15-q59fab.JPG?ixlib=rb-1.1.0&rect=801%2C0%2C1915%2C2079&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Michael Kovrig flashes a V for victory sign alongside his wife and sister at Pearson International Airport after his return to Canada. </span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Frank Gunn </span></span></figcaption></figure><iframe style="width: 100%; height: 175px; border: none; position: relative; z-index: 1;" allowtransparency="" src="https://narrations.ad-auris.com/widget/the-conversation-canada/meng-and-the-two-michaels--why-china’s-hostage-diplomacy-failed" width="100%" height="400"></iframe>
<p>On the face of it, the fact that Canada’s “two Michaels” — Michael Kovrig and Michael Spavor — boarded a Canadian government aircraft in Beijing at about the same time that Huawei executive Meng Wanzhou was being released from her extradition hearing bail requirements in Vancouver might indicate to some that China’s “<a href="https://foreignpolicy.com/2021/02/17/why-hostage-diplomacy-works/">hostage diplomacy</a>” was successful. </p>
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Read more:
<a href="https://theconversation.com/meng-for-the-two-michaels-lessons-for-the-world-from-the-china-canada-prisoner-swap-168737">Meng for the two Michaels: Lessons for the world from the China-Canada prisoner swap</a>
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<p>There was a clear link between Meng’s plea bargain arrangement with the United States Department of Justice, her subsequent release in Vancouver and the release of the two Michaels after more than 1,000 days in captivity. </p>
<p>Despite <a href="https://globalnews.ca/news/8223366/china-denies-retaliatory-arrests-freed-2-michaels-health-reasons/">consistent Chinese denials</a> over many months that their arrest was in retaliation for the detention of Meng under the <a href="https://www.treaty-accord.gc.ca/text-texte.aspx?id=101323">Canada-U.S. extradition treaty</a>, the fact that the two cases were resolved simultaneously (even <a href="https://www.bbc.com/news/world-us-canada-58687071">before Kovrig had been sentenced by the Chinese court</a>) stripped away any pretence that there was no connection.</p>
<p>In the past, in cases involving <a href="https://www.wsj.com/articles/west-unites-against-detention-of-foreign-nationals-in-signal-to-china-11613397836">detention in China of foreign nationals</a> when there have been unrelated disputes with their country of origin, the release of the “hostages” has not come for several weeks or months after the resolution of the original dispute. </p>
<p>That’s allowed China to maintain the fiction that it doesn’t detain people for retaliatory purposes and to argue that Chinese law must run its course. This time, even that fig leaf was removed. </p>
<h2>Deferred prosecution agreement</h2>
<p>In order to secure her release, Meng was given only the lightest of punishments, a deferred prosecution arrangement that required her to neither plead guilty nor pay a fine. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/snc-lavalin-deferred-prosecution-deals-arent-get-out-of-jail-free-cards-113095">SNC-Lavalin: Deferred prosecution deals aren't get-out-of-jail free cards</a>
</strong>
</em>
</p>
<hr>
<p>All she was required to do was consent to a statement of facts that outlined the U.S. view of what happened <a href="https://www.bbc.com/news/world-us-canada-47046264">when she allegedly misled global bank HSBC into believing that a Huawei subsidiary operating in Iran was not in fact controlled by Huawei</a>. </p>
<p>The deferred prosecution agreement will expire in 2022, and then the case will be closed. </p>
<p>Do the terms of this settlement demonstrate that the U.S. caved to Chinese hostage diplomacy by cutting such a generous deal? </p>
<p>The need to free Kovrig and Spavor was no doubt a factor given the pressure the Canadian government was putting on <a href="https://www.thestar.com/business/2021/02/23/white-house-signals-hard-line-on-buy-american-as-ottawa-urged-to-push-for-exemption.html">U.S. President Joe Biden’s administration</a> to withdraw the extradition request. But it was far from the only consideration. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/423420/original/file-20210927-19-5j4uxi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Biden looks down as Justin Trudeau speaks." src="https://images.theconversation.com/files/423420/original/file-20210927-19-5j4uxi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/423420/original/file-20210927-19-5j4uxi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/423420/original/file-20210927-19-5j4uxi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/423420/original/file-20210927-19-5j4uxi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/423420/original/file-20210927-19-5j4uxi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/423420/original/file-20210927-19-5j4uxi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/423420/original/file-20210927-19-5j4uxi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">U.S. President Joe Biden listens as Prime Minister Justin Trudeau speaks during the G7 summit in Cornwall, England, in June 2021.</span>
<span class="attribution"><span class="source">(Kevin Lamarque/Pool via AP)</span></span>
</figcaption>
</figure>
<p>The Department of Justice has emerged from the case with their minimum requirements met, namely an acknowledgement of their ability to enforce American sanctions on foreign companies if financial transactions go through the U.S. That’s not a bad outcome considering the flimsiness of the American legal case against Meng in the first place. </p>
<p>The <a href="https://www.scmp.com/news/china/diplomacy/article/3144192/us-improperly-provided-evidence-judge-meng-wanzhous-canadian">threadbare nature of the evidence</a> against Meng was increasingly exposed in the British Columbia Supreme Court extradition hearings as Meng’s legal team challenged the case presented by Canadian Crown attorneys on behalf of the U.S. Justice Department. </p>
<h2>No smoking gun</h2>
<p>Apart from the selective use of evidence by U.S. authorities and the fact that no harm was suffered by HSBC despite being allegedly “misled” by Meng, there was no smoking gun. </p>
<p>There was also the possibility that the B.C. court <a href="https://bc.ctvnews.ca/abuse-in-extradition-case-meng-s-legal-team-argues-for-stay-in-proceedings-1.5540283">would find abuse of process</a> given the clumsy way both the RCMP and the Canada Border Services Agency handled Meng’s arrest, and dismiss the case on these grounds. </p>
<p>In other words, the American case against Meng was hardly watertight. <a href="https://www.reuters.com/article/us-usa-huawei-tech-canada/u-s-in-talks-with-huawei-cfo-meng-on-resolving-criminal-charges-wsj-idUSKBN28D3J8?il=0">They had even offered Meng a plea bargain</a> in December 2020 that would have required her to plead guilty. Huawei rejected that offer. </p>
<p>Rescuing their case with the plea bargain they finally struck was a way for the American authorities to head off the growing possibility of a total loss.</p>
<figure class="align-center ">
<img alt="A crowd of people wearing masks gather in an airport arrival hall." src="https://images.theconversation.com/files/423413/original/file-20210927-19-3uy7uk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/423413/original/file-20210927-19-3uy7uk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/423413/original/file-20210927-19-3uy7uk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/423413/original/file-20210927-19-3uy7uk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/423413/original/file-20210927-19-3uy7uk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/423413/original/file-20210927-19-3uy7uk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/423413/original/file-20210927-19-3uy7uk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Supporters of Meng Wanzhou gather at Shenzhen Bao'an International Airport in China’s Guangdong Province to greet her as she returned from Canada.</span>
<span class="attribution"><span class="source">(AP Photo/Ng Han Guan)</span></span>
</figcaption>
</figure>
<p>Even though the Meng/two Michaels case has poisoned Canada-China relations, it was actually a U.S.-China dispute. Resolving it — not primarily to free the two Michaels but to remove a U.S.-China irritant — was a low-cost “give” by the Biden administration to get the issue out of the way so it can establish a better dialogue with Beijing. </p>
<p>So what did China achieve with its high-profile hostage diplomacy exercise? It not only fuelled harsh criticism from much of the developed world (which may not bother it too much), but it provided the motivation for Canada <a href="https://globalnews.ca/news/7641177/canada-arbitrary-detention-coalition-2-michaels/">to take the lead</a> in producing the <a href="https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/human_rights-droits_homme/arbitrary_detention-detention_arbitraire.aspx?lang=eng">Declaration Against Arbitrary Detention in State to State Relations</a>, now endorsed by dozens of countries. </p>
<h2>Trudeau didn’t give in to pressure</h2>
<p>China has no one but itself to blame for being put in the spotlight on this issue. It also failed to succeed in short-circuiting the Canadian and U.S. legal process. </p>
<p>That would have happened if Prime Minister Justin Trudeau’s government had succumbed to pressure early on to end extradition proceedings against Meng and release her, as a number of <a href="https://www.cbc.ca/news/politics/letter-release-meng-1.5625669">retired Canadian politicians and diplomats had proposed</a>.</p>
<figure class="align-center ">
<img alt="Justin Trudeau smiles from behind a microphone with a Canadian flag behind him." src="https://images.theconversation.com/files/423414/original/file-20210927-23-skl4h7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/423414/original/file-20210927-23-skl4h7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=407&fit=crop&dpr=1 600w, https://images.theconversation.com/files/423414/original/file-20210927-23-skl4h7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=407&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/423414/original/file-20210927-23-skl4h7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=407&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/423414/original/file-20210927-23-skl4h7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/423414/original/file-20210927-23-skl4h7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/423414/original/file-20210927-23-skl4h7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Prime Minister Justin Trudeau takes questions on Parliament Hill after announcing that the two Michaels had been released from detention in China.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Justin Tang</span></span>
</figcaption>
</figure>
<p>The Chinese may have miscalculated in believing that by seizing the Michaels, Canada would cave almost immediately and terminate the extradition process. </p>
<p>The fact that the Canadian government insisted that <a href="https://www.cbc.ca/news/politics/trudeau-meng-wanzhou-prisoner-1.5626744">the legal process, slow as it was, had to play out</a> — thus keeping Meng under restricted bail conditions in Canada for almost three years — was surely not something the Chinese leadership had bargained on. It should be a lesson to China in the future, even though Kovrig and Spavor unfortunately had to pay the price of the Chinese miscalculation.</p>
<h2>What’s next for Canada-China relationship?</h2>
<p>Now that the Meng/two Michaels affair has been resolved, attention will turn to the future of Canada-China relations. </p>
<p>The immediate logjam has been removed, but it will take a long time for the waters to flow smoothly. By resorting to taking hostages rather than working through diplomatic channels, China has destroyed decades of slowly nurtured goodwill and lost the trust of the Canadian public, as well as public opinion in many other parts of the world. </p>
<p>China can pretend to shrug off those concerns, and swagger on the world stage, but despite its impressive economic growth and growing military prowess, it cannot afford to antagonize all the people all the time. Hostage diplomacy is ultimately a losing proposition, a lesson that China has hopefully learned.</p><img src="https://counter.theconversation.com/content/168739/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hugh Stephens does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Did the U.S. cave to China’s exercise in hostage diplomacy when it signed a plea deal with a Huawei executive that resulted in freedom for the two Michaels? Or was it China that miscalculated badly?Hugh Stephens, Executive Fellow, School of Public Policy; Distinguished Fellow, Asia Pacific Foundation of Canada, University of CalgaryLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1603162021-05-10T13:40:51Z2021-05-10T13:40:51ZHuawei’s ability to eavesdrop on Dutch mobile users is a wake-up call for the telecoms industry<figure><img src="https://images.theconversation.com/files/399429/original/file-20210507-21-1xvdf6c.jpeg?ixlib=rb-1.1.0&rect=0%2C0%2C3994%2C2000&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/young-woman-mobile-phone-headphones-walks-1289685550">viewimage/Shutterstock</a></span></figcaption></figure><p>Chinese technology provider Huawei was <a href="https://www.theguardian.com/technology/2021/apr/19/huawei-may-have-eavesdropped-on-dutch-mobile-networks-calls">recently accused</a> of being able to monitor all calls made using Dutch mobile operator KPN. The revelations are from a <a href="https://www.silicon.co.uk/5g/dutch-report-huawei-kpn-monitoring-393727">secret 2010 report</a> made by consultancy firm Capgemini, which KPN commissioned to evaluate the risks of working with Huawei infrastructure.</p>
<p>While the full report on the issue has not been made public, <a href="https://nltimes.nl/2021/04/17/huawei-able-eavesdrop-dutch-mobile-network-kpn-report">journalists reporting on the story</a> have outlined specific concerns that Huawei personnel in the Netherlands and China had access to security-essential parts of KPN’s network – including the call data of millions of Dutch citizens – and that a lack of records meant KPN couldn’t establish how often this happened.</p>
<p>Both KPN and Huawei have denied any impropriety, though in the years since the 2010 report, Huawei has increasingly found itself labelled a <a href="https://theconversation.com/can-huawei-survive-the-us-sanctions-144810">high-risk vendor</a> for telecoms companies to work with, including by the UK’s <a href="https://www.ncsc.gov.uk/files/Advice-on-use-equipment-from-high-risk-vendors-in-UK-telecoms.pdf">National Cyber Security Centre</a>.</p>
<p>To better understand this story, and to consider whether other telecoms networks may have had similar security vulnerabilities to KPN’s, we need to look at how complex mobile networks are run. KPN essentially granted Huawei “<a href="https://www.telecomtv.com/content/security/kpn-shaken-to-the-core-by-huawei-espionage-allegations-41287/">administrator rights</a>” to its mobile network by outsourcing work to the Chinese firm. Legislation is only now catching up to prevent similar vulnerabilities in telecoms security.</p>
<h2>Commercial pressures</h2>
<p>Huawei is one of the <a href="https://cntechpost.com/2021/03/09/huaweis-share-of-global-telecoms-equipment-market-increases-to-31/">three dominant radio equipment providers</a> in the world, alongside Ericsson and Nokia. These giant technology companies provide the base stations and equipment that deliver mobile phone signals. Operators like KPN increasingly pay these companies not only to buy the equipment, but also for them to support and maintain it.</p>
<p>The telecoms market in which KPN operates is one of the most price-competitive in the world. European mobile operators saw <a>average revenues per user in 2019</a> of €14.90 (£12.85) a month, compared with €36.90 a month in the USA. European spend on telecoms services are also <a href="https://technews.tmcnet.com/channels/mobile-voip/articles/230239-european-mobile-service-providers-face-arpu-issues.htm">reducing</a> <a href="https://www.ofcom.org.uk/__data/assets/pdf_file/0017/105074/cmr-2017-uk.pdf">year-on-year</a> as operators compete to offer the best deals to consumers.</p>
<p>Lower revenues force operators to carefully manage costs. This means that operators have been keen to outsource parts of their businesses to third parties, <a>especially since the late 2000s</a>. </p>
<p>Large numbers of highly skilled engineers are an expensive liability to have on the balance sheet, and can often appear underused when things are running smoothly. Such jobs are often outsourced, with <a href="https://www.mobileworldlive.com/asia/asia-news/optus-to-cut-jobs-after-outsourcing-to-nokia">personnel transferring</a> to the outsourced provider, to help operators to cut their payroll costs.</p>
<h2>Outsourcing gone too far</h2>
<p>When everything is working, very few people notice outsourcing. But when things go wrong, outsourcing can often significantly complicate recovery, or create a large “single point of failure” or security issue. </p>
<p>In the UK, for instance, mobile operator O2 has seen <a href="https://www.theregister.com/2012/07/13/o2_outage_cause/">at least one outage</a> which has been linked to the use of outsourced functions. Where large numbers of operators <a href="https://telecoms.com/491082/inside-ericsson/">rely on the same outsourcing partner</a>, any issue or security breach affecting the outsourced provider can have a widespread impact.</p>
<p>Still, outsourcing by mobile operators is widespread. And firms in the UK and across Europe have often turned to Huawei to provide <a href="https://www.mobileeurope.co.uk/press-wire/9588-three-uk-joins-telefonica-by-outsourcing-core-management-to-huawei">IT services</a> and to help build <a href="https://www.information-age.com/o2-outsources-core-network-management-to-huawei-2103318/">core networks</a>. In 2010, Huawei was managing security-critical functions of KPN’s core network.</p>
<h2>Administrator access</h2>
<p>At the same time, equipment suppliers like Huawei are trying to move away from merely selling equipment and towards providing a <a href="https://www.thefastmode.com/expert-opinion/18162-the-ultimate-guide-to-open-ran-openran-integration-part-2-integration-stages-and-models">managed service</a>, including installation, maintenance and support. This helps them create recurring revenue in an industry that has generally been dominated by large five-year or ten-year purchasing cycles.</p>
<p>But as these vendors add services to their repertoire, they gain wider access to the mobile networks they work with. This could include <a href="https://www.ncsc.gov.uk/files/Advice-on-use-equipment-from-high-risk-vendors-in-UK-telecoms.pdf">certain security-critical parts</a> of telecoms networks, which are often designed to work in trusted, secure environments. </p>
<p>In the scenario where a vendor like Huawei also provides a managed service, they find themselves sitting in a uniquely privileged position, with inside knowledge of their own equipment, and with direct access to trusted management interfaces.</p>
<p>This creates the high-tech equivalent of putting all your eggs in one basket. It’s akin to giving the combinations of the bank vault to the same security guard in charge of the CCTV camera footage. It’s difficult to reliably monitor operations carried out by the vendor without relying on that vendor’s own software.</p>
<p>In cases where a vendor has been designated as high-risk as a result of their <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/923309/Huawei_Cyber_Security_Evaluation_Centre__HCSEC__Oversight_Board-_annual_report_2020.pdf">own product security practices</a>, it’s very difficult to know whether that vendor didn’t do anything untoward. This is the situation KPN apparently found themselves in with Huawei back in 2010.</p>
<figure class="align-center ">
<img alt="A man on the phone walking in front of a Huawei store" src="https://images.theconversation.com/files/399428/original/file-20210507-13-ze5g4u.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/399428/original/file-20210507-13-ze5g4u.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=410&fit=crop&dpr=1 600w, https://images.theconversation.com/files/399428/original/file-20210507-13-ze5g4u.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=410&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/399428/original/file-20210507-13-ze5g4u.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=410&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/399428/original/file-20210507-13-ze5g4u.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=515&fit=crop&dpr=1 754w, https://images.theconversation.com/files/399428/original/file-20210507-13-ze5g4u.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=515&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/399428/original/file-20210507-13-ze5g4u.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=515&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Huawei’s privileged access to KPN’s network could have allowed the Chinese firm to listen to calls made by Dutch citizens.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/man-talking-on-mobile-phone-he-1208284561">viewimage/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Are changes needed?</h2>
<p>With at least one operator aiming to reduce European operating expenditure by <a href="https://www.ft.com/content/8d2287ad-d0a3-4972-9b0d-9e32846f3164">€1.2 billion</a>, and 5G deployments bringing new opportunities for managed services and software-based solutions to be used in networks, decisions around outsourcing will continue to play an important role for mobile operators going forwards. </p>
<p>But legislation is rapidly catching up. The UK has proposed a <a href="https://www.gov.uk/government/collections/telecommunications-security-bill">telecoms security bill</a>, and associated <a href="https://www.gov.uk/government/publications/draft-electronic-communications-security-measures-regulations">draft secondary legislation</a> includes requirements for network operators to monitor all activity carried out by third party providers, to identify and manage the risks of using them, and to have a plan in place to maintain normal network operations if their supplier’s service is disrupted. </p>
