Washington’s “Coercive Steps” Against Huawei Are “Seriously Misguided"
Courtesy of ZeroHedge
The FT's editorial board rarely agrees with the Trump administration, and when it comes to Washington's decision to blacklist Huawei, the paper's editors believe Trump is making a massive miscalculation.
FT reporters warned yesterday that Google's decision to cut Huawei off from most Android-related offerings represented a "hammer blow" to the telecoms giant's rapidly expanding smartphone business.
Analysts quoted by the South China Morning Post on Tuesday warned that "as far as overseas markets go, this move just turned Huawei's upcoming phones into paperweights."
Beijing, for its part, has sworn to cultivate whole supply chains and app-based ecosystems out of nothing to insulate Huawei from Washington's blacklisting. In this, the FT editors apparently believe the Chinese might succeed.
And the worst possible outcome of the Huawei crackdown – for the US, at least – would be for Huawei to survive by building a fully independent supply chain. That could help 'decouple' the American and Chinese tech industries, which are deeply intertwined due to the components trade.
They amount to an effort to decouple the US and Chinese tech sectors, leading to a bifurcation of the global industry. This reflects a view reaching beyond the Trump White House and deep into the US security establishment that President Xi Jinping’s China is a malign actor, and that its technology is on course to outstrip America’s. Indeed, the US steps appear part of an attempt to constrain China’s rise.
Echoes of the Soviet era abound, but Soviet industry was never entwined with America’s in the way China’s is. The latest US moves seem designed to cripple or crush one of the first Chinese tech companies to become globally competitive — and one that relies on American suppliers in both mobile phones and network equipment.
Other countries might also chafe at Washington once again imposing its will on global markets, which could galvanize support for an alternative to the US-dollar-based global financial system. And if China is forced to divorce its tech industry from the American tech industry, it could accelerate the 'splintering' of the Internet.
What's more, the European countries that have decided to tolerate the 'security risks' associated with allowing Huawei equipment to be used in their 5G networks will resent Washington's tenacity.
Assuming the US administration sticks to its measures, despite heavy lobbying by US businesses, they will damage American and other western corporate interests. Allied capitals will resent the White House’s efforts to impose its writ. However great the vulnerabilities in Huawei and the broader Chinese tech sector that they have revealed, the US steps may also ultimately fail.
They are likely to spur a Beijing-led effort to address China’s weaknesses and develop a fully independent supply chain. A historical analogy might be China’s nuclear weapons programme: the departure of Soviet advisers in the late 1950s forced it to build its own A-bomb. The result could hasten a splintering of the internet and associated technologies to which China and Russia, which recently passed a law ensuring it can cut itself off the world wide web, have already contributed.
Instead of pushing China down this path, Washington would be better served by encouraging "cooperation in a rules-based system" (because Beijing has no problem adhering to 'rules', right?).
If China wishes to change its image as a malign force, it must rein in such attacks. Yet Washington’s coercive steps are misguided. The US and the west should not seek to block China’s rise but encourage it to co-operate in a rules-based system, by setting good examples themselves. Washington’s allies should be free to determine what steps they judge necessary to combat security threats from Huawei or others. The US has the right to take security steps too – but not to allow these to slide into destabilising protectionism.
One could also deduce from the FT's argument that, if Washington does press ahead, it must destroy Huawei, or risk serious repercussions.