Too many in the West are still blind to the inconvenient truth about China

The retreat from Huawei will be just the start of a long march away from dependence on Beijing

Ayear ago I wrote in these pages that the Government should line up with the United States and Australia in banning Huawei from vital communications infrastructure. It was clear then that we could not afford to become dependent on a country – China – with a radically different concept of how high technology can be used – whether for the theft of intellectual property or the domination of its own citizens. Ministers could have spared themselves a painful retreat from the more accommodating position they took then if they had acted on that essential truth.

The Digital Secretary, Oliver Dowden, is expected to announce imminently that the Cabinet has now reached this conclusion, and as a very capable rising minister he will no doubt make a good job of it. He will be able to explain that things have changed. America’s decision to ban Huawei from using semiconductors made with US equipment is devastating to confidence in the firm’s products. He might be less frank in acknowledging that opinion has moved so significantly against Chinese technology that the Government could no longer win a Commons vote on this issue without a major concession.

If ministers do indeed declare the phasing out of Huawei from the 5G network, Tory rebels should cut them some slack in setting a timetable for that. What matters is that we should not be strategically dependent on Chinese technology for the future, and that will require building up the production of alternative companies. It is not essential to rip everything out immediately – we just have to be able to maintain our own critical infrastructure for the long term.

Britain will thus belatedly be aligned with key allies, and it might look as if this particular controversy is at an end. But this is only the beginning of many major companies and countries being caught out in the same way.

Last autumn, I listened to a group of CEOS of top US firms explaining their plans to keep expanding in China – “you can’t have global growth without a big presence in China, even if they copy our technology”. Then I had political briefings from Washington, where everyone, Republican and Democrat, said: “We can’t have that any more: China is now a strategic adversary.”

Chinese companies are facing the same looming reality, and also haven’t realised that it is coming. The Chinese social media giant Tiktok has laboriously created a separate product for the world outside China, with a different ownership structure, but has still suddenly been banned from India, with other countries likely to follow suit. Major corporations proceed as if the world of the last 30 years carries on unchanged: global competition, supply chains criss-crossing China and America, new technology welcomed everywhere. It was a world where political conflict had been replaced by growth, margins and interdependence.

Business executives are now confronted with the inconvenient fact that a global struggle of political ideas is back, and that it will increasingly take priority over those margins and growth. That is not a good thing for the prosperity of the world – it means more expensive products and less trade – but it is about to hit all of us. Once software and internet access divide into two distinct worlds, so much else will follow: transfers of data, development of new products, financial flows, professional advice, and anything remotely connected to security and high technology.

That this could happen has been apparent since Xi Jinping’s speech to the Communist Party Congress in 2017, laying out the ambitions for Chinese leadership in the world economy and cutting-edge technologies, and combining that with the strict discipline of Marxistleninist ideology. The core belief of Westerners, that prosperity and freedom go together, is being challenged at the same time as our ultimate insurance, that we will always have a technological lead, is under threat. Ideas are always the most powerful drivers of human affairs. When their conflict coincides with a race to be the most technically advanced, they take over completely.

Compounding this intensifying conflict is a woeful lack of mutual understanding. Chinese culture and historical experience are so different from our own that we are not good at seeing things from their point of view. China represents a great civilisation, which in recent centuries endured the catastrophic consequences of falling behind in industrial development and succumbing to protracted foreign invasion. It cannot be surprising, after so many calamities, that Chinese leaders aspire in this century to be the most advanced, and passionately advocate their territorial integrity.

Yet their way of going about that reveals their own failure to understand how the West works. We can appear very mercenary, as if we are happy to look the other way about human rights and political differences in the interests of a quick buck. Many countries do that. We can be quite arrogant about assuming everyone will think like us anyway, so we have nothing to fear. That is how we all behaved when the USSR collapsed and the Cold War ended in victory.

We also, however, have a climate of opinion that can be slow to develop but very strong when it does so. When that happens, the worst tactic to adopt is a bullying and hectoring approach towards us. With political leaders and public opinion firming up around the idea that we want to be friendly to China but cannot be dependent on it, we see the tactics of picking on Australia, or grabbing a few square miles from India, or the destruction of the rule of law in Hong Kong, in a new and very disturbing light. The “Wolf Warrior” approach to Western public opinion is a huge mistake.

In the wake of Covid-19, China is busy closing wildlife markets, knowing full well how the pandemic arose. But ludicrous attempts to shift blame or cover up its origins mean China does not even get the credit for good work. In the same way, there will be perfectly good Chinese companies that are about to face a big shock, like their Western counterparts. It is not too late for two presidents, in Washington and Beijing, to find a way to stop what is about to happen, but they show no sign of doing so. If that continues, the Government’s retreat on Huawei will be the beginning of a very long march indeed.