<p>For some operators, it’s conceivable this might mean bringing key skills back in-house to ensure there’s someone watching the (outsourced) watchmen. In the case of KPN, these measures would likely have prevented Huawei from having seemingly unchecked and privileged access to its customers’ mobile data.</p><img src="https://counter.theconversation.com/content/160316/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Greig is a member of the UK 5G security group, depute chair of the UK Telecoms Data Taskforce, and is involved in the delivery of 5G Testbeds & Trials projects, funded by DCMS.</span></em></p>Dutch mobile operator KPN was warned in 2010 that Huawei could snoop on millions of its customers’ calls.Greig Paul, Lead Mobile Networks and Security Engineer, University of Strathclyde Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1515672020-12-08T19:10:06Z2020-12-08T19:10:06ZTimeline of a broken relationship: how China and Australia went from chilly to barely speaking<figure><img src="https://images.theconversation.com/files/373237/original/file-20201207-21-z2tvxz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Ng Han Guan/AP</span></span></figcaption></figure><p>When the history of this latest <a href="https://www.abc.net.au/news/2020-11-04/australia-china-relations-power-shift-as-new-superpower-rises/12843190">low point</a> in China-Australia relations is written, both sides will be blamed for mistakes.</p>
<p>Australia is not without fault. However, China is primarily responsible for the <a href="https://www.project-syndicate.org/commentary/the-china-strategy-australia-needs-by-gareth-evans-2020-12">continuing deterioration</a> in the relationship. </p>
<p>Its ruthlessness in <a href="https://www.theatlantic.com/magazine/archive/2020/05/mcmaster-china-strategy/609088/">asserting itself</a> far and wide, by fair means and foul, means there will be no going back to the status quo that prevailed before President Xi Jinping emerged in 2013 as China’s most nationalistic leader since Mao Zedong.</p>
<p>Likewise, Beijing’s <a href="https://www.afr.com/policy/foreign-affairs/has-china-given-up-on-australia-20201203-p56kfn">crude use of trade sanctions</a> to penalise Australia for real or imagined slights signifies that a trading relationship born of mutual benefit risks being subject to persistent, politically-motivated interference.</p>
<p>This is the reality, whether we like it or not. China is done with “<a href="https://www.smh.com.au/national/the-pm-ignored-one-of-the-enduring-truths-in-politics-in-his-over-the-top-response-to-china-20201203-p56kj6.html">biding its time</a>” in line with former leader Deng Xiaoping’s advice in pursuit of its big power ambitions. It may no longer be correct to describe China as a “rising power”. The power has risen.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/373483/original/file-20201208-17-1njiar5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373483/original/file-20201208-17-1njiar5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373483/original/file-20201208-17-1njiar5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373483/original/file-20201208-17-1njiar5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373483/original/file-20201208-17-1njiar5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373483/original/file-20201208-17-1njiar5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373483/original/file-20201208-17-1njiar5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">China has increasingly sought to exert its power since Xi came to power.</span>
<span class="attribution"><span class="source">Wu Hong/EPA</span></span>
</figcaption>
</figure>
<p>What is clear is that Canberra has <a href="https://www.bbc.com/news/world-australia-50299783">vastly underestimated</a> the velocity of change in the Asia-Pacific region, and, more to the point, the costs associated with an attachment to old models for doing business.</p>
<p>This is not an argument for sliding away from the American alliance, the cornerstone of Australian security. Rather, a more realistic assessment is required of what is and is not in the national interest.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/behind-chinas-newly-aggressive-diplomacy-wolf-warriors-ready-to-fight-back-139028">Behind China's newly aggressive diplomacy: 'wolf warriors' ready to fight back</a>
</strong>
</em>
</p>
<hr>
<p>What is not in the national interest are policies that needlessly antagonise the nation’s dominant customer. Again, this is not making the case for excusing China’s bad behaviour, or somehow suggesting the customer is always right. It is simply saying that gratuitous provocations should be avoided.</p>
<p>The timeline below tracks the recent tensions between China and Australia. Multiple episodes stand out that have marked — and in some cases scarred — Canberra’s relations with Beijing since Xi came to power. </p>
<p>These moments have all contributed to the deterioration of the relationship to the point where Australia now risks <a href="https://www.brookings.edu/articles/great-expectations-the-unraveling-of-the-australia-china-relationship/">long-term harm to its economic interests</a>. This is policy failure on-the-run.</p>
<h2>Timeline of a fraying relationship</h2>
<p><div data-react-class="InstagramEmbed" data-react-props="{"url":"https://www.instagram.com/p/CIhXCLZhD1b/?utm_source=ig_web_copy_link","accessToken":"127105130696839|b4b75090c9688d81dfd245afe6052f20"}"></div></p>
<h2>Three particularly damaging episodes</h2>
<p>Three episodes have been particularly damaging.</p>
<p>The first and almost certainly the most scarring was the decision in early 2019 for Australia to take the lead role in <a href="https://www.smh.com.au/business/companies/huawei-20190603-p51tur.html">lobbying its Five Eyes partners</a> to exclude the Chinese company Huawei from supplying technology for their 5G networks.</p>
<p>Australia’s <a href="https://www.abc.net.au/news/2018-08-23/huawei-banned-from-providing-5g-mobile-technology-australia/10155438">decision to exclude Huawei</a> from its own 5G roll-out is one thing, lobbying others to follow suit is another. What possessed decision-makers in Canberra to take it upon themselves to put Australia at the forefront of a global campaign against China’s economic interests remains a mystery.</p>
<p>To say this decision <a href="https://www.globaltimes.cn/content/1201462.shtml">enraged Beijing</a> would be an understatement, with the caveat that Australia had every right to exclude Huawei if it was deemed in the national security interest to do so.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/373481/original/file-20201208-17-1iby2vs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373481/original/file-20201208-17-1iby2vs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373481/original/file-20201208-17-1iby2vs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373481/original/file-20201208-17-1iby2vs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373481/original/file-20201208-17-1iby2vs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373481/original/file-20201208-17-1iby2vs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373481/original/file-20201208-17-1iby2vs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The US and UK have followed Australia’s lead in banning Huawei from their 5G networks.</span>
<span class="attribution"><span class="source">Ng Han Guan/AP</span></span>
</figcaption>
</figure>
<p>The second damaging episode involved Prime Minister Scott Morrison volunteering to <a href="https://www.abc.net.au/news/2020-05-20/wha-passes-coronavirus-investigation-australia-what-cost/12265896">lead the charge</a> for an investigation into China’s responsibility for the coronavirus that emerged in the city of Wuhan in late 2019.</p>
<p>Again, why Morrison took it upon himself to coordinate such an inquiry — when one was in train anyway under World Health Organisation auspices — is unclear. Beijing’s furious response might have been anticipated, with the editor of the state-run Global Times referring to Australia as the “<a href="https://www.theguardian.com/world/2020/apr/28/australia-called-gum-stuck-to-chinas-shoe-by-state-media-in-coronavirus-investigation-stoush">gum stuck to the bottom of China’s shoe</a>”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/murky-origins-why-china-will-never-welcome-a-global-inquiry-into-the-source-of-covid-19-136713">Murky origins: why China will never welcome a global inquiry into the source of COVID-19</a>
</strong>
</em>
</p>
<hr>
<p>The third damaging episode involved Treasurer Josh Frydenberg’s decision to prevent the Hong Kong-listed China Mengniu Dairy from <a href="https://www.afr.com/policy/economy/frydenberg-snubs-china-mengnui-s-600m-dairy-deal-for-lion-20200819-p55n59">taking over the Japanese-owned Lion Dairy and Drinks</a> in a $600 million acquisition.</p>
<p>In rejecting Mengniu’s takeover bid, Frydenberg overrode advice from the Foreign Investment Review Board and Treasury — both of which had supported the deal.</p>
<p>This was a politically motivated decision to satisfy critics of the sale of Australian assets to Chinese entities. It certainly reinforced a view in Beijing that Australia’s foreign investment approval process is tilted against Chinese companies.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/373485/original/file-20201208-19-19fk0d6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373485/original/file-20201208-19-19fk0d6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=389&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373485/original/file-20201208-19-19fk0d6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=389&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373485/original/file-20201208-19-19fk0d6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=389&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373485/original/file-20201208-19-19fk0d6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=489&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373485/original/file-20201208-19-19fk0d6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=489&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373485/original/file-20201208-19-19fk0d6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=489&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The closed Huanan seafood market in Wuhan, believed to be the epicentre of the coronavirus outbreak.</span>
<span class="attribution"><span class="source">Koki Kataoka/AP</span></span>
</figcaption>
</figure>
<h2>Does the government actually have a plan for China?</h2>
<p>Likewise, the government’s <a href="https://theconversation.com/morrisons-foreign-relations-bill-should-not-pass-parliament-heres-why-145615">foreign relations bill</a> — <a href="https://www.abc.net.au/news/2020-12-08/what-are-the-governments-new-foreign-relations-laws-about/12947590">passed by parliament this week</a> — can be read as an attempt to reinforce Canberra’s control over a panoply of relationships between Australian states, territories and educational institutions and their Chinese counterparts.</p>
<p>The government might pretend this is an omnibus bill aimed at asserting federal government oversight of the foreign policy-making responsibilities of the Commonwealth. But in reality it is aimed squarely at contacts with Chinese entities.</p>
<p><a href="https://www.theguardian.com/world/2020/may/25/chinas-belt-and-road-initiative-what-is-it-and-why-is-victoria-under-fire-for-its-involvement">Victoria’s Belt and Road agreement</a> with Beijing is in the bill’s sights, along with the Northern Territory’s <a href="https://www.abc.net.au/news/2019-03-12/why-did-northern-territory-sell-darwin-port-to-china-what-risk/10755720">deal with the Chinese Landbridge Group</a> for lease of part of the Darwin port.</p>
<p>There is a central question in all of this: does the Morrison government actually have an overarching game plan for dealing with China, or is it simply stumbling from one crisis to the next? </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/373486/original/file-20201208-15-wpxz5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373486/original/file-20201208-15-wpxz5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373486/original/file-20201208-15-wpxz5c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373486/original/file-20201208-15-wpxz5c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373486/original/file-20201208-15-wpxz5c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373486/original/file-20201208-15-wpxz5c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373486/original/file-20201208-15-wpxz5c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In the past week, Morrison has demanded an apology from China and sought a diplomatic reset.</span>
<span class="attribution"><span class="source">Lukas Coch/AAP</span></span>
</figcaption>
</figure>
<p>Those responsible for Australia’s foreign policy clearly have not been able to navigate treacherous diplomatic terrain and avoid the pitfalls that have brought Sino-Australian relations to an <a href="https://www.globaltimes.cn/content/1192669.shtml">all-time low</a>. </p>
<p>Morrison’s foreign policy team has also proved ineffectual at facing down <a href="https://www.afr.com/policy/foreign-affairs/china-challenge-needs-clever-diplomacy-not-shrill-crusades-20200120-p53sz7">pressures from those in the government’s own ranks</a> who have a particular animus towards Beijing. Such antagonism has proved to be a dead weight on constructive China policy-making.</p>
<p>This brings us to Morrison’s own reaction to the offensive tweet depicting a doctored image of an Australian soldier with a knife at the throat of an Afghan child. Soon after it was shared by a Chinese Foreign Ministry spokesman, <a href="https://www.smh.com.au/world/asia/twitter-slow-to-comply-with-morrison-s-takedown-request-20201130-p56j80.html">Morrison went on television</a> to denounce both the official and the crude caricature.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/whats-behind-chinas-bullying-of-australia-it-sees-a-soft-target-and-an-essential-one-151273">What's behind China's bullying of Australia? It sees a soft target — and an essential one</a>
</strong>
</em>
</p>
<hr>
<p>No one could reasonably object to the prime minister’s outrage. However, he should not have lowered himself to engage a Chinese spin-doctor in an argument about a graphic piece of Chinese propaganda.</p>
<p>This should have been left to Foreign Minister Marise Payne, or, better still, the head of the Department of Foreign Affairs and Trade. Morrison further compounded the issue by vaingloriously demanding an apology.</p>
<p>Morrison’s clumsy handing of the issue speaks to a lack of China literacy among his advisers.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1335895910962761729"}"></div></p>
<h2>An Australian media echo chamber</h2>
<p>The Australian media has also played a role in amplifying anti-Beijing viewpoints to such an extent, it has had a deadening effect on reasonable discussion about managing the country’s China policy more effectively.</p>
<p>The business community, for example, has been discouraged — <a href="https://www.theguardian.com/australia-news/2020/jul/16/shameful-turnbull-rebukes-australian-business-for-criticising-china-relations">even intimidated</a> — from voicing its opinion out of concern it would be accused of pandering to Beijing for its own selfish reasons.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australia-can-repair-its-relationship-with-china-here-are-3-ways-to-start-150455">Australia can repair its relationship with China, here are 3 ways to start</a>
</strong>
</em>
</p>
<hr>
<p>All this adds to pressures on policymakers to pursue a one-dimensional “stand up to Chinese bullying” approach, not give ground and ascribe the worst possible motives to whatever China says or does.</p>
<p>This is hardly a substitute for a carefully thought-through, well-articulated, tough-minded approach to managing a highly complex relationship in the national interest. </p>
<p>As things stand, those in charge of framing Australia’s policies with China are failing to do this — and Australia’s best interests are clearly not being served as a result.</p><img src="https://counter.theconversation.com/content/151567/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tony Walker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia’s policy-makers are pursuing a one-dimensional “stand up to Chinese bullying” approach — and it clearly isn’t working.Tony Walker, Vice-chancellor's fellow, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1448102020-09-02T17:50:52Z2020-09-02T17:50:52ZCan Huawei survive the US sanctions?<p>“A deadly blow to the Chinese tech champion” is how <a href="https://edition.cnn.com/2020/08/17/tech/huawei-us-sanctions-hnk-intl/index.html">CNN described</a> the sanctions announced on August 17 by the US Commerce Department. They will restrict any foreign semiconductor company from selling chips developed or produced using US software or technology to Huawei.</p>
<p>Developing countries such as <a href="https://asia.nikkei.com/Spotlight/Huawei-crackdown/Huawei-5G-dominance-threatened-in-Southeast-Asia">India and Vietnam</a> have already followed suit. In Europe, Huawei may be excluded from the 5G market as well. On the services front, <a href="https://www.cnet.com/news/huawei-ban-full-timeline-us-restrictions-china-trump-executive-order-commerce-dept/">Google licences are also now compromised</a> and other applications may not be renewed.</p>
<p>Cutting off major tech Chinese companies from the US market, including <a href="https://www.brookings.edu/blog/up-front/2020/08/07/why-is-the-trump-administration-banning-tiktok-and-wechat/">TikTok and WeChat</a>, comes at a time of rising diplomatic tensions between Washington and Beijing. But why Huawei and why now? And given the tough sanctions, can the company continue thrive?</p>
<h2>Trade wars</h2>
<p>The 2017 <a href="https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf">“National Security Strategy of the USA”</a> report cites China as a “strategic competitor” <a href="https://theconversation.com/whats-wrong-with-huawei-and-why-are-countries-banning-the-chinese-telecommunications-firm-109036">threatening</a> the power, influence and security of the United States. The report also mentions Russia.</p>
<p>Since 2015, China has invested heavily in cutting-edge technologies under the <a href="https://merics.org/en/report/made-china-2025">“Made in China 2025” label</a>. Among targeted sectors were IT, space and robotics. Washington characterized the push as an <a href="https://www.whitehouse.gov/wp-content/uploads/2018/06/FINAL-China-Technology-Report-6.18.18-PDF.pdf">“economic aggression”</a> and a potential threat regarding security and intellectual property. The <a href="https://theconversation.com/winners-and-losers-in-the-us-china-trade-war-119320">US-China trade war</a> began in March 2018, with significant increases in US tariffs on Chinese products such as steel. </p>
<p>The <a href="http://republicans-intelligence.house.gov/sites/intelligence.house.gov/files/documents/Huawei-ZTE%20Investigative%20Report%20%28FINAL%29.pdf">US Congress Intelligence Committee</a> has had an eye on Huawei and its leaders since 2003. US authorities have long been concerned by allegations of <a href="https://www.cnbc.com/2018/12/06/huaweis-difficult-history-with-us-government.html">intellectual property theft</a> and other international violations.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/353576/original/file-20200819-25043-yi9z5l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/353576/original/file-20200819-25043-yi9z5l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353576/original/file-20200819-25043-yi9z5l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=326&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353576/original/file-20200819-25043-yi9z5l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=326&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353576/original/file-20200819-25043-yi9z5l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=326&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353576/original/file-20200819-25043-yi9z5l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=410&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353576/original/file-20200819-25043-yi9z5l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=410&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353576/original/file-20200819-25043-yi9z5l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=410&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Huawei-US ban timeline (2017-2020).</span>
<span class="attribution"><span class="source">J.-P. Larcon</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>On December 1, 2018, Ms. Meng Wanzhou, chief financial officer of Huawei and daughter of the company’s founder, was arrested in Vancouver at the request of a US court.</p>
<figure class="align-center ">
<img alt="Huawei, Meng Wanzhou leaves Vancouver court on May 27" src="https://images.theconversation.com/files/353381/original/file-20200818-24-1lo7lc7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353381/original/file-20200818-24-1lo7lc7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353381/original/file-20200818-24-1lo7lc7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353381/original/file-20200818-24-1lo7lc7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353381/original/file-20200818-24-1lo7lc7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353381/original/file-20200818-24-1lo7lc7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353381/original/file-20200818-24-1lo7lc7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Huawei, Meng Wanzhou leaves Vancouver on May 27.</span>
<span class="attribution"><span class="source">Don Mackinnon/AFP</span></span>
</figcaption>
</figure>
<p>The company was alleged to have violated <a href="https://www.courthousenews.com/wp-content/uploads/2020/05/US-Meng-BCSC.pdf">US sanctions against Iran</a> by selling it telecom equipment through its subsidiary Skycom. Wanzhou is currently <a href="https://economictimes.indiatimes.com/news/international/business/huawei-cfo-meng-wanzhou-to-push-for-release-of-classified-documents-in-canada-court/articleshow/77590142.cms">fighting extradition</a> to the United States while under house arrest in Vancouver.</p>
<h2>The EU safety net</h2>
<p>Australia, Canada, New Zealand, United Kingdom and the United States – the <a href="https://www.csis.org/analysis/united-kingdoms-policy-u-turn-huawei">“Five Eyes” intelligence alliance</a> – are also expected to impose restrictive economic measures on Huawei. The EU stated that rather than an absolute embargo, it would develop a set of a <a href="https://ec.europa.eu/digital-single-market/en/news/cybersecurity-5g-networks-eu-toolbox-risk-mitigating-measures">“tool box”</a> of precise technical measures that will ensure a steady secure deployment of 5G networks.</p>
<p>The <a href="https://www.ecfr.eu/publications/summary/meeting_the_challenge_of_secondary_sanctions%20%22%22">consequences of the American sanctions</a> extend to foreign companies using US hardware or software. This means that they too have now lost access to the 5G market, not only in the United States but in other parts of the world as well.</p>
