Chinese state-owned telecom giant Huawei is facing another setback in its struggle to keep its international business afloat. The UK, which had resisted calls by the US to ban Huawei from deploying its 5G network infrastructure, has now decided to remove the company from its 5G networks, as the British newspapers the Sunday Times and Daily Telegraph reported.
UK Finally Caves on Huawei
Since Washington embarked on its anti-Chinese technology campaign based on national security allegations, the Trump administration has had difficulty convincing its counterparts in London. Particularly since the two are part of the Five Eyes intelligence-sharing pact, the US has been keen to welcome the UK aboard its Chinese boycott.
However, in January, British officials said Huawei would not be completely banned and could remain on as a network equipment supplier. A few months later, Washington leveraged more restrictions on foreign companies using American equipment to produce chips for Huawei and the UK National Cyber Security Centre (NCSC) began an expedited review of the situation.
Although official plans have yet to be unveiled by Prime Minister Boris Johnson, his government is preparing to cancel the purchase of new Huawei equipment and remove all existing network gear, as the Daily Telegraph reported.
China’s ambassador to the UK Liu Xiaoming, threatened unspecified consequences and damage to London’s reputation if it proceeds with the ban, as Deutsche Welle reported.
“The China business community are all watching how you handle Huawei. If you get rid of Huawei it sends out a very bad message to other Chinese businesses,” Liu said.
The move to revoke market access to Huawei and ZTE coincides with London’s staunch support of Hong Kong following the passage of Beijing’s new national security bill. The UK revealed it would create a path to full British citizenship for Hong Kongers who hold British National passports.
Liu condemned the move in what she called a “gross interference in China’s internal affairs.”
India Jumps Aboard Bandwagon
Huawei’s latest troubles don’t end with the UK. India is also considering a ban, according to CNBC. Like the UK, India’s ban would make a reversal as the company was given permission to participate in a 5G trial rollout in December. Along with Huawei, the state is also banning Chinese state-owned ZTE on the same national security grounds.
India has also banned Chinese app including popular social networks TikTok and WeChat. New Delhi is presently engaged in a border dispute with Beijing, further complicating the political distance between the two states. If any state has more reason to distrust China than the US, it is perhaps India.
“The China-India … dispute, compounded with the economic stress caused due to the (coronavirus) pandemic, has likely forced the government thinking to adopt a strategy similar to U.S. to potentially retaliate in a way where it would hurt China the most,” said Neil Shah, research director at Counterpoint Research.
Germany is China’s Lone Beacon of Light
With Washington’s maximum pressure campaign against Huawei and ZTE claiming more victories, few US allies are left to purchase Chinese telecom equipment. Beyond the general list of allied states, the American plan to cripple Huawei and ZTE has resonated in other states as well over fears of US sanctions.
However, France and Germany have yet to ban the companies. The French cybersecurity agency ANSSI said while there won’t be a total ban coming from Paris, it would recommend that telecom operators build their 5G networks with products from other companies.
On the other hand, German-based Deutsche Telekom has embraced Huawei, as Reuters reported. It has entered into contracts for 5G networks, cloud services, and even a television component. The contract, signed before the May 2019 restrictions by the US went into place, is one of the few remaining international deals of significance Huawei has maintained, as POLITICO reported.
Huawei described Deutsche Telekom as a “preferred customer,” but the truth is that it remains one of the only customers left. According to Deutsche Telekom, an outright ban on foreign companies “would reduce its flexibility.” How long France and Germany, both key US allies, can continue to withstand the Trump administration’s pressure remains to be seen, however.
Few Can Hold Out Against US Pressure
Thus far, the company’s deal in Germany has survived on German Chancellor Angela Merkel’s fear that cancelling it would harm German companies operating in China. Merkel’s time in office is expiring though and her successor may feel differently. Although extricating Chinese technology suppliers would certainly delay 5G rollout plans, it would not make Germany the first to face such delays.
Outside of China, most states are lagging behind initial forecasts for 5G implementation. Other suppliers like Ericsson and Nokia have ramped up efforts and taken on some of the contracts Huawei and ZTE were forced from. By 2021, alternatives should be easy to come by if states like Germany are willing to risk the political and economic repercussions.
At some point, however, US pressure will find its way to Berlin, especially if President Donald Trump secures another election victory in November. At that point, Berlin’s equation would change to the point that placating the Trump administration may carry less downsides than irritating Beijing.
For Huawei, and to a lesser extent ZTE, there is not much to be hopeful for in the future. The UK, one of America’s staunchest allies, had resisted calls to abandon Chinese technology for over a year. In acquiescing, London has proven that no one resist US pressure forever, particularly when national security claims are leveraged.
“Chairman Xi’s spy web isn’t going to like this, but good for the British government,” said US Sen. Ben Sasse, R–Neb., a member of the Senate Select Committee on Intelligence. “Shared security interests are a major part of our special relationship with the Brits, and the Chinese Communist Party’s tech puppet should not be allowed to sit on our closest ally’s networks.”