Issue of the week: handling Huawei
What should be done about the company at the heart of escalating tensions between the US and China?
Any company would find it “the stuff of nightmares” to receive a US Department of Justice indictment containing allegations that could land one of its top executives in prison for decades, said Kathrin Hille and Louise Lucas in the FT. But for Huawei, the Chinese tech giant at the centre of a stand-off between the US and China, the charges tabled last week “are expected to be just the beginning”. The firm is charged with 23 crimes, including sanctions-busting and obstructing justice. Its CFO, Meng Wanzhou (the daughter of founder Ren Zhengfei), is fighting extradition to the US from Canada on fraud charges. That hasn’t satisfied “the China hawks in the Trump administration”, who are pushing for further punishments, such as a complete ban on Huawei in the West. The company has “become an emblem for Washington’s growing fears over China as a threat to US global economic and technological dominance”.
Huawei likes to portray itself as an “independent enterprise” wholly owned by its employees, said Jamie Doward in The Observer (“we’re the John Lewis of China”, one claimed). But long-held concerns over its links with China’s intelligence services have meant that Huawei is already barred from supplying nextgeneration 5G equipment (the technology that will connect “the internet of things”) to Australia and New Zealand. Now about 170 other countries must decide whether it’s safe to continue doing business with the company. In the event of further sanctions, the fallout for telecom operators that have partnered with Huawei, or have its kit embedded in their systems, would be grave. The UK, “in need of friends as Brexit looms”, is in a particularly tricky position. To ignore the “mounting brouhaha” risks alienating our closest ally, the US. Yet we’re heavily reliant upon Chinese technology and investment.
Taking aggressive action against Huawei “would come with huge costs for all, including America”, said The Economist. “But the greatest cost would be a splintering of the global trading system.” Huawei’s case illustrates how “the line between justice and trade negotiations has become blurred” under this US administration: Trump has described Meng as a bargaining chip. Moreover, “the exclusion of a firm on the say-so of American officials, without evidence of spying, would set a dangerous precedent”. Instead of “spiralling into a cold war”, leaders on both sides should try to minimise distrust by creating new mechanisms and rules to harness Huawei safely. Taking the “nuclear option” of banning it “should be a last resort”.