<h2>What can Huawei do?</h2>
<p>In the aftermath of the May 2019 embargo decision, Huawei founder Ren Zhengfei said that to ensure its survival, the company need to put itself in <a href="https://www.reuters.com/article/us-huawei-tech-founder/huawei-founder-details-battle-mode-reform-plan-to-beat-u-s-crisis-idUSKCN1VA0Z0">battle mode</a>.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/Nl2jCWDwE8w?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">A May 2019 Time interview with Ren Zhengfei, then Huawei CEO.</span></figcaption>
</figure>
<p>Ms. He Tingbo, president of HiSilicon, the semiconductor subsidiary of Huawei, suggested another scenario – the beginning of a <a href="https://www.reuters.com/article/usa-huawei-tech-hisilicon/update-1-huaweis-hisilicon-says-it-has-long-been-preparing-for-us-ban-scenario-idUSL4N22T0J0">“Long March”</a> to make the firm independent of US technology.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/353587/original/file-20200819-16-1kb3rfu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/353587/original/file-20200819-16-1kb3rfu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353587/original/file-20200819-16-1kb3rfu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=383&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353587/original/file-20200819-16-1kb3rfu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=383&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353587/original/file-20200819-16-1kb3rfu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=383&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353587/original/file-20200819-16-1kb3rfu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=482&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353587/original/file-20200819-16-1kb3rfu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=482&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353587/original/file-20200819-16-1kb3rfu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=482&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Largest semiconductor companies in the world by revenue in 2020.</span>
<span class="attribution"><span class="source">JP Larcon</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Huawei first negotiated with its US and international suppliers to secure as many short-term transactions as possible not yet covered by the embargo. It also turned to suppliers such as Samsung, its Korean competitor in smartphones, and Semiconductor Manufacturing International Corporation (SMIC). SMIC, based in Shanghai, is thus driven to rapidly increase its investments in the high-end market.</p>
<h2>Huawei needs to expand its network</h2>
<p>Huawei has so far tried to retain its competitiveness. But its recently launched Huawei AppGallery – which works with its <a href="https://consumer.huawei.com/en/phones/p40/">P40 smartphones</a> – does not include popular applications such as Facebook, Instagram, Twitter or WhatsApp.</p>
<p>In August 2020, Huawei lost its <a href="https://www.washingtonpost.com/business/2020/08/14/huawei-temporary-general-license-expires/">“Android temporary licence”</a>. To mitigate the loss, the company is counting on application developers who are attracted by <a href="https://consumer.huawei.com/ae-en/community/details/HMS-ecosystem-reaches-700-million-global-devices%2C-registered-developers-jumps-to-16-million/topicId_112244/">Huawei’s 700 million</a> smartphone customers. Adidas, Booking, Deliveroo, Deezer JD Sports, Ryanair, Trainline, Opera, Viber, and of course TikTok have become regular Huawei clients.</p>
<p>But more developers could come. To attract them, Huawei – which is the fifth-largest investor in terms of R&D – will have to develop its own innovation capacities.</p>
<h2>Building on its people</h2>
<p>Huawei also relies on its employees’ motivation. The company has been a private firm since its inception and is completely owned by its employees through a shareholding system called the <a href="https://www.investopedia.com/terms/e/esop.asp">employee stock ownership plan</a> (ESOP) similar to those in the United States and the UK. </p>
<p>Of the more than <a href="https://www.huawei.com/en/corporate-information">194,000 people working for Huawei</a>, approximately 100,000 receive <a href="https://hbr.org/2015/09/huawei-a-case-study-of-when-profit-sharing-works">virtual stock options</a> based on their performance. The value of the shares is calculated on the net asset value of the firm and can represent substantial amounts compared to the base salary.</p>
<p>Good customer services and warm B2B relationships with phone providers throughout the world could also help the firm navigate this sensitive geopolitical context.</p>
<h2>Opportunities and uncertainties</h2>
<p><a href="https://www.london.edu/think/lessons-from-huawei-when-chinese-companies-go-global">Huawei’s global strategy</a> in 2018 and 2019 has enabled the company to grow steadily in the 5G market in China and countries such as Russia, Turkey, South Africa, Saudi Arabia and Indonesia.</p>
<p>The company has developed new products to remain competitive against Samsung or Apple and has also diversified its business. In 2019 it launched a new generation of chips for its own computer servers and those of its customers. The <a href="https://www.huawei.com/en/news/2019/8/huawei-ascend-910-most-powerful-ai-processor">Ascend 910 chip</a> is dedicated to the calculations of artificial intelligence algorithms in data centres.</p>
<p>The firm also expanded in connected cars. Huawei works with major Chinese manufacturers including FAW, SAIC and Dongfeng Motors.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/353584/original/file-20200819-25336-28jv8d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/353584/original/file-20200819-25336-28jv8d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353584/original/file-20200819-25336-28jv8d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353584/original/file-20200819-25336-28jv8d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353584/original/file-20200819-25336-28jv8d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353584/original/file-20200819-25336-28jv8d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353584/original/file-20200819-25336-28jv8d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353584/original/file-20200819-25336-28jv8d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Huawei turnover according regions and sectors.</span>
<span class="attribution"><span class="source">J.-P. Larcon</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>However, the French group PSA, which has also worked with Huawei since 2017, said in March 2020 that it could <a href="https://www.reuters.com/article/us-autoshow-geneva-huawei-tech/peugeot-ready-to-adjust-huawei-partnership-if-us-demands-idUSKBN20Q22U">reconsider its position</a> if the United States made it a prerequisite for the merger with Fiat Chrysler.</p>
<p>In coming weeks, the escalation between the US and China may lead to strategic negotiations and eventually a <a href="https://foreignpolicy.com/2020/05/14/china-us-pandemic-economy-tensions-trump-coronavirus-covid-new-cold-war-economics-the-great-decoupling/$">radical economical breakup</a>, in which companies such as Huawei may become either leverage or bait.</p><img src="https://counter.theconversation.com/content/144810/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jean-Paul Michel Larçon ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Sanctions against Huawei by the US Commerce department have been followed by other countries. How can the company’s business thrive with so few avenues left?Jean-Paul Michel Larçon, Emeritus Professor Strategy and International Business, HEC Paris Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1454052020-09-01T13:01:50Z2020-09-01T13:01:50ZAnt Group: why America is missing out on the biggest IPO in history<figure><img src="https://images.theconversation.com/files/355820/original/file-20200901-24-wcq991.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ant Group is the payments powerhouse behind Alibaba.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/konskie-poland-september-06-2018-ant-1174445692">Piotr Swap</a></span></figcaption></figure><p>The US capital markets are being shunned by the largest initial public offering in history. This is an <a href="https://www.theguardian.com/commentisfree/2020/jun/23/the-guardian-view-on-china-trump-and-the-rest-might-right-and-trade-bait">indirect result</a> of the recent China-baiting by US politicians, led by Donald Trump. </p>
<p>Ant Group’s <a href="https://edition.cnn.com/2020/08/26/tech/ant-group-ipo-hnk-intl/index.html">US$200 billion</a> (£168 billion) flotation would normally have been a candidate for either the NYSE or NASDAQ, but will instead take place on the Hong Kong Stock Exchange (as well as Shanghai). This is especially galling to the US stock markets considering American financial royalty Citigroup, JP Morgan and Morgan Stanley are among those overseeing the listing. </p>
<p><a href="https://marker.medium.com/how-ant-group-became-the-biggest-fintech-company-in-the-world-7afae29ec1d3">Ant Group</a> is an online payments powerhouse that grew out of Alibaba, China’s answer to Amazon, and is ultimately controlled by Alibaba co-founder Jack Ma and his longstanding executives. The fact that it not listing in the US looks very likely to be the latest instalment in the very real and potentially dangerous political spat taking place between China and the US. </p>
<p>In August, Trump <a href="https://www.cnbc.com/2020/08/07/trump-issues-executive-orders-to-ban-us-transactions-with-wechat-tiktok.html">issued executive orders</a> restricting transactions related to two other Chinese tech gians: Tencent, which owns WeChat, and TikTok owner ByteDance. The president also issued an executive order to TikTok to make it destroy all copies of data on its US customers. </p>
<p>Meanwhile, the US Bureau of Industry and Security <a href="https://www.jdsupra.com/legalnews/updated-list-of-u-s-national-security-20966/">is restricting</a> Chinese companies from using US-origin technology in their products. And there is the “<a href="https://www.datacenterdynamics.com/en/news/us-clean-network-program-seeks-build-clouds-cables-and-apps-free-china/">clean network program</a>”, which started as a snub to Huawei’s superior 5G wireless technology and has since been expanded to restrict storage on cloud-based systems by certain other Chinese companies. </p>
<p>Finally, and perhaps most relevant of all to Ant Group, there is the proposed “<a href="https://www.lexology.com/library/detail.aspx?g=c7cdc8c4-5e0e-493b-b548-f49e23720117">Holding Foreign Companies Accountable Act</a>”. This legislation is designed to enforce compliance with certain company rules, including complying with US audits and disclosing foreign government ownership or control. </p>
<p>Failure to comply by the <a href="https://www.forbes.com/sites/kenrapoza/2020/08/19/why-200-chinese-companies-may-soon-delist-from-the-us-stock-exchange/#4126dcca3fe7">230 Chinese companies</a> listed in the US, which are worth circa US$1 trillion, would see them removed from American stock exchanges. These <a href="https://www.investors.com/etfs-and-funds/sectors/baba-stock-own-biggest-chinese-stocks-hit-list/">companies include</a> Alibaba, internet giant Baidu, e-commerce group JD.com and PetroChina. The proposals are supposed to have a three-year timeframe, but Trump has politicised them and is planning on using yet another executive order to speed up the process.</p>
<h2>Pension impact</h2>
<p>In much the same way as US capital markets have missed out on the listing of Ant Group, those who will be harmed by this act are the US pension funds and other financial institutions with <a href="https://www.researchgate.net/profile/Tatiana_Didier/publication/265449561_Information_Asymmetry_and_Institutional_Investor_Mandate_Evidence_from_US_Mutual_Fund_Foreign_Holdings/links/5523c77d0cf2c74f0dff1927/Information-Asymmetry-and-Institutional-Investor-Mandate-Evidence-from-US-Mutual-Fund-Foreign-Holdings.pdf">restrictive investment mandates</a> that stipulate that they can only buy shares in companies with US listings. </p>
<p>Qualified institutional buyers within the meaning of rule 144A under the US Securities Act will still be able to buy companies overseas, as indeed they might with Ant Group. The problem is that not all US institutions are mandated to invest outside of US capital markets. As for the Chinese companies themselves, they would not be starved of capital because they would simply relist elsewhere. </p>
<p>Some investors will therefore be forced sellers under the proposed act. There is <a href="https://www.jstor.org/stable/2330828">academic evidence</a> that delisting causes a company’s share price to fall: a sample of 520 companies demonstrated an average decline of 8.5%. As such, the biggest losers will be those US pension funds that diversified into these Chinese stocks, following <a href="https://www.buildalpha.com/mean-variance-optimization-portfolio-construction/">established techniques</a> for building more profitable portfolios. </p>
<p>Although there are very sound reasons for punishing rule breakers, delisting for the kinds of violations included in the proposed act has been the exception in the US. The legislation, which sets a precedent, is being viewed as targeted specifically at Chinese companies. Although it applies to all foreign companies, it <a href="https://www.forbes.com/sites/kenrapoza/2020/08/19/why-200-chinese-companies-may-soon-delist-from-the-us-stock-exchange/#d5f18793fe71">will be hard</a> for the Chinese to comply because of the state’s particularly tangled relationship with businesses. </p>
<p>The China Securities Regulatory Authority, in a bid to reduce the tension, <a href="https://www.bloombergquint.com/onweb/china-securities-regulator-sends-new-proposal-on-u-s-audits">approached the</a> US Public Company Accounting Oversight Board in August with an offer to let it audit a few selected state-owned enterprises. It is unlikely that this will pacify the China hawks in the US administration. If it doesn’t, the biggest losers will be US capital markets and investment funds – and ultimately ordinary Americans trying to save for their retirement. </p>
<p>Targeted punitive action against companies, individual sanctions and nationalistic legislation will likely mean that Ant Group is not the last non-US company to decide against a listing in the US. As a result, <a href="https://heinonline.org/HOL/LandingPage?handle=hein.journals/busl50&div=21&id=&page=">the hegemony</a> of US capital markets may well be under threat. It could all potentially be powerful ammunition for the Democrats in their battle to unseat the president in November. </p>
<hr>
<p><em>The original version of this article suggested that Ant Group may also have avoided the US because of different rules about disclosing controlling shareholders in Hong Kong, but the rules are in fact not different in this respect.</em></p><img src="https://counter.theconversation.com/content/145405/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daniel Broby is affiliated with the Centre for Financial Regulation and Innovation. He is a Chartered Fellow of the CISI and a Fellow of CFA Society of the UK.</span></em></p>In the teeth of the crackdown on foreign listed companies, Ant Group has opted for Hong Kong – ultimately to the cost of American savers.Daniel Broby, Director, Centre for Financial Regulation and Innovation, University of Strathclyde Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1341042020-08-14T15:29:17Z2020-08-14T15:29:17ZChina-US trade talks cancelled: why negotiations will still happen eventually<p>Senior trade negotiators from the US and China <a href="https://www.scmp.com/economy/china-economy/article/3096144/china-feel-pressure-negotiators-prepare-trade-deal">had been due</a> to have a virtual call on August 15 to check the progress of the “phase one” deal reached by the two nations in January, aimed at overcoming the trade war that has dragged on for the past several years. But it has <a href="https://www.cnbc.com/2020/08/15/us-china-trade-deal-review-postponed.html">since been announced</a> that the talks have been postponed, with no new date set. The two sides cited scheduling conflicts and the need to allow China more time to make good on its commitments under the deal. </p>
<p>The high tensions between China and the US will presumably not have helped either. Donald Trump <a href="https://thehill.com/homenews/administration/506757-trump-indicates-phase-two-deal-with-china-unlikely">recently said</a> he was not thinking about holding more talks, <a href="https://www.cbsnews.com/news/trump-china-trade-deal-phase-2-not-interested-talking/">telling journalists</a>: “We made a great trade deal. But as soon as the deal was done, the ink wasn’t even dry, and they hit us with the plague.”</p>
<p>So is there any chance of a breakthrough any time soon?</p>
<h2>Progress so far</h2>
<p>It seems a long time ago that the phase one deal <a href="https://int.nyt.com/data/documenthelper/6667-us-china-trade-deal/b8ef0d1826ca2b48f121/optimized/full.pdf">was signed</a>. It was always intended as a mini-deal to be followed by a second phase. The main commitment, effective from February, was a promise by China to purchase US$63.9 billion (£48.9 billion) more US goods and services in 2020 than in 2017. Further targets for 2021 require China to purchase an additional US$200 billion of goods and services over the two years. </p>
<p>The chart demonstrates how poor progress has been. Exports from China to the US have gone up in spite of COVID-19 (per the top dotted line), but the amount it is importing from the US (the bottom dotted line) has not picked up to the levels envisioned. </p>
<p>The Peterson Institute for International Economics <a href="https://www.piie.com/research/piie-charts/us-china-phase-one-tracker-chinas-purchases-us-goods">estimates that</a> China imported less than 50% of what it should have done in the year to June. Barring a large upswing in the second half of the year, hitting the 2020 target looks unlikely.</p>
<p><strong>Chinese trade with the US</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/352923/original/file-20200814-14-1noe9yh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graph of Chinese trade with US" src="https://images.theconversation.com/files/352923/original/file-20200814-14-1noe9yh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/352923/original/file-20200814-14-1noe9yh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=427&fit=crop&dpr=1 600w, https://images.theconversation.com/files/352923/original/file-20200814-14-1noe9yh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=427&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/352923/original/file-20200814-14-1noe9yh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=427&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/352923/original/file-20200814-14-1noe9yh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=537&fit=crop&dpr=1 754w, https://images.theconversation.com/files/352923/original/file-20200814-14-1noe9yh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=537&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/352923/original/file-20200814-14-1noe9yh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=537&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">COMTRADE for 2017 and General Administration of Customs of China for 2018-2020</span></span>
</figcaption>
</figure>
<p>US exports covered in the agreement include machinery, pharmaceuticals, aircraft, iron, steel, agricultural products, gas, oil and services. The deal was particularly important for US agriculture, whose barriers to trade have also been reduced through relaxing Chinese health and safety standards and other bureaucratic obstacles. </p>
<p>Meanwhile, the US pharmaceuticals sector was afforded additional protection through a commitment from Beijing to do more to enforce intellectual property rights against copycat manufacturers. However, other commitments such as access for financial-services providers were left vague and may be harder to enforce.</p>
<p>The next chart looks at some specific market segments. It shows a dramatic decline in Chinese imports of US aircraft and soya beans, while imports of mechanical appliances, electrical equipment and electronics are flat. The Peterson Institute’s data suggests that China had achieved around 24%, 27% and 5% of the end-of-year commitments in agriculture, manufacturing and energy respectively by June.</p>
<p><strong>Chinese US imports by sector</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/352927/original/file-20200814-24-11en126.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graph showing Chinese imports of certain US goods." src="https://images.theconversation.com/files/352927/original/file-20200814-24-11en126.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/352927/original/file-20200814-24-11en126.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=412&fit=crop&dpr=1 600w, https://images.theconversation.com/files/352927/original/file-20200814-24-11en126.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=412&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/352927/original/file-20200814-24-11en126.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=412&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/352927/original/file-20200814-24-11en126.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=518&fit=crop&dpr=1 754w, https://images.theconversation.com/files/352927/original/file-20200814-24-11en126.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=518&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/352927/original/file-20200814-24-11en126.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=518&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">COMTRADE for 2017 and General Administration of Customs of China for 2018-2020</span></span>
</figcaption>
</figure>
<p>China’s failure is not entirely surprising, given <a href="https://voxeu.org/article/greater-trade-collapse-2020">the collapse</a> in global trade due to COVID-19. According to our calculations based on General Administration of Customs of China statistics, Chinese total exports to the rest of the world in May-June 2020 were only 1.2% lower compared to the same period of 2019, but their exports to the US were 6.9% lower. This may be because China has controlled the pandemic more successfully than the US.</p>
<p>Fresh impetus, perhaps through phase-two talks, is needed to get phase-one implementation back on track. Yet thanks to the wider disagreements that have engulfed the China-US relationship, talks looked unlikely even before the confirmation that the August 15 meeting had been postponed. </p>
<h2>China-US tensions</h2>
