Beijing cash lets Huawei beat rivals China
The Chinese telecoms company whose role in the construction of Britain’s 5G network has been questioned amid growing security fears has received as much as US$74 billion of state aid from Beijing, helping it to expand and undercut its rivals, it is alleged.
A review by The Wall Street Journal of grants, credit facilities, tax breaks and other state assistance shows for the first time the extent to which Huawei has been helped – allegedly enabling it to offer generous financing terms and charge 30 per cent less for network equipment than its competitors.
Huawei acknowledged receiving ‘‘some policy support’’ but denied receiving special treatment, and claimed that the American report was based on ‘‘false information and poor reasoning’’.
The CIA previously told British spy chiefs that Huawei had received funding from the People’s Liberation Army and branches of Chinese intelligence. Huawei said at the time that it did not comment on ‘‘unsubstantiated allegations’’.
The new claims are likely to strengthen fears that Huawei’s network equipment could contain a ‘‘back door’’ enabling China to spy on, or sabotage British communications. Huawei strongly denies such a possibility, but US officials have urged Britain to ban Huawei’s equipment from its 5G mobile internet network.
A decision has been postponed but is expected to be announced next year.
According to the Journal’s analysis, the largest portion of Chinese government assistance to Huawei, US$46b, came from loans, credit lines and other support from state lenders.
The company also saved about US$25b in taxes between 2008 and 2018 due to state incentives to promote the tech sector, the report said. Among other assistance, it received US$1.6b in grants and US$2b in land discounts.
In the five years to 2018, grants declared by Huawei were 17 times as large as similar subsidies reported by Finland’s Nokia, the second-largest telecoms equipment maker. Ericsson, of Sweden, the third-largest, reported no such grants in the period.
Huawei said in a statement: ‘‘Huawei’s relationship with the Chinese government is no different than that of any other private company that operates in China. Like other tech companies in China, including those from abroad, Huawei receives some policy support from the Chinese government. But we have never received any additional or special treatment.’’
The company said its working capital primarily came from business operations and external financing.