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The U.S. should not demonize Huawei – it should invest to compete

Seeking to undermine China’s legitimate rise will create a new technology iron curtain and increase the risk of conflict.

Paul Clifford
27 June 2019
Imaginechina/SIPA USA/PA Images

History has shown that technological and industrial rivalry between Great Powers, such as the Britain-Germany steel race before World War I, can be the gateway to military conflict. The actions being taken by the U.S. against the Chinese technology firm Huawei are the opening salvos in a dangerous technology war which may be a slippery slope towards dire consequences.

Why is the U.S. administration seeking to exclude Huawei from global markets and supply chains? This goes far beyond legitimate national security concerns and is aimed at bringing down Huawei which has had the temerity to challenge U.S. technology hegemony. It is part of an exercise to contain, disable or derail China’s remarkable economic revival. It has the look of a technology-age equivalent of the U.S. attempt to “contain” China after 1949.

It is true that in its early days Huawei used technology theft to gain market advantage. But the reason the U.S. administration fears Huawei is that through being an avid learner of Western business practices and through spending 15% of its revenues on R&D, Huawei has to a great extent passed from the model of catchup and imitation to one whereby it is innovating.

The West has demanded that China become a responsible global stakeholder and ironically that is exactly what Huawei has done, participating actively in the creation of global 5G standards and plugging into global supply chains. A consequence of the U.S. administration going after Huawei will surely be to accelerate Huawei’s and China’s drive towards technology self-sufficiency. As part of smart risk mitigation, Huawei has already built its own limited semiconductor chip design capability. Now, given that the Android supply from Google is being cut off, Huawei says it will shortly launch its own handset operating system. China’s ‘Made in China 2025’ program – which has created panic in the West – was always to an extent aspirational rather than entirely achievable. But the actions against Huawei are a wake-up call for China’s leaders and will put renewed fire and urgency into that program.

We must remain committed to constructive engagement with China. The other options are dangerous and unacceptable. Maintaining a high level of vigilance over security threats from China is not at odds with permitting Huawei and other Chinese firms to take their place on the global stage.

The U.S. administration should not use the smokescreen of security concerns to attempt to bring down global technology rivals such as Huawei. Huawei is a world-class, self-made company that has carefully maintained a high degree of autonomy. China’s Party-State can no doubt exert pressure on Huawei when it sees fit. But day-to-day it does not interfere in Huawei’s management.

It is misguided to force U.S. and other global firms to disengage from China. They are heavily involved with Huawei in strategic partnerships and supply relationships. Working with Huawei and China does not mean you have to surrender your core technology. U.S. firms are certainly capable of protecting their intellectual property.

Seeking to slow or undermine China’s legitimate technological rise, implies a decoupling of the U.S. and Chinese economies. It will lead to a technology war that manifests itself in a new technology iron curtain. We should disavow restricting global discourse and collaboration in telecommunications that is such a fast developing and socially transformative tool.

How should the U.S. react to the fact that its previously unassailable lead in technology is finally being challenged by China? This is a psychological challenge not just a matter of technology or business. It is better to avoid a paranoid response that leads to conflict and instead to respond in two ways. Firstly, by investing to compete, which implies a massive rethink of U.S. industrial policy, and secondly by cooperating with China, wherever prudent, recognizing that we have complementary skills and approaches.

A trade war is futile but can be reversed. Discussions on creating a level playing field in China are worth having. But starting down the road towards a technology war strikes at the heart of China’s key interests and its role in the world. Inevitably, China is already threatening to retaliate. Such conflict leads to a world divided by technologies and can easily spill over into political and military issues.

The demonization of Huawei is the wrong path. The integrated global technology supply chain in which Huawei and China participate needs to be further developed not dismantled. The interdependency this brings is a healthy counterbalance and antidote to the breed of nationalism that leads to conflict.

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