<p>From an American perspective, the upcoming elections are key. <a href="https://www.pewresearch.org/fact-tank/2020/07/30/republicans-see-china-more-negatively-than-democrats-even-as-criticism-rises-in-both-parties/">Polling suggests</a> that both Republican and Democratic voters are increasingly negative about China, not least because of the pandemic. Trump’s tough stance is therefore politically savvy in an election year.</p>
<p>The Americans had expected to use phase two to negotiate over other trade concerns, such as Chinese tech. We have seen the US pressurising other countries such as <a href="https://www.statista.com/chart/17528/countries-which-have-banned-huawei-products/">the UK</a> to follow suit on banning Huawei, while more recently Trump has turned up the heat on the likes of <a href="https://www.whitehouse.gov/presidential-actions/executive-order-addressing-threat-posed-wechat/">WeChat</a> and <a href="https://theconversation.com/tiktok-and-microsoft-government-agendas-are-driving-businesses-like-no-time-since-ww2-heres-what-they-can-do-about-it-144082">TikTok</a>.</p>
<p>There is also a plethora of divisive non-trade issues. Alex Azar, the US health secretary, <a href="https://edition.cnn.com/2020/08/09/politics/alex-azar-taiwan/index.html">visited Taiwan</a> earlier in August. This was one of the highest-level US delegations in decades, and followed a recent Taiwanese delegation being hosted at the US state department. There are also increasing <a href="https://www.ft.com/content/9aa24272-6e02-45f5-a2ad-44ac009bf7d6">military tensions</a> in the Taiwan Strait, and the US and China have been <a href="https://www.cnbc.com/2020/07/27/us-reduces-diplomatic-staff-in-china-after-chengdu-closure.html">closing consolates</a> in one another’s <a href="https://www.taiwannews.com.tw/en/news/3971743">countries</a>. </p>
<p>There is also the fallout from <a href="https://theconversation.com/hong-kong-how-chinas-new-national-security-law-subverts-the-territorys-cherished-rule-of-law-139683">China imposing</a> national security legislation on Hong Kong, prompting a <a href="https://www.whitehouse.gov/presidential-actions/presidents-executive-order-hong-kong-normalization/">US executive order</a> that Hong Kong will be treated the same as mainland China for trade purposes. This means goods labelled “Made in Hong Kong” will no longer receive preferential treatment. </p>
<p>The US is Hong Kong’s <a href="https://wits.worldbank.org/CountryProfile/en/Country/HKG/Year/2018/TradeFlow/Export/Partner/by-country">second largest</a> trading partner, and the territory will now endure the same tariffs imposed on Chinese goods. <a href="https://www.piie.com/research/piie-charts/us-china-trade-war-tariffs-date-chart">These are</a> currently six times higher than before the trade war. The row over Hong Kong has also led to the US and China <a href="https://www.theguardian.com/world/2020/aug/10/china-sanctions-11-us-citizens-including-marco-rubio-and-ted-cruz">imposing sanctions</a> on certain citizens from each other’s countries. </p>
<p>These tensions are very important, though many of them are longstanding. When the phase one agreement was signed, both the US and China were willing to put aside differences to improve trade. Tensions have undoubtedly escalated since then, but the tide may yet turn in favour of negotiations to implement phase one and explore phase two. </p>
<p>There are important matters to discuss in phase two, including bringing tariffs down to pre-trade-war levels. The US retained the restrictions <a href="https://www.uscc.gov/sites/default/files/2020-02/U.S.-China%20Trade%20Deal%20Issue%20Brief.pdf">as leverage</a> last time around. There is also the question of imports after 2021, and China’s subsidies to state-owned enterprises. And with cyber-security a high priority for the US, the actions against WeChat and TikTok could be part of the negotiating strategy. </p>
<p>There are therefore numerous incentives to resume negotiations, even if they may not happen immediately. Ultimately, new negotiations will heavily depend on the result of the US elections and the post-COVID-19 economic recovery of both countries.</p><img src="https://counter.theconversation.com/content/134104/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>From the US kicking out Huawei to China’s Hong Kong crackdown, there is a lot standing in the way of happy east-west relations just now.Karen Jackson, Senior Lecturer in Economics, University of WestminsterOleksandr Shepotylo, Lecturer in Economics, Aston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1440822020-08-10T10:21:10Z2020-08-10T10:21:10ZTikTok and Microsoft: government agendas are driving businesses like no time since WW2 – here’s what they can do about it<figure><img src="https://images.theconversation.com/files/351775/original/file-20200807-24-1tl9dod.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Time's up for TikTok. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/stone-uk-august-3-2020-tiktok-1789126505">Ascannio</a></span></figcaption></figure><p>The Trump administration has turned up the heat on Chinese tech companies TikTok and WeChat with an <a href="https://www.theguardian.com/technology/2020/aug/06/us-senate-tiktok-ban">executive order</a> that US companies have 45 days to stop transacting with them. The administration <a href="https://www.ft.com/content/82762dc2-faba-4283-9590-bce60a1a90ea">has also</a> recommended that Chinese firms listed on US exchanges be removed unless they provide US regulators access to their audited accounts. </p>
<p>It comes only days after the US president gave <a href="https://www.nytimes.com/2020/08/03/technology/trump-tiktok-microsoft.html">the go-ahead</a> for Microsoft (or rival US bidders) to buy TikTok if the purchase can be completed by <a href="https://blogs.microsoft.com/blog/2020/08/02/microsoft-to-continue-discussions-on-potential-tiktok-purchase-in-the-united-states/">September 15</a>. Failing that, Trump says he will shut down the video-sharing app in the US. Zhang Yiming, the chief executive of ByteDance, which owns TikTok, wrote to employees telling them he <a href="https://www.ft.com/content/235b431c-bf4d-4baf-b84a-ff8ab5f45761">has no choice</a> but to abide by US laws.</p>
<p>Thanks to the tight deadline, Microsoft is likely to snap up a <a href="https://www.usatoday.com/story/tech/2020/08/03/trump-microsoft-tiktok-app-acquisition-satya-nadella/5575223002/">crown jewel</a> at a discount – TikTok is the <a href="https://www.socialfilms.co.uk/blog/tiktok-uk-statistics#:%7E:text=In%20total%2C%20App%20Store%20and,reach%2010%20million%20by%202021.">fourth most popular</a> app in the world. Trump also said the US Treasury should get “<a href="https://www.wsj.com/articles/trump-says-u-s-should-get-slice-of-tiktok-sale-price-11596479818">a very substantial portion</a>” of the sale price, “because we’re making it possible for this deal to happen”. The mechanics of this are unclear. Microsoft <a href="https://blogs.microsoft.com/blog/2020/08/02/microsoft-to-continue-discussions-on-potential-tiktok-purchase-in-the-united-states/">said it</a> “appreciates the US government’s and President Trump’s personal involvement”.</p>
<h2>Business and the national agenda</h2>
<p>Not since the second world war has the US government expected big businesses to champion a national agenda in this way. It’s one thing to expect businesses to be socially responsible toward local communities. But to ban access of foreign companies, and then to expect domestic companies and the government to profit profit directly from it, is a dangerous line to cross. </p>
<p>Most dangerous is to expect big companies to carry out “national duties” because the country is facing “foreign adversaries”. Do it my way, the leader might say, or I could break you apart. After all, this comes at a time when the excessive size and power of tech rivals such as Google, Facebook and Amazon <a href="https://www.theguardian.com/technology/2020/aug/05/antitrust-bill-new-york-easier-to-sue-big-tech">is already the subject</a> of a fierce congressional debate. </p>
<p>What the White House has set in motion is in fact a new norm around the world. Governments now feel compelled and are urged to intervene in a company’s operations because of concerns over “privacy issues”, “national security”, “local jobs” or the “local economy”. </p>
<p><a href="https://asia.nikkei.com/Spotlight/Asia-Insight/Indian-apps-soar-after-ban-on-China-s-TikTok-WeChat-and-Baidu">India has</a> already banned TikTok, WeChat and another Chinese tech company, Baidu. The UK is <a href="https://edition.cnn.com/2020/07/14/tech/huawei-uk-ban/index.html">removing Huawei</a> from its telecoms network. Japanese clothing retailer Uniqlo <a href="https://www.koreatimes.co.kr/www/tech/2020/08/694_293742.html">is closing stores</a> in South Korea in the midst of the ongoing trade dispute. </p>
<p>In the fog of these skirmishes, there is a total absence of intergovernmental organisation. The crackdown on TikTok and WeChat has been instigated purely by Trump’s <a href="https://www.nytimes.com/2020/08/06/technology/trump-wechat-tiktok-china.html">executive order</a>. When it comes to trade disputes and tariffs, the World Trade Organization (WTO) is <a href="https://theconversation.com/huawei-and-tiktok-are-at-the-forefront-of-a-new-drift-to-regionalism-many-others-will-follow-143306">delegitimised so completely</a> through long failures over world trade negotiations, the dispute settlement arm and so forth, that it is unable to meaningfully mediate between countries anywhere. This means that the burden of doing business falls back entirely upon executives. </p>
<p>Before the WTO, tariffs were everywhere. In 1963, for example, the then US president, Lyndon Johnson, imposed a 25% tariff on light trucks imported to the US. This was to retaliate against European tariffs on American chicken imports. The “<a href="https://www.investopedia.com/terms/c/chicken-tax.asp">chicken tax</a>”, as the tariff on light trucks became known, was signed as representatives of the United Auto Workers union from Detroit were threatening to call a strike just before the 1964 election. Johnson’s tax gave them what they wanted: Volkswagen sales of trucks and vans in the US plummeted.</p>
<p>Without the WTO to prevent this kind of dispute, companies had to rely on their own ingenuity. Mercedes was one that managed to avoid much of the pain. For years, the German automotive manufacturer would disassemble its vehicle parts and ship the pieces to South Carolina, where American workers put them back together in a small kit assembly building. The resulting vehicles were, therefore, “<a href="https://www.autonews.com/article/20161203/OEM/312059954/mercedes-finds-a-better-way-around-the-chicken-tax">locally made</a>” and free of the import tariff. Any additional costs resulting from this roundabout method were negligible in comparison to Mercedes’ profits.</p>
<h2>How companies can respond</h2>
<p>Today’s economic war between the US and China and the escalating political dispute dwarfs any “chicken tax” in magnitude. The amount of US imports <a href="https://www.wsj.com/articles/china-u-s-to-assess-trade-deal-11596572350">at stake</a> in the countries’ next negotiation during mid-August is US$200 billion (£153 billion). As a result of the trade hostilities, some <a href="https://www.aljazeera.com/ajimpact/trade-tiktok-china-decoupling-affects-200803144706785.html">US$1.7 trillion</a> has been wiped off the value of US-listed firms over the past two years.</p>
<p>One immediate consequence is that US companies are moving manufacturing activities <a href="https://www.cnbctv18.com/business/why-vietnam-is-emerging-as-a-favoured-manufacturing-hub-in-the-post-covid-19-world-5783291.htm">out of China</a>, to places like Thailand and Vietnam and Bangladesh. Successful executives are those who are capable of recognising the need to change business practices ahead of political sentiment and pivoting toward a new operating model quickly, whether in China or by moving to new markets.</p>
<p>Zoom, for instance, has stopped selling new and upgraded products directly to customers in mainland China. Instead, it is shifting to a “<a href="https://uk.reuters.com/article/uk-zoom-china/zoom-to-shift-to-partner-only-model-in-china-suspend-direct-sales-idUKKBN24Z11J#:%7E:text=2%20days%20ago-,Zoom%20to%20shift%20to%20'partner%2Donly'%20model,in%20China%2C%20suspend%20direct%20sales&text=SHANGHAI%20(Reuters)%20%2D%20Zoom%20Video,the%20company%20said%20on%20Monday.">partner-only model</a>” in the country, outsourcing commercial activities to Bizconf Communications, Suiri Zhumu Video Conference and Systec Umeet. It’s the sort of partnership model that <a href="https://docs.microsoft.com/en-us/azure/china/">Microsoft also has</a> in China for cloud-computing service Azure.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/351779/original/file-20200807-22-jouvys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Chinese people having Zoom conference in office" src="https://images.theconversation.com/files/351779/original/file-20200807-22-jouvys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/351779/original/file-20200807-22-jouvys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=356&fit=crop&dpr=1 600w, https://images.theconversation.com/files/351779/original/file-20200807-22-jouvys.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=356&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/351779/original/file-20200807-22-jouvys.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=356&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/351779/original/file-20200807-22-jouvys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=448&fit=crop&dpr=1 754w, https://images.theconversation.com/files/351779/original/file-20200807-22-jouvys.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=448&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/351779/original/file-20200807-22-jouvys.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=448&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Zoom is partnering up in China.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/video-conference-concept-teleconference-telemeeting-webinar-1771091531">Metamorworks</a></span>
</figcaption>
</figure>
<p>To see what lies ahead, effective managers look to extreme cases in sectors other than their own. Nowhere is stored data more sensitive than in the financial sector. In Europe, <a href="https://www.bloomberg.com/news/articles/2020-03-06/european-banks-store-their-sensitive-data-on-american-clouds">German and French</a> government officials are in talks to create a continental cloud service run by local tech companies for banks. This is part of Europe’s strategy for “ensuring technological sovereignty and reducing its dependence” on US providers. It’s not safe enough to simply buy from Amazon, Microsoft or Google.</p>
<p>All these are extra burdens and considerations for executives who are already too busy. As <a href="https://www.howardyu.org/virtual-meetings-are-about-to-turn-the-art-of-management-into-a-scalable-science/">I argue here</a>, automating mundane decisions using AI is now of even greater urgency. </p>
<p>Business people have long despised politics. But “politics” is now shaping corporate strategy from boardrooms down to assembly lines. Some such as Zoom, and once upon a time Mercedes, adapt to this climate and thrive. Others like TikTok are finding themselves caught on the wrong side of history.</p><img src="https://counter.theconversation.com/content/144082/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Howard Yu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>All round the world, executives are having to bend to the will of politicians.Howard Yu, Professor of Management and Innovation, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1433062020-07-29T10:20:41Z2020-07-29T10:20:41ZHuawei and TikTok are at the forefront of a new drift to regionalism – many others will follow<figure><img src="https://images.theconversation.com/files/349920/original/file-20200728-21-rui4zg.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">EPA</span></span></figcaption></figure><p>Huawei and TikTok were two of the most successful examples of globalisation. Huawei started as a small private firm in 1987 and <a href="https://foreignpolicy.com/2019/04/03/the-improbable-rise-of-huawei-5g-global-network-china/">has risen</a> in just over 30 years to become a world champion in telecommunications. TikTok has succeeded over a much shorter time period. Having <a href="https://influencermarketinghub.com/tiktok-growth/#:%7E:text=TikTok%20is%20now%20available%20in,300%20million%20in%20June%202018.">only launched</a> in 2016, the video-sharing service <a href="https://www.socialfilms.co.uk/blog/tiktok-uk-statistics#:%7E:text=In%20total%2C%20App%20Store%20and,reach%2010%20million%20by%202021.">is now</a> the fourth most popular app in the world and has achieved 1.9 billion downloads worldwide. </p>
<p>Both of these Chinese companies are now at the mercy of a widening geopolitical divide. The US <a href="https://www.economist.com/briefing/2020/07/16/americas-war-on-huawei-nears-its-endgame">has led</a> an <a href="https://www.bbc.co.uk/news/newsbeat-4704134">increasingly successful</a> campaign to <a href="https://www.caixinglobal.com/2020-07-17/tsmc-cuts-off-computer-chip-sales-to-huawei-under-us-sanctions-101580989.html">eliminate Huawei</a> from the global market over alleged security fears, <a href="https://www.npr.org/2020/07/22/894343562/trump-administration-is-considering-ban-on-tiktok-in-the-u-s">and is</a> threatening <a href="https://www.theverge.com/2020/7/27/21341062/biden-staff-delete-tiktok-personal-work-phones">to ban</a> TikTok too. There <a href="https://www.zdnet.com/article/tech-trade-war-after-huawei-which-chinese-firms-are-next-on-us-enemies-list/">has also</a> been speculation that other Chinese tech companies such as Lenovo, ZTE and Xiaomi could be at risk. Meanwhile, HSBC <a href="https://fortune.com/2020/06/04/hsbc-hong-kong-china-law-peter-wong/">has risked</a> getting caught <a href="https://www.telegraph.co.uk/business/2020/07/23/hsbc-fresh-pressure-claims-checks-hong-kong-clients-pro-democracy/">in the crossfire</a> by expressing support for China’s security crackdown on Hong Kong.</p>
<p>These developments are signs of attempts by the US <a href="https://hbr.org/2020/06/prepare-for-the-u-s-and-china-to-decouple">to decouple</a> from China’s economy and concentrate <a href="https://www.forbes.com/sites/zakdoffman/2020/12/29/us-and-china-technology-conflict-heres-why-2020-is-so-critical/#3f198be3175e">on alliances</a> within its own political and economic sphere. It chimes with the wider drift away from globalisation towards a more regional approach to trade, reflected in the difficulties of the World Trade Organization (WTO) and the rise of regional trading blocs.</p>
<h2>Regional retrenchment</h2>
<p>In response to the US moves to restrict its activities, <a href="https://asiatimes.com/2020/05/south-korea-is-the-pivot-in-the-huawei-wars/">Huawei is now</a> trying to forge closer supply alliances with companies in China and elsewhere in Asia, such as Samsung. TikTok could be making a similar move but in the opposite direction, <a href="https://thenextweb.com/apps/2020/07/22/tiktok-might-be-sold-to-us-investors-to-ward-off-security-concerns/">amid reports</a> that several US investment capitalists might buy the brand from owner ByteDance and separate it from its Chinese version, which is called Douyin. In both cases, these companies appear to be retrenching from a global to a regional focus. </p>
<p>These developments are being driven by the growing antagonism between China and the US – but many other multinationals are facing a similar dilemma, because the global trade system is at risk of breaking down. Multinationals established their dominance by forging global supply chains that maximised the <a href="https://www.econlib.org/library/Topics/Details/comparativeadvantage.html">comparative advantages</a> of each country involved. </p>
<p>They have been encouraged since the 1940s by global trade policies that have struck down national trade barriers and deepened global economic integration. In recent years, this has been done through WTO agreements. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/349948/original/file-20200728-27-1ks0j50.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Donald Trump giving a speech." src="https://images.theconversation.com/files/349948/original/file-20200728-27-1ks0j50.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/349948/original/file-20200728-27-1ks0j50.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=735&fit=crop&dpr=1 600w, https://images.theconversation.com/files/349948/original/file-20200728-27-1ks0j50.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=735&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/349948/original/file-20200728-27-1ks0j50.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=735&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/349948/original/file-20200728-27-1ks0j50.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=923&fit=crop&dpr=1 754w, https://images.theconversation.com/files/349948/original/file-20200728-27-1ks0j50.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=923&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/349948/original/file-20200728-27-1ks0j50.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=923&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Protectionism personified.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/las-vegas-nevada-december-14-2015-353100986">Joseph Sohm</a></span>
</figcaption>
</figure>
<p>But the wealth created by globalisation <a href="https://publications.parliament.uk/pa/ld200203/ldselect/ldeconaf/5/507.htm">has been</a> very unevenly distributed, which has caused domestic political disturbance in many corners of <a href="https://www.theguardian.com/world/2017/jul/14/globalisation-the-rise-and-fall-of-an-idea-that-swept-the-world">the world</a>. Nationalist governments have <a href="https://www.bankofengland.co.uk/monetary-policy-report/2019/november-2019/in-focus-trade-protectionism-and-the-global-outlook">responded to</a> this new reality with protectionist measures, of which the <a href="https://theconversation.com/winners-and-losers-in-the-us-china-trade-war-119320">US-China trade war</a> is <a href="https://english.bdi.eu/article/news/protectionism-and-nationalism-on-the-rise/">only the most</a> prominent example.</p>
<p>As a result, the trade liberalisation promoted by the WTO has run into difficulty. This was clear from <a href="https://www.nytimes.com/2016/01/01/opinion/global-trade-after-the-failure-of-the-doha-round.html">the breakdown</a> of the Doha Round of negotiations in the mid-2010s due to unsolvable tensions between the member states. The WTO’s system for resolving trade disputes between countries <a href="https://www.piie.com/publications/policy-briefs/dispute-settlement-crisis-world-trade-organization-causes-and-cures#:%7E:text=WTO%20members%20have%20failed%20to,rules%20on%20dispute%20settlement%20itself.&text=For%20the%20past%20few%20years,the%20scope%20for%20judicial%20overreach">has also</a> become dysfunctional, <a href="https://www.bbc.co.uk/news/business-50681431">stemming from a row</a> over how it operates. Regrettably – but not surprisingly – the WTO’s director-general, Roberto Azevedo, <a href="https://www.dw.com/en/wto-chief-roberto-azevedo-resigns-amid-appeals-dispute-with-united-states/:%7E:text=Robert%20Azevedo%20has%20said%20he,of%20the%20World%20Trade%20Organization.&text=World%20Trade%20Organization%20(WTO)%20Director,of%20the%20global%20trade%20body.">announced he was</a> stepping down a few weeks ago – a year before his term was due to end. </p>
<h2>The emerging trading order</h2>
<p>In parallel with the rise in protectionism and the WTO problems, countries have increasingly been building regional trade blocs. Examples include <a href="https://www.cfr.org/backgrounder/nafta-and-usmca-weighing-impact-north-american-trade">the renewed</a> North American Free Trade Agreement (NAFTA), the <a href="https://www.instituteforgovernment.org.uk/explainers/trade-cptpp">Pacific rim’s</a> Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), and the <a href="https://asean.org/joint-media-statement-10th-regional-inter-sessional-comprehensive-economic-partnership-rcep-ministerial-meeting/">forthcoming China-led</a> Regional Inter-sessional Comprehensive Economic Partnership (RCEP). </p>
<p>These agreements are all about further liberalising trade between member states within a region. They do this by cutting tariffs, reducing administrative burdens by mutually recognising one another’s technical standards, harmonising public procurement rules, establishing similar employment levels and environmental protections, and giving easier market access to services.</p>
<p>These measures significantly reduce companies’ operating costs, particularly if their production lines are spread across the countries in the bloc. Ultimately they make supply chains more regional, making it easier to buy and sell goods and services within the zone. </p>
<p>But just like the US-China conflict has caused difficulties for Huawei and TikTok, this regional approach to free trade creates tensions with the multilateralism of the WTO. Regional trading blocs run against the principle on which the WTO is founded, namely “most favoured nation treatment”. This says that whenever one nation grants a trading concession to another, it should be extended to all other nations in the world.</p>
<p>Whenever regional blocs expand trade within their region, producers outside the bloc who can make the same goods more cheaply end up being discriminated against. Global welfare suffers as a result. For multinationals trying to operate global supply chains and trade around the world, this also represents a spaghetti bowl of red tape. </p>
<p>Yet the fact that we are now going to have rival trade blocs in Asia when RCEP launches at the end of the year suggests that more regionalism could be the shape of things to come. If so, this could further fragment the global trade system. </p>
<p>It is of course possible that more regionalism could stimulate global free trade in the long run. Once the nations within a bloc have become highly economically integrated, it may encourage outsider countries to join in a attempt to take advantages of the bloc. The UK’s <a href="https://www.gov.uk/government/publications/uk-approach-to-joining-the-cptpp-trade-agreement/an-update-on-the-uks-position-on-accession-to-the-comprehensive-and-progressive-agreement-for-trans-pacific-partnership-cptpp">move to</a> participate in the CPTTP could be an early example. If this eventually encouraged multinationals to trade across regional blocs, global trade liberalisation could move back up the agenda. </p>
<p>Equally, the superiority of certain players within certain blocs might make this happen by necessity. For example, Huawei’s dominance in <a href="https://www.forbes.com/sites/danielaraya/2019/04/05/huaweis-5g-dominance-in-the-post-american-world/#4e037b3848f7">5G technologies</a> and its efforts to establish an alliance in Asia and other developing countries raises the possibility that it might one day overtake the US tech giants. If so, it may make western governments think again about whether protectionism was working as intended, and encourage them to re-embrace the system of global trade.</p><img src="https://counter.theconversation.com/content/143306/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Zhongdong Niu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As world trade breaks down into a patchwork of regional blocs, it raises questions about the future of global multinationals.Zhongdong Niu, Lecturer in Law, Edinburgh Napier UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1435172020-07-28T21:31:03Z2020-07-28T21:31:03ZLawmakers keen to break up ‘big tech’ like Amazon and Google need to realize the world has changed a lot since Microsoft and Standard Oil<figure><img src="https://images.theconversation.com/files/350020/original/file-20200728-13-10an37w.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3250%2C2096&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">House lawmakers grilled these four CEOs on July 29.</span> <span class="attribution"><span class="source">AP Photo</span></span></figcaption></figure><p>Big tech is back in the spotlight. </p>
<p>The chief executives of Amazon, Apple, Facebook and Google <a href="https://www.nytimes.com/2020/07/28/technology/amazon-apple-facebook-google-antitrust-hearing.html?action=click&module=Top%20Stories&pgtype=Homepage">testified before Congress</a> on July 29 to defend their market dominance from accusations they’re stifling rivals. Lawmakers and regulators are increasingly talking about <a href="https://www.wsj.com/articles/justice-department-is-preparing-antitrust-investigation-of-google-11559348795">antitrust action</a> and possibly breaking the companies up into smaller pieces. </p>
<p>I study the effects of <a href="https://sites.tufts.edu/digitalplanet">digital technologies on lives</a> and livelihoods across 90 countries. I believe <a href="https://www.politico.com/2020-election/candidates-views-on-the-issues/technology/tech-competition-antitrust/">advocates</a> of breaking up big technology companies, as well as <a href="https://www.weforum.org/agenda/2019/07/these-are-some-of-the-best-quotes-about-technology-monopolies-in-2019/">opponents</a>, are both falling prey to some serious myths and misconceptions. </p>
<h2>Myth 1: Comparing Google with Standard Oil</h2>
<p>Arguments for and against antitrust action <a href="https://www.nytimes.com/1998/10/19/business/microsoft-trial-precedents-previous-antitrust-cases-leave-room-for-both-sides.html">often use earlier cases</a> as reference points.</p>
<p>The massive <a href="https://theconversation.com/for-tech-giants-a-cautionary-tale-from-19th-century-railroads-on-the-limits-of-competition-91616">19th-century monopoly Standard Oil</a>, for example, has been referred to as the “<a href="https://www.nytimes.com/2018/02/20/magazine/the-case-against-google.html">Google of its day</a>.” There are also people who are recalling the 1990s <a href="https://www.nytimes.com/2018/05/18/opinion/microsoft-antitrust-case.html">antitrust case against Microsoft</a>. </p>
<p>Those cases may seem similar to today’s situation, but this era is different in one crucial way: the global technology marketplace. </p>
<p>Currently, there are two “big tech” clusters. One is in the U.S., dominated by <a href="https://theconversation.com/big-tech-isnt-one-big-monopoly-its-5-companies-all-in-different-businesses-92791">Google, Amazon, Facebook and Apple</a>. The other is in China, dominated by <a href="https://singularityhub.com/2018/08/17/baidu-alibaba-and-tencent-the-rise-of-chinas-tech-giants/">Baidu, Alibaba, Tencent, Huawei</a> and <a href="https://www.nytimes.com/2020/07/26/technology/tiktok-china-ban-model.html">TikTok</a>-maker ByteDance. </p>
<p>This global market is subject to very different political and policy pressures than regulators faced when dealing with Standard Oil and Microsoft. For example, the Chinese government <a href="https://www.scmp.com/tech/china-tech/article/2120913/china-recruits-baidu-alibaba-and-tencent-ai-national-team">has blocked most</a> of the U.S. companies from entering its market. And the <a href="https://www.bloomberg.com/news/articles/2018-06-27/alibaba-pulls-back-in-u-s-amid-trump-crackdown-on-chinese-investment">U.S. government has done likewise</a>, blacklisting some Chinese outfits over perceived national security threats while discouraging others.</p>
<p>Since the COVID-19 outbreak, the Chinese government <a href="https://www.amnesty.org/en/latest/news/2020/04/how-china-used-technology-to-combat-covid-19-and-tighten-its-grip-on-citizens/">has doubled down</a> on championing its own technology companies.</p>
<p>U.S. companies’ size and data accumulation capabilities give the country economic and political influence around the globe. If the U.S. technology giants are broken up, the result would be a vastly uneven global playing field, pitting fragmented U.S. companies against consolidated state-protected Chinese firms.</p>
<h2>Myth 2: Antitrust is about money</h2>
<p>There are two main views of antitrust action among legal experts. </p>
<p>One focuses on consumer welfare, which has been the prevailing approach federal lawyers have taken <a href="https://www.jstor.org/stable/724991">since the 1960s</a>. The other suggests that regulators should look at the <a href="https://www.yalelawjournal.org/note/amazons-antitrust-paradox">underlying structure of the market</a> and potential for <a href="https://www.pbwt.com/antitrust-update-blog/a-brief-overview-of-the-new-brandeis-school-of-antitrust-law">powerful players to exploit</a> their positions.</p>
<p>Those two sides seem to agree that price plays a key role. People who argue against breaking up the tech giants point out that Facebook and Google provide services that are <a href="https://slate.com/technology/2019/06/facebook-big-tech-antitrust-breakup-mistake.html">free to the consumer</a>, and that Amazon’s marketplace power drives its products’ costs down. On the other side, though, are those who say that <a href="https://www.yalelawjournal.org/note/amazons-antitrust-paradox">having low or no prices</a> is evidence that these companies are artificially lowering consumer costs to draw users into company-controlled systems that are <a href="https://techcrunch.com/2019/02/04/why-no-one-really-quits-google-or-facebook/">hard to leave</a>.</p>
<p>Both sides are missing the fact that the monetary price is less relevant as a measure of what users pay in the technology industry than it is in other types of business. Users <a href="https://theconversation.com/how-much-is-your-data-worth-to-tech-companies-lawmakers-want-to-tell-you-but-its-not-that-easy-to-calculate-119716">pay for digital products with their data</a>, rather than just money.</p>
<p>Regulators shouldn’t focus only on the monetary costs to the users. Rather, they should ask whether users are being asked for more data than is strictly necessary, whether information is being collected in <a href="https://theconversation.com/7-in-10-smartphone-apps-share-your-data-with-third-party-services-72404">intrusive or abusive ways</a> and whether customers are <a href="https://www.axios.com/mark-warner-josh-hawley-dashboard-tech-data-4ee575b4-1706-4d05-83ce-d62621e28ee1.html">getting good value in exchange for their data</a>.</p>
<h2>Myth 3: Trust-busting is all or nothing</h2>
<p>There aren’t just two ways for this debate to end, with either a breakup of one or more technology giants or simply leaving things as they are for the market to develop further. </p>
<p>In my view, the best outcome is right in the middle. The errant company is sued to make necessary changes but isn’t broken up. The very fact that the government filed a lawsuit leads to progress with other companies. That is exactly what happened in past cases against the Bell System, IBM and Microsoft. </p>
<p>In the 1956 federal consent decree against the <a href="https://www.beatriceco.com/bti/porticus/bell/bellsystem_history.html">Bell System</a> telephone company, for example, which settled a seven-year legal saga, the company wasn’t split up. Instead, Bell was required to <a href="https://economics.yale.edu/sites/default/files/how_antitrust_enforcement.pdf">license all its patents royalty-free</a> to other businesses. This meant that some of the most profound technological innovations in history – including the <a href="https://www.computerhistory.org/atchm/who-invented-the-transistor/">transistor</a>, the <a href="https://www.popsci.com/article/science/invention-solar-cell/">solar cell</a> and the <a href="https://www.photonics.com/Articles/A_History_of_the_Laser_1960_-_2019/a42279">laser</a> – became widely available, yielding computers, solar power and other technologies that are crucial to the modern world. When the Bell System was <a href="https://www.cio.com/article/3267826/breaking-up-is-hard-to-do-why-the-bell-system-breakup-isn-t-a-model-for-tech.html">eventually broken up</a> in 1982, it did not do nearly as much to spread <a href="https://si.wsj.net/public/resources/images/BF-AV826_ATT_16U_20171120171814.jpg">innovation and competition</a> as the agreement that kept the Bells together a quarter-century earlier. </p>
<p>The antitrust action against IBM lasted 13 years and didn’t break up the company. However, as part of its tactics to avoid appearing to be a monopoly, IBM agreed to <a href="https://www.cnet.com/news/ibm-and-microsoft-antitrust-then-and-now/">separate pricing for its hardware and software products</a>, previously sold as an indivisible bundle. This created an opportunity for entrepreneurs Bill Gates and Paul Allen to create a new software-only company called Microsoft. The surge of software innovations that have followed can clearly trace their origins to the IBM settlement. </p>
<p>Two decades later, Microsoft was itself the target of an antitrust action. In the resulting settlement, <a href="https://www.theverge.com/2018/9/6/17827042/antitrust-1990s-microsoft-google-aol-monopoly-lawsuits-history">Microsoft agreed to ensure its products were compatible</a> with competitors’ software. That made room in the emerging internet marketplace for web browsers, the predecessors of Apple’s Safari, Mozilla’s Firefox and Google Chrome.</p>
<p>Even Margrethe Vestager, the European Union’s top antitrust official and frequent tech-giant nemesis, has said that “<a href="https://www.nytimes.com/2018/02/20/magazine/the-case-against-google.html">antitrust prosecutions are part of how technology grows</a>.” But that doesn’t mean they all have to achieve their most extreme ends and be broken up. </p>
<h2>Myth 4: COVID-19 and the end of tech bashing</h2>
<p>The current pandemic has highlighted the value of the technological innovations of the big tech companies. </p>
<p>Americans are relying more than ever on the internet and online shopping and delivery, while <a href="https://www.google.com/covid19/mobility/">mobility data</a> has been critical in gauging social distancing behaviors and guiding policy. <a href="https://sites.tufts.edu/digitalplanet/covid-19-hotspots-rural-america/">Digital tools</a> for tracking coronavirus cases, deaths and social distancing behaviors in the smallest counties <a href="https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6">have circulated widely</a>, and social media and smartphone videos were <a href="https://www.nytimes.com/2020/06/18/technology/social-media-protests.html">crucial</a> to the recent protests and calls for social justice. </p>
<p>Altogether, this has led to a <a href="https://www.coindesk.com/public-opinion-shifts-on-big-tech-and-privacy-during-pandemic">softening</a> of <a href="https://www.coindesk.com/public-opinion-shifts-on-big-tech-and-privacy-during-pandemic">public opinion toward big tech</a> and <a href="https://www.theverge.com/interface/2020/3/26/21193902/tech-backlash-covid-19-coronavirus-google-facebook-amazon">calls</a> for an <a href="https://www.brookings.edu/techstream/covid-and-the-future-of-techlash/">end to talk</a> of <a href="https://www.mercurynews.com/2020/04/09/opinion-covid-19-response-will-end-all-the-big-tech-bashing/">breaking them up</a>. </p>
<p>But the pandemic has also revealed numerous digital fault lines: differences in access by <a href="https://hbr.org/2020/04/which-countries-were-and-werent-ready-for-remote-work">country</a>, <a href="https://sites.tufts.edu/digitalplanet/how-digital-disparities-across-the-us-disproportionately-hurt-black-and-latinx-communities/">race</a> and <a href="https://sites.tufts.edu/digitalplanet/urban-rural-divide-in-the-us-during-covid-19/">region</a>; the ability of tech companies to <a href="https://www.theguardian.com/technology/2020/jul/27/california-investigations-amazon-workers-coronavirus">exploit labor</a>; and potential for new kinds of misuse of <a href="https://www.brookings.edu/techstream/the-dangers-of-tech-driven-solutions-to-covid-19/">data</a>. </p>
<p>Far from giving the technology industry a free pass, the pandemic is an opportunity to take a more balanced view. Yes, let’s celebrate the Silicon Valley’s value, but let’s not turn a blind eye to the problems they create or worsen. </p>
<p>During the hearings, you’ll likely hear politicians accentuate the bad stuff, while the tech CEOs will paint an overly rosy image of themselves. Antitrust is complicated enough without misconceptions clouding their judgments as well. </p>
<p><em>This is an updated and expanded version of an <a href="https://theconversation.com/3-myths-to-bust-about-breaking-up-big-tech-119283">article originally published</a> on July 17, 2019.</em></p><img src="https://counter.theconversation.com/content/143517/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bhaskar Chakravorti has founded and directs the Institute for Business in the Global Context at Fletcher/Tufts that has received funding from Mastercard, Microsoft, the Gates Foundation, the Rockefeller Foundation, Omidyar Network and the Onassis Foundation. He is a Non-Resident Senior Fellow at Brookings India and a Senior Advisor on Digital Inclusion at the Mastercard Center for Inclusive Growth.</span></em></p>As the government considers antitrust action against big US technology companies, a global business scholar identifies four myths that need busting first.Bhaskar Chakravorti, Dean of Global Business, The Fletcher School, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1428932020-07-22T01:12:47Z2020-07-22T01:12:47ZThe dangerous new cold war brewing with China will test New Zealand even more than the old one<figure><img src="https://images.theconversation.com/files/348737/original/file-20200721-23-1212uap.jpg?ixlib=rb-1.1.0&rect=8%2C0%2C2973%2C1873&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">GettyImages</span></span></figcaption></figure><p>A new cold war with China is coming and it will be just as dangerous, expensive and pointless as the last one. </p>
<p>The difference will be how much more New Zealand is involved.</p>
<p>Steering an independent course in these dangerous seas will be very difficult: our <a href="https://www.gcsb.govt.nz/about-us/ukusa-allies/">Five Eyes</a> security partners will want us to jump one way, our largest economic partner the other.</p>
<p>This fine line was visible this week when Prime Minister Jacinda Ardern <a href="https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12349400">spoke</a> at the China Business Summit in Auckland. New Zealand has “different perspectives on some issues”, said Ardern – to which China’s New Zealand ambassador Wu Xi replied:</p>
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<p>Pursuing a zero-sum game and portraying others as adversaries or enemies will lead to nowhere and will only harm its own interests.</p>
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<h2>The Hong Kong crisis</h2>
<p>The latest flashpoint is China’s decision to pass a <a href="https://www.bbc.com/news/world-asia-china-52765838">new security law</a> for Hong Kong. The New Zealand government has ordered a review of all policy settings, despite Foreign Minister Winston Peters having already criticised the law and being told by Beijing to <a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12345066">stop interfering</a> in Hong Kong’s and China’s internal affairs.</p>
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Read more:
<a href="https://theconversation.com/china-is-becoming-increasingly-assertive-security-law-in-hong-kong-is-just-the-latest-example-142313">China is becoming increasingly assertive – security law in Hong Kong is just the latest example</a>
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<p>But New Zealand is right to be concerned about the new law. Designed to combat political dissidence, it covers serious but ill-defined crimes and imposes heavy penalties through opaque justice systems. </p>
<p>It also breaches the spirit of the 1997 <a href="https://www.basiclaw.gov.hk/en/basiclawtext/chapter_2.html">Basic Law</a>, which established the principles for the British handover to China.</p>
<p>Some might argue it’s a price worth paying if it brings stability and prosperity back to Hong Kong. After all, some of the key 1997 promises were never implemented, and China has quite properly taken the initiative.</p>
<p>Moreover, the Basic Law was going to lapse in 2047. What is happening now was going to happen anyway, just sooner than planned. </p>
<p>The new law may be repugnant to those who believe civil liberties enjoyed in Western democracies should be universal. But it is not unique within communist China, where social and economic progress has been achieved at a price of minimal dissent. </p>
<h2>New Zealand is already out of step</h2>
<p>Self-interest might have had other powers turning a blind eye in the past. But the new geopolitics have seen the security law become a line in the sand. </p>
<p>America is ready to impose <a href="https://edition.cnn.com/2020/07/02/politics/china-sanctions-hong-kong/index.html">sanctions</a> on China over Hong Kong and <a href="https://time.com/5847184/uyghur-human-rights-policy-act-china/">Uyghur human rights</a>. Australia is <a href="https://www.reuters.com/article/us-australia-defence/australia-to-sharply-increase-defence-spending-with-focus-on-indo-pacific-idUSKBN242466">increasing</a> its military spending by 40% over the next ten years, as part of a more assertive approach to China with less reliance on the US.</p>
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Read more:
<a href="https://theconversation.com/hong-kong-activists-now-face-a-choice-stay-silent-or-flee-the-city-the-world-must-give-them-a-path-to-safety-141880">Hong Kong activists now face a choice: stay silent, or flee the city. The world must give them a path to safety</a>
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<p>Britain wants to <a href="https://www.bbc.com/news/uk-politics-53246899">offer citizenship</a> to 3 million Hong Kong residents. Citing security risks, it has also mandated that all Huawei 5G technology <a href="https://www.bbc.com/news/technology-53403793">be removed</a> from British networks by 2027.</p>
<p>Following India, US President Donald Trump is <a href="https://www.cnet.com/news/trump-pushes-a-tiktok-ban-everything-you-need-to-know/">pressing</a> for a ban on the popular Chinese social media app TikTok due to security concerns.</p>
<p>Amid all this, New Zealand is increasingly out of step. Our criticism of the new security law was clear, but it wasn’t coordinated with the Five Eyes partners, nor did it employ the kind of language that has seen Hong Kong described as a “bastion of freedom”. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1284784810200838145"}"></div></p>
<p>New Zealand has also <a href="https://www.rnz.co.nz/news/political/421286/andrew-little-says-new-zealand-won-t-follow-uk-s-huawei-5g-ban">announced</a> it won’t follow Britain’s ban on Huawei and has avoided discussions about military build-ups or sanctions.</p>
<p>This is wise. There is no military solution to this problem and our economic relationship with China only complicates matters. </p>
<p>China is New Zealand’s largest trading partner in goods and second-largest overall including trade in services. Since the ground-breaking 2008 Free Trade Agreement, two-way trade has <a href="https://www.mfat.govt.nz/en/countries-and-regions/north-asia/china/">increased</a> to NZ$30.6 billion per year, more than half of that in New Zealand’s favour.</p>
<h2>Towards a new independence</h2>
<p>In an ideal world, these problems would be resolved calmly through a rule-based order of law or arbitration. </p>
<p>Unfortunately, the chances of China consenting to a third party resolving any dispute over what it sees as its sovereign rights are near zero. When such a resolution was attempted over its island building project in the South China Sea, China put the <a href="https://pca-cpa.org/en/cases/7/">unfavourable ruling</a> in the bin.</p>
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Read more:
<a href="https://theconversation.com/huaweis-window-of-opportunity-closes-how-geopolitics-triumphed-over-technology-142158">Huawei's window of opportunity closes: how geopolitics triumphed over technology</a>
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<p>The question, therefore, is how New Zealand positions itself in the new cold war if all sides are angry and there is no clear middle ground. The announced policy review offers the best way forward. </p>
<p>The review needs to consider the tone and independence of our foreign policy voice. It should ensure our trade relations comply with the human rights standards we profess to value. And it should require free trade never comes at the expense of free speech.</p>
<p>Of course, we will have to measure the costs and benefits of elevating human rights goals in our foreign policy. If countries we disagree with can’t change, we need to articulate what our bottom line is.</p>
<p>Most critically of all, we must now learn to navigate for ourselves in what will be the most difficult foreign policy challenge the next government will face. </p>
<p>Because whether we like it or not, we are sailing into a new cold war.</p><img src="https://counter.theconversation.com/content/142893/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alexander Gillespie has received funding from the NZ Law Foundation and the Francqui Foundation in Belgium, but neither are relevant to this article.</span></em></p>Between trade and traditional security alliances, New Zealand is being pulled in opposite directions over China. A new foreign policy is urgently needed.Alexander Gillespie, Professor of Law, University of WaikatoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1419252020-07-14T14:49:47Z2020-07-14T14:49:47ZCanada must navigate U.S.-China tensions by staying true to its values<figure><img src="https://images.theconversation.com/files/346647/original/file-20200709-22-ayp2ib.jpg?ixlib=rb-1.1.0&rect=53%2C112%2C2910%2C1814&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In this June 2019 photo, U.S. President Donald Trump poses for a photo with Chinese President Xi Jinping during a meeting on the sidelines of the G20 summit in Osaka, western Japan</span> <span class="attribution"><span class="source">(AP Photo/Susan Walsh)</span></span></figcaption></figure><p>The Canadian government’s inability to navigate the ongoing rivalry between the United States and China has exposed a striking dysfunction in Canada’s foreign policy.</p>
<p>It speaks to a serious vulnerability in a nascent superpower conflict driven by <a href="https://www.weforum.org/agenda/2019/07/the-rise-of-techno-nationalism-and-the-paradox-at-its-core/">techno-nationalism</a> and populist politics. What’s clear is that both Beijing and Washington are willing to manipulate Canada’s rule of law system for their own political ends. </p>
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<img alt="" src="https://images.theconversation.com/files/346356/original/file-20200708-19-1789pqc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/346356/original/file-20200708-19-1789pqc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/346356/original/file-20200708-19-1789pqc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/346356/original/file-20200708-19-1789pqc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/346356/original/file-20200708-19-1789pqc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=510&fit=crop&dpr=1 754w, https://images.theconversation.com/files/346356/original/file-20200708-19-1789pqc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=510&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/346356/original/file-20200708-19-1789pqc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=510&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Meng Wanzhou is seen leaving her home to attend a court hearing in Vancouver in October 2019.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
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<p>The Trump administration’s request to arrest and extradite Huawei chief financial officer Meng Wenzhou, followed by China’s <a href="https://www.politico.com/news/2020/06/22/trudeau-canadians-arrest-huawei-333773">retaliatory detention</a> of Canadians <a href="https://nationalpost.com/news/canada/who-are-michael-kovrig-and-michael-spavor">Michael Kovrig and Michael Spavor</a>, illustrate Prime Minister Justin Trudeau’s helplessness and confusion on how to handle such a difficult situation. </p>
<p>In fact, near policy paralysis coupled with a “wait and see” approach appears to have guided the government throughout the crisis. </p>
<h2>Middle power interests</h2>
<p>The tragedy of Kovrig and Spavor’s imprisonment provides guidance on how <a href="https://www.thecanadianencyclopedia.ca/en/article/middle-power">middle power states</a> should navigate rivalries between more powerful nations. On the one hand, the Trump administration’s <a href="https://www.brookings.edu/blog/order-from-chaos/2019/01/04/america-first-is-only-making-the-world-worse-heres-a-better-approach/">America First policy</a> has shown its traditional allies are expendable, while Xi Jinping’s emboldened authoritarianism advocates the detention of foreigners for political leverage. Middle power states, meantime, must protect their values and interests. </p>
<p>But what is Canada’s national interest and what are Canadian values? Finding an agreed-upon set of non-partisan ethics is an emotional and a complex endeavour. Despite the difficulty, times of crisis require leaps of political faith in finding unity to build meaningful policy. </p>
<p>Now is one of those times. </p>
<p>As Canada becomes a playground in a great power rivalry, Canadians must prepare themselves for an era marked by fierce competition between the U.S. and China. A conflict with both global and regional implications, Canada is notably vulnerable given its geographic proximity to the United States and its economic <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/180606/t001a-eng.htm">interdependency</a> with both nations. </p>
<h2>Canada in a no-win situation</h2>
<p>There is a strong lesson for Canada and other middle power states. It’s clear now that Huawei is a <a href="https://www.fintrac-canafe.gc.ca/publications/general/faq-pep-eng">politically exposed</a> firm, and the American request to extradite Meng Wenzhou poses a significant risk for Canadians. As <a href="https://www.scmp.com/comment/opinion/article/3091333/canadas-duty-lies-freeing-kovrig-and-spavor-china-means-letting">David Zweig</a>, a professor emeritus at Hong Kong University of Science and Technology, rightly points out, if Meng is deported, hundreds of thousands of Canadians in China will be in peril. Canada has been forced into a no-win situation. </p>
<p>Michael Kovrig’s wife, <a href="https://www.cbc.ca/news/politics/kovrig-spavor-nadjibulla-interview-1.5621981">Vina Nadjibulla</a>, has noted: “We cannot win a race to the bottom with China; we cannot become aggressive and confrontational because confrontation is not a strategy.”</p>
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<img alt="" src="https://images.theconversation.com/files/346650/original/file-20200709-26-1fd482a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/346650/original/file-20200709-26-1fd482a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/346650/original/file-20200709-26-1fd482a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/346650/original/file-20200709-26-1fd482a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/346650/original/file-20200709-26-1fd482a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/346650/original/file-20200709-26-1fd482a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/346650/original/file-20200709-26-1fd482a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">U.S. Secretary of State Mike Pompeo speaks at a news conference in Washington on July 1, 2020, in front of a video monitor showing Spavor, left, a Canadian businessman, and Kovrig, right, a former Canadian diplomat, detained in China since December 2018.</span>
<span class="attribution"><span class="source">(AP Photo/Manuel Balce Ceneta)</span></span>
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<p>Both Zweig and Nadjibulla, along with a <a href="https://globalnews.ca/news/7105280/michael-kovrig-spavor-meng-wanzhou-letter/">powerful collective</a> of Canada’s political elite, are advocating for Meng’s release in exchange for the two Michaels. There is of course <a href="https://www.macdonaldlaurier.ca/canada-must-reject-calls-release-meng-wanzhou-open-letter-prime-minister-trudeau/">fierce objection</a> to a prisoner swap, along with calls for tougher action while diplomatic efforts continue <a href="https://www.thestar.com/politics/federal/2020/06/25/trudeau-refuses-demands-to-release-meng-wanzhou-saying-it-would-put-millions-of-canadians-in-danger.html">behind the scenes</a>. </p>
<p>A prisoner swap would in fact undermine Canada’s credibility and signal to the world and our allies that Ottawa accepts hostage diplomacy. It would in many ways jeopardize Canada’s future relationship with Asia. </p>
<h2>Embracing human security</h2>
<p>While there is speculation that China and the United States are headed towards what’s known as a <a href="https://foreignpolicy.com/2017/06/09/the-thucydides-trap/">Thucydides Trap</a> — which holds that war is inevitable when a rising power challenges a dominant state — Canada must prepare itself for the worst and find creative ways of navigate this superpower rivalry. </p>
<p>In doing so, Canadian policy-makers must understand that they’re in no position to change the behaviour of nuclear-armed, authoritarian China. To think otherwise is pure fantasy. </p>
<p>But Canada has options. </p>
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<img alt="" src="https://images.theconversation.com/files/346651/original/file-20200709-18-3solli.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/346651/original/file-20200709-18-3solli.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=421&fit=crop&dpr=1 600w, https://images.theconversation.com/files/346651/original/file-20200709-18-3solli.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=421&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/346651/original/file-20200709-18-3solli.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=421&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/346651/original/file-20200709-18-3solli.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=529&fit=crop&dpr=1 754w, https://images.theconversation.com/files/346651/original/file-20200709-18-3solli.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=529&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/346651/original/file-20200709-18-3solli.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=529&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Trudeau and Xi Jinping listen to opening remarks at a plenary session at the G20 Summit in Osaka, Japan, in June 2019.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Adrian Wyld</span></span>
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<p>First, the government should return to its post-Cold War roots and advocate clear principles of <a href="https://www.un.org/humansecurity/what-is-human-security/">human security</a>. Unlike traditional security, human security is a people-to-people, centred approach for understanding how communities can build capacity and resilience. As <a href="https://utorontopress.com/ca/freedom-from-fear-freedom-from-want-4">Kenneth Christie at Royal Roads University and I have written</a>, human security is fundamentally concerned with supporting good governance, human well-being and sustainable development.</p>
<p>Second, Canada should draw on its Cold War experience as a middle power state navigating great power rivalries through multilateral organizations. <a href="https://www.theatlantic.com/politics/archive/2019/09/multilateralism-nearly-dead-s-terrible-news/598615/">The Trump administration’s retreat</a> from global institutions is an opportunity for Western allies to implement progressive policies with a clear focus on human security. While Canada has friends, it must do better in reminding them what we stand for. </p>
<p>Third, Canada should aggressively market its human security campaign within China’s vital <a href="https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative">Belt and Road Initiative</a> countries and the hallways of NATO, advocating human rights and the rule of law. Billboards should be placed on the sides of highways reminding allies how far their economic partners will go to meddle in a nation’s legal sovereignty should they not comply with their wishes. </p>
<p>China does not have to agree with Canada’s liberal democratic principles, nor should we force our values on China. </p>
<p>But the world needs to know how Canada’s sovereign rule of law has been steamrolled by two self-interested superpowers. And Canadians must stay true to our values and help other vulnerable and marginalized victims of great power rivalry.</p><img src="https://counter.theconversation.com/content/141925/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert J. Hanlon does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Prime Minister Justin Trudeau’s government seems helpless and confused on how to manage the tensions between the United States and China after being caught in the conflict’s crosshairs.Robert J. Hanlon, Associate Professor of International Relations and Asian Politics, Thompson Rivers UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1421582020-07-07T19:53:17Z2020-07-07T19:53:17ZHuawei’s window of opportunity closes: how geopolitics triumphed over technology<figure><img src="https://images.theconversation.com/files/346001/original/file-20200707-194418-4pddc2.jpg?ixlib=rb-1.1.0&rect=970%2C251%2C3025%2C1341&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Sipa USA</span></span></figcaption></figure><p>When the United Kingdom completed its <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/819469/CCS001_CCS0719559014-001_Telecoms_Security_and_Resilience_Accessible.pdf">telecom supply chain review</a> last year it gave a green light to Huawei by concluding that nationality-based bans did nothing to improve network security and could actually harm it by weakening competition. Executives at Huawei celebrated what they saw as a victory for evidence-based decision-making. </p>
<p>The decision also seemed to vindicate the many critics of Australia’s <a href="https://ecipe.org/wp-content/uploads/2018/10/TSSR-final.pdf">telecom sector security review</a>, which the previous year reached exactly the opposite conclusion and decided to ban Huawei (and any other Chinese companies) from supplying equipment for use in Australia’s 5G mobile rollout. </p>
<p>Even the <a href="https://www.abc.net.au/news/2020-01-29/uk-grants-huawei-a-limited-role-in-5g/11908398">compromise</a> that Prime Minister Boris Johnson’s government announced at the end of January 2020, to exclude Huawei from the “core” of the 5G network and from sensitive areas such as military installations, but to otherwise allow it to have an up to 35% market share, was an outcome the firm could live with. </p>
<h2>Huawei’s last big hope had been the UK</h2>
<p>The decision reportedly caused <a href="https://www.ft.com/content/a70f9506-48f1-11ea-aee2-9ddbdc86190d">outrage</a> in the Trump White House, and left a number of Conservative Party back-benchers seething. </p>
<p>Since then, Johnson has <a href="https://www.theguardian.com/technology/2020/may/22/boris-johnson-forced-to-reduce-huaweis-role-in-uks-5g-networks">backtracked</a>, and on Monday appeared to close the door on Huawei saying he was determined the UK should not be “<a href="https://www.washingtonpost.com/world/europe/huawei-5g-uk/2020/07/06/7477b862-bf8e-11ea-8908-68a2b9eae9e0_story.html">in any way vulnerable to a high-risk state vendor</a>”.</p>
<p>It follows intense pressure from the US Department of Commerce which has announced plans to bar Huawei and its suppliers from using any <a href="https://www.nytimes.com/2020/05/15/business/economy/commerce-department-huawei.html">American technology or software</a>.</p>
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Read more:
<a href="https://theconversation.com/why-the-global-battle-over-huawei-could-prove-more-disruptive-than-trumps-trade-war-with-china-131828">Why the global battle over Huawei could prove more disruptive than Trump's trade war with China</a>
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<p>Britain’s <a href="https://www.theverge.com/2020/7/6/21314340/huawei-5g-networks-security-risk-us-uk">National Cyber Security Centre</a> has increased the pressure, urging that Huawei equipment be removed from the country’s networks on the grounds that the new US restrictions will force it to resort to “untrusted” technology solutions. </p>
<p>The <a href="https://www.smh.com.au/world/asia/how-the-us-steamrolled-chinese-tech-giant-out-of-five-eyes-20200706-p559fa.html">Sydney Morning Herald</a> reported on Monday that Huawei had “lost the anglosphere”.</p>
<p>Recent reports indicate that France, which had also opted for a compromise by restricting Huawei from the core of its network and from Paris, but allowing it in the rest of the country, is now considering <a href="https://thehill.com/policy/cybersecurity/506063-france-to-encourage-telecom-groups-to-avoid-huawei-products-but-not-ban">a multi-year phase out</a> of all Huawei equipment.</p>
<h2>It may have lost the West</h2>
<p>It remains to be seen how this plays out in a number of other key European countries, such as Belgium, where Huawei has more than 70% of the market in some areas, as well as Germany, which until now has been adamant it <a href="https://thehill.com/policy/cybersecurity/506063-france-to-encourage-telecom-groups-to-avoid-huawei-products-but-not-ban">won’t ban</a> Chinese suppliers. </p>
<p>The company faces something of a <a href="https://tfipost.com/2020/05/d10-can-destroy-huawei-5g-britain-wants-alliance-of-10-democracies-including-india-to-take-on-china/">united front</a> including each of the <a href="https://en.wikipedia.org/wiki/Five_Eyes">Five Eyes</a> countries of Australia, Canada, New Zealand, the United Kingdom and the United States, as well as France and India, which has recently moved to <a href="https://techcrunch.com/2020/06/29/india-bans-tiktok-dozens-of-other-chinese-apps/">ban</a> a whole slew of Chinese mobile apps including TikTok.</p>
<p>In some ways, it seems surprising given the fact that nobody, least of all the American security hawks have been able to adduce <a href="https://www.axios.com/huawei-china-security-britain-5g-evidence-d2a86be0-f8d0-4baa-a138-0be790599c50.html">any hard evidence</a> that Huawei represents a greater security risk than any other major supplier. </p>
<p>In other ways, it is less surprising given the Trump administration’s increasingly confrontational approach and China’s increasingly assertive push-back. Its June 30 decision to impose a <a href="https://www.npr.org/2020/06/30/885127007/china-enacts-security-law-asserting-control-over-hong-kong">new security law</a> on Hong Kong has only helped to further harden attitudes in the West, particularly the UK.</p>
<p>It was always going to be hard for Huawei to stay in Western markets.</p>
<h2>It was hard to please two masters</h2>
<p>Once it grew to the size it has enjoyed for about the last ten years, and once it took on the strategic importance that comes with being one of the world’s top suppliers of 5G network equipment, Huawei was inevitably going to find it difficult to please an increasingly nationalistic Chinese leadership while not alarming nervous governments in Western capitals. </p>
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<a href="https://images.theconversation.com/files/346000/original/file-20200707-194409-ul0gdf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/346000/original/file-20200707-194409-ul0gdf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/346000/original/file-20200707-194409-ul0gdf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/346000/original/file-20200707-194409-ul0gdf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/346000/original/file-20200707-194409-ul0gdf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/346000/original/file-20200707-194409-ul0gdf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/346000/original/file-20200707-194409-ul0gdf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/346000/original/file-20200707-194409-ul0gdf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Huawei has a massive domestic customer base.</span>
<span class="attribution"><span class="source">Sipa USA</span></span>
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<p>In China it had to demonstrate unwavering loyalty to the goals of the Communist Party leadership. Outside China it had to argue that it had little or nothing to do with the Chinese State. </p>
<p>Operators <a href="https://www.bbc.com/news/technology-47482140">love Huawei</a> because it has consistently proven better than its competitors on price, tailored customer service and innovation. But it is governments that regulate telecommunications networks and that must take the big decisions on what companies will be admitted as suppliers.</p>
<p>For executives at Huawei there are no easy choices. </p>
<p>The size of its domestic market has given it the massive economies of scale it has needed to be competitive globally, so that it cannot jeopardise its position at home. </p>
<p>Its role in global markets has allowed it to innovate. </p>
<p>Most of its technological breakthroughs have been achieved through its many partnerships abroad. To walk away from these would weaken its market leadership.</p>
<h2>Looking inwards didn’t help</h2>
<p>Once the US-led campaign against Huawei began in earnest in 2018 it circled the wagons and centralised control of its external messaging and overseas representation in the hands of its longest-serving or most successful employees, all of whom were Chinese. </p>
<p>These were predominantly engineers by training and had no inclination to defend the company on any terms besides its track record as an equipment vendor and its cyber-security credentials (which from an industry perspective are pretty solid).</p>
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Read more:
<a href="https://theconversation.com/blocking-huawei-from-australia-means-slower-and-delayed-5g-and-for-what-117507">Blocking Huawei from Australia means slower and delayed 5G – and for what?</a>
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<p>Even if it had done something different back then, nothing would have helped it overcome the contradictions of trying to appear to be a loyal corporate citizen in China while at the same time claiming to be just another normal private-sector company abroad. </p>
<p>The limited space it has to operate is becoming increasingly narrow to the point where in many markets it is no longer able to appear to be both.</p>
<h2>Prepare for fragmentation</h2>
<p>Another important point worth bearing in mind is that Huawei is not alone in seeing its market access curtailed because of its country of origin. This has also long been happening to Western companies in China.</p>
<p>For many years, China has been trying to raise its level of <a href="https://jamesmcgregor-inc.com/books_wrapper/china-s-drive-for-indigenous-innovation/">indigenous innovation</a> making it <a href="https://www.bsa.org/files/reports/BSALockout2012.pdf">increasingly difficult</a> for foreign suppliers.</p>
<p>In December it reportedly decided to <a href="https://www.ft.com/content/b55fc6ee-1787-11ea-8d73-6303645ac406">phase out</a> all foreign-owned software and hardware from Chinese government operated IT systems. </p>
<p>This means China has itself accepted the logic that the country of origin of a supplier matters for security and industry development.</p>
<p>It leaves us heading towards a world of increasing fragmentation and higher costs, with many arguing, in both China and the West, that this is the price we’ll have to pay for greater security.</p>
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<a href="https://theconversation.com/china-could-be-using-tiktok-to-spy-on-australians-but-banning-it-isnt-a-simple-fix-142157">China could be using TikTok to spy on Australians, but banning it isn’t a simple fix</a>
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<img src="https://counter.theconversation.com/content/142158/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon Lacey was formerly Vice-President Trade Facilitation and Market Access of Huawei Technologies, where he was responsible for managing trade and investment risks facing the company across a dozen of its most important markets.</span></em></p>Huawei is unlikely to supply 5G technology to any of the English-speaking democracies. Britain had been its last big hope.Simon Lacey, Senior Lecturer in International Trade, University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1404482020-06-15T15:08:54Z2020-06-15T15:08:54ZAfrican countries need to seize opportunities created by US-China tensions<figure><img src="https://images.theconversation.com/files/341189/original/file-20200611-80789-p6p9x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The unfolding US-China power <a href="https://www.theguardian.com/world/2020/may/24/china-raises-us-trade-tensions-with-warning-of-new-cold-war">rivalry</a>
bears a striking resemblance to the tensions between the US and the Soviet bloc during the Cold War years. Back then, African countries were positioned like pawns on a grand chessboard. Their social and economic progress was hampered because they expended energy aligning themselves with either of the superpowers in the battle for world supremacy <a href="https://foreignpolicy.com/2019/01/07/a-new-cold-war-has-begun/">between communism and capitalism</a>. </p>
<p>With notable exceptions, African states generally failed to exercise positive agency for their own development. They also eroded the institutional and governance foundations vital for economic success. </p>
<p>In the current context of rising geopolitical tensions between the US and China, African countries may find themselves repeating the same mistakes unless they proactively shape their own destinies.</p>
<p>The tensions between the two great powers, characterised by <a href="https://www.scmp.com/economy/china-economy/article/3078745/what-us-china-trade-war-how-it-started-and-what-inside-phase">a vicious trade war</a>, are deepening at a time when the world economy is under enormous strain due to COVID-19. At the same time African countries are facing their worst economic crises since independence. </p>
<p>Africa is institutionally under-prepared to weather the combined effects of the health pandemic and severe economic recession. Its leaders will need to consciously design strategies of engagement that will help them to manage the ongoing superpower tensions to their advantage. They should do so without taking sides. This requires that they deal with each of these great powers based on pragmatic – rather than ideological – choices. </p>
<p>Despite their institutional under-preparedness, African countries can – and indeed must – be highly strategic and tactical in how they respond to the US-China tensions. Failure to do so will inevitably mean sacrificing their own interests. </p>
<p>There are three arenas of challenges and opportunities for the African continent in the current geopolitical climate. The first involves technological frontiers, the second is global supply chains, and the third is trade integration and economic cooperation. </p>
<h2>New technological frontiers</h2>
<p>There is <a href="https://www.mercatus.org/system/files/broughel-technological-innovation-mercatus-research-v1.pdf">overwhelming evidence</a> that technological innovation is the key driver of economic growth. Therefore, access to and exploitation of new technologies such as <a href="https://www.gsma.com/futurenetworks/ip_services/understanding-5g/">5G</a> is vital to Africa’s development. Fifth generation technologies are important options for a continent like Africa where mobile technology has leap-frogged more traditional technologies. </p>
<p>Access to technologies like 5G offers access to universal broadband, which is critical for the continent’s advance to a digital economy. </p>
<p>In May last year the US government put the Chinese firm Huawei, the world’s <a href="https://www.marketsandmarkets.com/Market-Reports/5g-technology-market-202955795.html">leading</a> <a href="https://carrier.huawei.com/en/spotlight/5g">supplier</a> of 5G network infrastructure, on its list of entities deemed to pose a significant risk to national security and foreign policy interests. </p>
<p>Huawei was effectively banned from importing and incorporating key US technologies into its products and services. This included both hardware, such as high-tech semiconductor components, and software, like Google Mobile Services (GMS). The ban was later <a href="https://asia.nikkei.com/Spotlight/Huawei-crackdown/New-ban-on-Huawei-blocks-access-to-non-US-chipmakers">extended</a> to key technologies from non-US firms. These included the Taiwan Semiconductor Manufacturing Company, a major Huawei supplier.</p>
<p>In the month following the initial ban, the CEOs of four major South African telecommunications operators – Telkom, Vodacom, MTN and Cell C – wrote a <a href="https://mybroadband.co.za/news/cellular/312767-here-it-is-the-letter-vodacom-mtn-telkom-and-cell-c-sent-to-ramaphosa.html">joint letter</a> to South African president Cyril Ramaphosa requesting his urgent intervention on the US action against Huawei. Their aim would have been to lend diplomatic weight to prevent damage to South Africa’s telecommunications sector. </p>
<p>In July last year Ramaphosa <a href="https://www.gov.za/speeches/president-cyril-ramaphosa-south-african-digital-economy-summit-5-jul-2019-0000">came out in</a> support of the four operators as well as Huawei. He said the ban was: </p>
<blockquote>
<p>an example of protectionism that will affect our own telecommunications sector, particularly the efforts to roll out the 5G network, causing a setback on other networks as well. </p>
</blockquote>
<p>This was an example of pragmatism on the part of the South African government.</p>
<p>African policymakers should strenuously safeguard their right to choose from the widest possible range of technology options that suit their countries’ development needs. And they should insist on acquiring and developing new technologies like 5G based on pragmatism. </p>
<h2>Global supply chains</h2>
<p>The second theatre of struggle for African countries is in global supply chains. </p>
<p>The COVID-19 reality, combined with the ratcheting up of US-China tensions over trade, technology and supply chains, has opened up opportunities that African countries should exploit. </p>
<p>Combined, they have exposed serious problems in supply networks across various sectors. These include digital products, food, pharmaceutical and medical supply chains. </p>
<p>These sectors represent opportunities for African countries to develop new products, services and capabilities. They could, for example, provide answers to safeguarding <a href="https://www.news24.com/fin24/Opinion/opinion-africas-food-security-under-fire-20200423">Africa’s food security needs</a>, local production of <a href="https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2375">essential drugs and medicines</a>, low-cost medical <a href="https://allianceforscience.cornell.edu/blog/2020/05/african-science-steps-up-to-covid-challenge/">tests and equipment</a>, and <a href="https://oxfordbusinessgroup.com/news/impact-covid-19-global-supply-chains">logistics</a>. </p>
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<img alt="" src="https://images.theconversation.com/files/341191/original/file-20200611-80770-1amn4sy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/341191/original/file-20200611-80770-1amn4sy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/341191/original/file-20200611-80770-1amn4sy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/341191/original/file-20200611-80770-1amn4sy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/341191/original/file-20200611-80770-1amn4sy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/341191/original/file-20200611-80770-1amn4sy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/341191/original/file-20200611-80770-1amn4sy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A mural of presidents Donald Trump and Xi Jinping in Berlin.</span>
<span class="attribution"><span class="source">EFE-EPA/Omer Messinger</span></span>
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<p>But African countries will need to work more collaboratively to develop thriving economic sectors and cross-border industrial linkages. Trade will, in our view, be a critical enabler for this.</p>
<p>This leads us to the third domain, namely the need for African countries to deepen trade integration and economic cooperation. This will provide a basis for diversifying from over-reliance on export markets such as China and the US, and to build internal resilience. </p>
<h2>Intra-Africa trade</h2>
<p>Intra-African <a href="https://s3-eu-west-1.amazonaws.com/demo2.opus.ee/afrexim/African-Trade-Report_2019.pdf">trade</a> accounts for just 16% of total African trade. This compares with 52% in Asia and 73% in Europe. African trade is highly concentrated on a few economic hubs: China and Europe together account for 54% of total African trade, with China being Africa’s single largest trading partner. It accounts for over 14% of total African trade.</p>
<p>The <a href="https://au.int/en/cfta">African Continental Free Trade Area</a> creates the institutional and infrastructural framework for Africa to strengthen intra-African trade, diversify its trading partners and implement long-overdue trade policy reforms. </p>
<p>COVID-19 has induced significant delays in the implementation of this trading arrangement. It should, in fact, have magnified a sense of urgency. But instead of showing adaptability, African leaders pressed a pause button. As a result, the continent could miss an opportunity to accelerate development of cross-border value chains in medical supplies and equipment and other areas.</p>
<h2>Imagination and courage</h2>
<p>African countries should seize the opportunities presented by deepening tensions between China and the US to realise positive agency and chart their own future. They will need to be more proactive and adaptive under the fluid and uncertain global environment. This will require a great deal of imagination and courage. </p>
<p>African countries face a daunting set of challenges and constraints. But policymakers always have options.</p><img src="https://counter.theconversation.com/content/140448/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>African policymakers should strenuously safeguard their right to choose from the widest possible range of technology options that suit their countries’ development needs.Mzukisi Qobo, Head: Wits School of Governance, University of the WitwatersrandMjumo Mzyece, Associate Professor of Technology and Operations Management, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1390232020-05-24T01:11:32Z2020-05-24T01:11:32ZBeware the ‘cauldron of paranoia’ as China and the US slide towards a new kind of cold war<figure><img src="https://images.theconversation.com/files/336945/original/file-20200522-57665-mxwr4t.jpg?ixlib=rb-1.1.0&rect=14%2C0%2C4947%2C2611&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> </figcaption></figure><p>In September 2005, before an audience of some of the most powerful business figures in the United States, then US Deputy Secretary of State Robert Zoellick unveiled his “<a href="https://2001-2009.state.gov/s/d/former/zoellick/rem/53682.htm">responsible stakeholder</a>” formula for China’s global engagement.</p>
<blockquote>
<p>China is big and growing… For the United States and the world the essential question is how will China use its influence… We need to urge China to become a responsible stakeholder in that system.</p>
</blockquote>
<p>This is how the China as a “responsible stakeholder” template for the West’s conduct of relations with an emerging power was born. It was not a superpower at that stage, but a rising one.</p>
<p>Later in that same speech, Zoellick added:</p>
<blockquote>
<p>Many Americans worry that the Chinese dragon will prove to be a fire breather. There is a cauldron of anxiety about China.</p>
</blockquote>
<p>If there was a “cauldron of anxiety” then, it is “cauldron of paranoia” now as the US slips towards a <a href="https://www.ft.com/content/fe59abf8-cbb8-4931-b224-56030586fb9a">new Cold War</a>.</p>
<p>It’s not there yet, but the possibility of a permafrost can’t be discounted. This would include a decoupling of the US and Chinese economies and a deepening technology war in which competing technologies would seek to get the upper hand inside and outside cyberspace. It would also include an all-out arms race.</p>
<h2>Rising tensions</h2>
<p>Washington’s <a href="https://asia.nikkei.com/Spotlight/Huawei-crackdown/TSMC-halts-new-Huawei-orders-after-US-tightens-restrictions">campaign to deprive China’s telecommunications giant Huawei</a> from access to US-designed microchips for its artificial intelligence processors, mobile phones and networking capabilities is aimed squarely at denying the Chinese company a technological edge.</p>
<p>The Huawei decision is one of several designed to squeeze Chinese access to US technology, and in the process disrupt global supply chains.</p>
<p>China regards the US campaign against Huawei as highly provocative, if not war by another means.</p>
<p>These are sobering moments as the world contemplates getting dragged into a “cauldron” of superpower tension not witnessed since the 1950s.</p>
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Read more:
<a href="https://theconversation.com/australia-has-dug-itself-into-a-hole-in-its-relationship-with-china-its-time-to-find-a-way-out-138525">Australia has dug itself into a hole in its relationship with China. It's time to find a way out</a>
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<p>Middle-sized players like Australia risk getting trampled. Prime Minister Scott Morrison is discovering to the cost of his country’s agriculture and mining sectors that it is better to stay out of the way of bull elephants in a global jungle. His ill-advised solo intervention in calls for an independent inquiry into a pandemic has backfired as China picks off <a href="https://www.smh.com.au/business/the-economy/chinese-power-stations-told-to-avoid-australian-coal-in-new-trade-threat-20200521-p54v8w.html">vulnerable Australian exports for reprisals</a>.</p>
<p>An American “cauldron of anxiety” has spilled over.</p>
<h2>The US problem</h2>
<p>I was in that New York City hotel ballroom for the Zoellick speech as North American correspondent for The Australian Financial Review. I had no doubt it was a significant moment in America’s attempts to address an emerging challenge from an economically resurgent China, but this challenge needed to be kept in proportion.</p>
<p>Bear in mind China’s president at the time was the cautious bureaucrat, Hu Jintao. The country had not yet left behind paramount leader Deng Xiaoping’s advice to colleagues that when it came to demonstrating China’s newfound might, it was better to “<a href="http://www.globaltimes.cn/content/661734.shtml">hide your capabilities, bide your time</a>”.</p>
<p>It was seven years before the “China first” <a href="https://www.bbc.com/news/world-asia-pacific-11551399">Xi Jinping</a> became China’s most powerful leader since Deng, and possibly since Mao Zedong himself.</p>
<p>Zoellick’s speech was delivered more than a decade before a New York property developer named Donald Trump became an “America first” president ill-equipped to deal with complexities involved in managing a relationship with a surging China.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/337194/original/file-20200523-124822-hr01r9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/337194/original/file-20200523-124822-hr01r9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/337194/original/file-20200523-124822-hr01r9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/337194/original/file-20200523-124822-hr01r9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/337194/original/file-20200523-124822-hr01r9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/337194/original/file-20200523-124822-hr01r9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/337194/original/file-20200523-124822-hr01r9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption"></span>
<span class="attribution"><span class="source">AAP/EPA/Carlos Barria</span></span>
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<p>Trump’s mixture of bombast, bellicosity, prejudice, impulsiveness, and apparent lack of a sense of history makes him particularly ill-suited to cope with the world’s biggest foreign policy challenge since the second world war.</p>
<p>That includes the Cold War with the former Soviet Union. That conflict could be managed by a policy of containment and mutually assured destruction.</p>
<p>At a time when the western alliance cries out for leadership, America is consumed, even torn apart, by internal divisions. Those divisions are likely to be rubbed raw in this year’s presidential election, in which China will be the focus of the sort of fearmongering that characterised American internal debates about the Soviet Union in the 1950s.</p>
<p>Trump’s contribution to that debate in the midst of a pandemic may not be surprising given his intemperate use of language generally, but in the circumstances it was shocking nevertheless.</p>
<p>This is what he tweeted on May 20:</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1263085979491016708"}"></div></p>
<p>Let that sink in. The latest occupant of the Oval Office, successor to some of the great figures of world history, has accused China of being responsible for “mass worldwide killing”.</p>
<p>China’s mishandling of the early stages of the coronavirus pandemic deserve investigation and censure, but Trump himself bears responsibility for his own “incompetence” and that of his administration in managing America’s response to the crisis.</p>
<p>In its early stages he declared the virus would simply vanish. He used the word “<a href="https://www.cnbc.com/2020/02/28/trump-says-the-coronavirus-is-the-democrats-new-hoax.html">hoax</a>”, allegedly cooked up by his political enemies, to dismiss the contagion. As a consequence valuable time was lost in responding.</p>
<p>America now has the worst record globally in dealing with the pandemic. Things being equal this will constitute a significant drag on Trump’s re-election prospects, hence his flailing about in search for scapegoats.</p>
<p>Leaving aside American domestic politics – the Democrats will not want to be accused of being soft on China in a presidential election cycle – the much bigger question is the extent to which the pandemic will disrupt, even overturn, a globalising world.</p>
<h2>A new, shaky world order</h2>
<p>The journal Foreign Policy has made a useful contribution to the debate in its latest issue – <a href="https://foreignpolicy.com/2020/05/14/china-us-pandemic-economy-tensions-trump-coronavirus-covid-new-cold-war-economics-the-great-decoupling/">The Great Decoupling</a> – in which it seeks to frame what is happening now historically. History is not kind to a process in which states decouple, pull up the drawbridges, roll back trade and investment ties and, in the United Kingdom’s case, depart a trading bloc that had served it well.</p>
<p>America is far from the only nation state succumbing to the forces of nationalism and populism. It is a worrying trend for open-market trading countries like Australia, dependent on increasing economic integration.</p>
<p>This is how Foreign Policy framed issues involved in what it perceives to be a disrupted moment in history in which a status quo power is being obliged to confront the reality of challenges to its brief moment as a hyperpower following the fall of the Berlin Wall. </p>
<blockquote>
<p>The threat of the great decoupling is a potentially historic break, an interruption perhaps only comparable to the sundering of the first huge wave of globalization in 1914, when deeply intertwined economies such as Britain and Germany, and later the United States, threw themselves into a barrage of self-destruction and economic nationalism that didn’t stop for 30 years. This time, though, decoupling is driven not by war but peacetime populist urges, exacerbated by a global coronavirus pandemic that has shaken decades of faith in the wisdom of international supply chains and the virtues of the global economy.</p>
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Read more:
<a href="https://theconversation.com/us-china-relations-were-already-heated-then-coronavirus-threw-fuel-on-the-flames-137886">US-China relations were already heated. Then coronavirus threw fuel on the flames</a>
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<p>This scenario might be regarded as alarmist, even implausible, given difficulties that would arise in dismantling a highly integrated global economy. However, if a pandemic and response to it are a guide against the background of growing tensions between the US and China, the implausible becomes possible.</p>
<p>In the past week, Trump has opined about “<a href="https://www.ft.com/content/cfbba6bf-3de5-458d-92d1-a62fb958a354">cutting off the whole relationship</a>” with China. He has also speculated about not repaying US$1 trillion in debt to China.</p>
<p>These are ridiculous statements, but the fact an American president in an election year could say such things is indicative of the sort of atmosphere that prevails in a country where a populist leader has been wounded by his own ineptitude.</p>
<p>However, if the 2016 US presidential election demonstrated anything, it was that a significant proportion of the American electorate will embrace an “America First” mindset that is antagonistic to the outside world.</p>
<p>Nationalistic Sinophobes on Trump’s immediate staff feed his populist impulses and his anti-China rhetoric at the risk of deepening a global recession or even depression.</p>
<p>Foreign Policy quotes Zoellick liberally 15 years after his “responsible stakeholder” speech. His warnings today bear repeating in view of pressures in America to throw in the towel on engagement with the world’s largest population, second largest economy, and a permanent member of the UN Security Council.</p>
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<p>If we have another pandemic, or environmental issues, or financial sector issues, or Iran, or North Korea, how effective are you going to be if you don’t have a working relationship with China?</p>
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<p>It’s a good question.</p><img src="https://counter.theconversation.com/content/139023/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tony Walker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It’s not just the coronavirus that is upping the ante, but tensions over Huawei and other technologies that are threatening to create a new cold war. And Australia will be caught in the middle.Tony Walker, Adjunct Professor, School of Communications, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1318282020-02-18T19:00:47Z2020-02-18T19:00:47ZWhy the global battle over Huawei could prove more disruptive than Trump’s trade war with China<figure><img src="https://images.theconversation.com/files/315868/original/file-20200218-10985-1cdvjxu.jpg?ixlib=rb-1.1.0&rect=414%2C454%2C2589%2C1769&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Rungroj Yongrit/EPA</span></span></figcaption></figure><p>China’s ambassador to Australia, Cheng Jingye, let the cat out of the bag this week when he <a href="https://www.smh.com.au/politics/federal/huawei-ban-a-thorny-issue-hurting-china-australia-relations-says-ambassador-20200217-p541ic.html">lambasted Canberra</a> over its decision to exclude Huawei from the build-out of Australia’s 5G network.</p>
<p>In uncharacteristically sharp diplomatic language, Cheng described Australia’s campaign against Huawei as “politically motivated” and “discriminatory”.</p>
<p>This is not the first time Chinese officials have voiced their country’s displeasure with the Australian government’s campaign against Huawei. But Cheng’s public intervention represents the most direct criticism of Australia in what is shaping as a defining issue in relations between China and the West.</p>
<h2>A burgeoning technology war with China</h2>
<p>It is now clear America and its allies are engaged in what has the makings of a <a href="https://www.chathamhouse.org/publication/us-china-strategic-competition-quest-global-technological-leadership">full-blown technology war</a>. The ultimate destination of this conflict is unclear, but its ramifications will scar international relationships for decades to come.</p>
<p>The rawness of this issue is likely to become more pronounced as China spreads its superfast 5G technology across the globe in competition with the more expensive Nokia and Ericsson systems. Huawei technology <a href="https://www.smh.com.au/world/europe/why-are-huawei-and-5g-such-a-big-deal-around-the-world-20200131-p53wf0.html">accounts for about 30%</a> of the world’s mobile technology market, double the reach of its nearest rivals.</p>
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Read more:
<a href="https://theconversation.com/whats-at-stake-in-trumps-war-on-huawei-control-of-the-global-computer-chip-industry-124079">What's at stake in Trump's war on Huawei: control of the global computer-chip industry</a>
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<p>America and its allies fear <a href="https://www.nytimes.com/2019/01/26/us/politics/huawei-china-us-5g-technology.html">Huawei’s penetration</a> – indeed dominance – of the market for 5G will give the Chinese company, and China itself, a “backdoor” into communications systems globally.</p>
<p>The battle over Huawei is merely the most visible manifestation of conflict between the US, the longtime leader in technology, and China, the emerging technology superpower. China’s advances in areas like <a href="https://www.bbc.com/news/business-50255191">artificial intelligence</a> are already turning assumptions about American technological superiority upside down.</p>
<p>What is in peril is a global communications system in which various players find ways to integrate their technologies. A technology wrangle involving combatants in a fight for dominance in a data-hungry world is giving new meaning to the word “disruption”.</p>
<h2>China’s displeasure with Australia’s role</h2>
<p>Behind the scenes, China has made no secret of its angst over Australia’s role as what it perceives to be a stalking horse for Washington in a campaign against Huawei and, by extension, other Chinese technology companies.</p>
<p>A <a href="https://www.smh.com.au/business/companies/huawei-20190603-p51tur.html">lobbying campaign</a> conducted in 2018 by Andrew Shearer, then deputy head of the Office of National Intelligence, particularly incensed Beijing. He had sought to persuade the UK to exclude Huawei from its 5G build-out.</p>
<p>In 2018, <a href="https://www.smh.com.au/technology/government-implies-5g-china-ban-in-new-security-advice-20180823-p4zz77.html">Australia became the first country</a> to bar Huawei from providing 5G technology. Shearer is now cabinet secretary and close to Prime Minister Scott Morrison.</p>
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<a href="https://theconversation.com/huawei-is-a-test-case-for-australia-in-balancing-the-risks-and-rewards-of-chinese-tech-99081">Huawei is a test case for Australia in balancing the risks and rewards of Chinese tech</a>
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<p>No Australian prime minister has visited Beijing since <a href="https://www.smh.com.au/politics/federal/malcolm-turnbull-given-ceremonial-welcome-in-beijing-20160414-go6tci.html">Malcolm Turnbull in 2016</a>.</p>
<p>Cool relations between Canberra and Beijing can be attributed in great part to these behind-the-scenes lobbying activities against Huawei by a member of the so-called “Five Eyes” intelligence-sharing establishment (in partnership with the US, UK, Canada and New Zealand).</p>
<p>The UK’s decision, despite pressure from US President Donald Trump, to enable Huawei to help build non-core elements of its 5G network is <a href="https://www.smh.com.au/politics/federal/five-eyes-fail-to-see-straight-over-huawei-20200216-p541bg.html">causing a crisis of confidence</a> among “Five Eyes” participants.</p>
<p>How to deal with China in a new era in which American technological dominance is eroding fast lies at the centre of this argument.</p>
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<p>Fallout in Australia from internal “Five Eyes” wrangling over the Chinese company emerged in the past week or so. It was revealed Anthony Byrne, the deputy chair of the Australian Parliament’s intelligence committee, <a href="https://www.abc.net.au/news/2020-02-16/huawei-decision-in-britain-australian-intelligence-mps-snub-uk/11969680">had upbraided visiting British Foreign Secretary Dominic Raab</a> over the UK’s decision to allow Huawei to help build its 5G network.</p>
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<a href="https://theconversation.com/huawei-and-5g-uk-had-little-choice-but-say-yes-to-chinese-heres-why-130813">Huawei and 5G: UK had little choice but say yes to Chinese – here's why</a>
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<p>That confrontation was leaked to the media and caused the cancellation of a visit to the UK by leaders of the intelligence committee. Committee chair <a href="https://www.afr.com/politics/federal/huawei-leak-sees-mps-head-to-washington-not-london-20200216-p5419z">Andrew Hastie and Byrne will now travel to Washington</a> instead for consultations on the Huawei issue.</p>
<p>In some respects, these arguments among friends and allies might be regarded as a storm in a teacup since Australian parliamentary committees are relatively powerless. </p>
<p>However, it is not overstating the case to say differences among the “Five Eyes” on the Huawei issue pose a threat to a long-standing Western consensus about how to manage relations with China more generally.</p>
<h2>Fighting words from the US</h2>
<p>These cracks were visible at the just-concluded <a href="https://www.theguardian.com/us-news/2020/feb/15/us-defence-secretary-warns-us-alliances-at-risk-from-huawei-5g">Munich security conference</a>. US Secretary of State Mike Pompeo and Defence Secretary Mark Esper warned that alliances, including the future of NATO itself, were in jeopardy if European countries went ahead with using Huawei technology in their 5G networks.</p>
<p>In an unusually sharp and direct criticism of China, Esper described Huawei as the “China poster child for its nefarious industrial strategy”, one that is “fuelled by theft and coercion and the exploitation of free-market, private companies and universities”. He added:</p>
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<p>Reliance on Chinese 5G vendors could render our partners’ critical systems vulnerable to disruption, manipulations and espionage. </p>
<p>The Chinese Communist Party is heading even faster and further in the wrong direction with more internal repression, more predatory behavior, more heavy-handedness and a more aggressive military posture. It is essential that the international community wake up to the challenge.</p>
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<p>These are fighting words, but it is at least questionable whether Washington, with the assistance of allies like Australia, will prevail in its efforts to shut Huawei and other Chinese technology companies out of the biggest and most lucrative market of the 21st century – advanced technology.</p>
<p>If there was a consensus among the participants in Munich, it was that Western countries needed to tread warily in absorbing Chinese technology into their communications systems to the point where dependence on China would become irreversible.</p>
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Read more:
<a href="https://theconversation.com/how-us-uk-intelligence-sharing-works-and-why-huawei-5g-decision-puts-it-at-risk-130978">How US-UK intelligence sharing works – and why Huawei 5G decision puts it at risk</a>
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<p>A smattering of officials, including Fu Ying, former ambassador to Britain and Australia, represented Beijing at the conference. She posed a <a href="https://www.scmp.com/news/china/diplomacy/article/3050771/china-gets-little-sympathy-munich-us-europe-agree-need">rhetorical question</a> that will have resonated with some attendees:</p>
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<p>Do you really think the democratic system is so fragile it could be threatened by this single high-tech company, Huawei?</p>
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<h2>US moves in court against Huawei</h2>
<p>Meanwhile, Washington added fuel to an already heated “technology war” by <a href="https://www.nytimes.com/2020/02/13/technology/huawei-racketeering-wire-fraud.html">charging Huawei and two of its subsidiaries</a> with federal racketeering and conspiracy to steal trade secrets from US companies.</p>
<p>This represents a significant escalation in the US campaign against Huawei.</p>
<p>Washington is accusing Huawei of purloining trade secrets, including source codes and wireless technology, from six companies. These were were not named but are believed to include US technology giants Cisco and Motorola.</p>
<p>These “racketeering” charges are separate from <a href="https://www.nytimes.com/2020/01/20/world/canada/meng-wanzhou-huawei-detention-vancouver.html">extradition hearings in Canada involving Meng Wanzhou</a>, Huawei’s chief financial officer and daughter of its founder.</p>
<p>Washington is seeking Meng’s extradition on charges of participating in a decade-long attempt by the company to steal state secrets, obstruct a criminal investigation and evade economic sanctions against Iran.</p>
<p>Whether it likes it or not, the Australian government finds itself attached to an American campaign against Huawei and, in turn, a slew of other Chinese companies.</p>
<p>Leaving aside a conventional trade war between the US and China over soybeans and consumer durables, a technology conflict will prove longer lasting and certainly more disruptive.</p><img src="https://counter.theconversation.com/content/131828/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tony Walker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Differences among the ‘Five Eyes’ over the tech company’s role in building 5G networks pose a threat to the long-standing Western consensus about how to manage relations with China.Tony Walker, Adjunct Professor, School of Communications, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1309782020-02-05T11:16:22Z2020-02-05T11:16:22ZHow US-UK intelligence sharing works – and why Huawei 5G decision puts it at risk<figure><img src="https://images.theconversation.com/files/313542/original/file-20200204-41503-1deq7yf.jpg?ixlib=rb-1.1.0&rect=0%2C194%2C4064%2C2847&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The home of MI6 in central London. </span> <span class="attribution"><span class="source">Claudio Divizia/Shutterstock</span></span></figcaption></figure><p>The UK’s decision to allow Huawei to build part of its 5G network despite US opposition threatens to undermine one of the world’s longest standing and most important intelligence partnerships. </p>
<p>There is no closer intelligence relationship between two countries than that between the UK and the US. Forged during the second world war, it developed through a series of memorandums of understanding between 1946 and 1948 to form <a href="https://www.e-ir.info/2014/01/08/buffeted-not-busted-the-ukusa-five-eyes-after-snowden/">the UKUSA agreement</a>. Since then, a huge volume of intelligence has been shared between the two countries.</p>
<p>The Huawei case is unusual in that the UK and US have disagreed publicly, whereas disputes on intelligence issues usually play out behind the scenes. It’s also the result of a deliberate policy choice by the UK. And it concerns communications technology – usually an area of close alignment.</p>
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<a href="https://theconversation.com/huawei-and-5g-uk-had-little-choice-but-say-yes-to-chinese-heres-why-130813">Huawei and 5G: UK had little choice but say yes to Chinese – here's why</a>
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<p>The US publicly opposed Huawei’s involvement and even sent <a href="https://www.ft.com/content/8bbb3d9e-3534-11ea-a6d3-9a26f8c3cba4">a delegation of officials</a> from the National Economic Council and National Security Agency (NSA) to argue its case. The US position is that Huawei is a tool of the Chinese Communist Party and allowing it to build parts of the UK’s 5G network would give the Chinese state access to vital infrastructure and the ability to conduct espionage on UK citizens. Despite this, the UK went ahead, albeit restricting the <a href="https://theconversation.com/huawei-and-5g-uk-had-little-choice-but-say-yes-to-chinese-heres-why-130813">firm to supplying non-core parts</a> of the network. This is a strange decision for the UK government to make as it has historically bowed to US pressure to preserve its most important alliance.</p>
<p>Elbridge Colby, a former deputy assistant secretary of defense in the Trump administration, <a href="https://twitter.com/ElbridgeColby/status/1223209251881017344">laid out possible retaliatory measures</a> against the UK by the US.</p>
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<p>The US secretary of state, Mike Pompeo, offered conciliatory language on his visit to Britain days later. “They considered it carefully. I have respect for their sovereign decision,” he said, but noted that whether this would affect future cooperation “<a href="https://www.telegraph.co.uk/politics/2020/01/30/mike-pompeo-warns-huawei-not-trusted-congratulates-britain-escaping/">remains to be seen</a>”.</p>
<h2>Put out in the past</h2>
<p>Researching the workings of this relationship <a href="https://www.eurospanbookstore.com/secrets-and-spies.html">for a new book on UK intelligence</a>, I heard how tensions have arisen before that threatened the flow of information between the US and UK. </p>
<p>In 2010, the UK’s Court of Appeal <a href="https://www.theguardian.com/world/2010/feb/10/binyam-mohamed-torture-ruling-evidence">ordered the release</a> of a summary of classified CIA information relating to the interrogation of a terrorism suspect, Binyam Mohammed. During the judicial process, the US threatened to withdraw intelligence cooperation and a letter was sent from the US intelligence community, following the appeal, making it clear that negative actions would follow should this be repeated. </p>
<p>A member of parliament’s intelligence and security committee, whom I interviewed, recalled speaking to the CIA soon afterwards and finding: </p>
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<p>They were really annoyed that their intelligence had been used in open court in that case and they were just quite rude … I remember one of them saying ‘If someone is about to blow up central London we will cooperate with you. Anything else, forget it’.</p>
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<p>In fact, the relationship survived intact. But if that’s how the US responded when the UK government was compelled to act by a court of law, expect it to be even more angry behind the scenes by the UK making a choice of its own volition.</p>
<h2>What’s shared and when</h2>
<p>The latest falling out is over communications technology, which has up to now been the closest area of cooperation between the US and UK intelligence communities. Personnel from the NSA are routinely embedded in the UK’s Government Communications Headquarters (GCHQ) and vice versa. A former director of GCHQ told me that their US counterparts are “extremely generous in passing over knowhow about how you get technology to work”. The UK benefits significantly from its connections with much larger and better resourced US agencies such as the NSA.</p>
<p>This level of warmth was not apparent in the descriptions of officials from other UK agencies, especially the Secret Intelligence Service, MI6. A former UK intelligence officer explained, using the fictional country Ruritania as an example: </p>
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<p>The way intelligence works, if I were to go to the Americans and say, ‘We’d really like to know something about Ruritania but we’re not able to collect anything, can you help?’, the answer would be ‘We’d love to help you, but we’ve got nothing’. Whereas, if I were to go to the Americans and say ‘We are worried about Ruritania, so we have started a collection programme and here is what we think … the Americans would say, ‘Well, that’s very interesting. We’ve got some reports that we can share with you’. That’s how it works. It’s always reciprocal. There are no free lunches.</p>
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<p>The risk in overruling US objections over Huawei is that it begins to undermine the closest aspects of cooperation, over communications and surveillance, and leads to a more transactional (and potentially fragile) relationship in the future. That could have a big impact on future intelligence sharing between the two countries.</p><img src="https://counter.theconversation.com/content/130978/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jamie Gaskarth received funding from the British Academy for a project on UK intelligence accountability, 2015-2018 (SG151249).</span></em></p>Tensions have emerged before over US-UK intelligence sharing, but the Johnson government’s decision over Huawei is different.Jamie Gaskarth, Senior Lecturer in Politics and International Relations, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.