Over the past few months, the U.S. government has launched an assault against Chinese telecommunications giant Huawei for three publicly acknowledged reasons: Huawei, as the Justice Department alleges, was involved in sanctions-busting with Iran. The company also allegedly stole U.S. technology and even awarded its employees bonuses to do so. And third, because Huawei is a Chinese company and Chinese law mandates that it follow the orders of its security services, anything Huawei installs in equipment used by a U.S. ally could pose a security risk to the United States.
But, in the three-dimensional chess game that is U.S.-China relations, underlying this battle is another conflict with China over technology and U.S. concerns that it is losing the fight. This battle centers on the rollout of 5G telecommunications technology that is expected to reshape not only modern economies but modern warfare, too. And so far, China appears to be ahead — very far ahead.
This matters because 5G will produce enormously faster broadband speeds — upward of 10 gigabits per second — with no lags. This web of connectivity could facilitate the introduction of highways with driverless cars, advanced automation on factory floors and a brave new world where machines effortlessly exchange oceans of data. It could also transform warfare with integrated military operations that would make today’s joint operations look like children playing in a kindergarten sandbox. Imagine squadrons of pilotless fighters, drones and smart missiles along with a coordinated cyberattack.
Tragically for the United States, China’s efforts to roll out its 5G network have lacked any of the catalyzing drama associated with the Soviet Union’s launch of Sputnik, the world’s first satellite, in 1957. According to a report last year by Deloitte, since 2015, China has outspent the United States by an estimated $24 billion in wireless communications infrastructure.
Density is key to 5G. A successful network needs more cell towers than 4G. That means more small cells on telephone polls and street lamps. According to the Deloitte report, China Tower, the world’s leader in building these relay stations, has invested $17.7 billion since 2015, beating all its U.S. rivals combined.
Nationwide, China today has 1.9 million wireless sites compared to 200,000 in the United States. For every 10 square miles, China has 5.3 sites, while the United States has a paltry 0.4. Chinese telecommunications firms are on track to begin standalone 5G service in 2020, five years ahead of their U.S. counterparts. Faced with this disparity, the Deloitte reports warns that "China and other countries may be creating a 5G tsunami, making it near impossible to catch up.”
To get ahead, China has leveraged its systemic differences with the United States. A few decades ago, American analysts scoffed at China’s continued use of communist-era “Five-Year Plans” to manage its economy. Not anymore. According to Deloitte, China’s most recent plan earmarks $400 billion for 5G-related investments, dwarfing anything similar in the United States. China’s government has forced its three big telecommunications providers to work together to build 5G, something the U.S. government could not do. China also has strong-armed leading Chinese Internet platform companies — such as Baidu, Alibaba, Tencent, JD.com and ride-sharing company Didi Chuxing — into taking a nearly $12 billion stake in one telecom provider, China Unicom, to subsidize its 5G rollout.
China has harnessed the full weight of its national government to ensure that Chinese firms are at the forefront of standards-setting negotiations worldwide. In a report released in November, the Eurasia Group consulting firm estimated that, while China was on the sidelines of the standards setting for 3G and 4G, Chinese firms could end up holding upward of 40 percent of the standard essential patents for standalone 5G.
China is not the only country ahead of the United States in 5G. Japan has far more sites per 10 square miles — 15.2 — than both China or the United States. Germany has made similar progress to China’s — with nearly 10 times more sites per 10 square miles than in the United States. But, despite some of President Trump’s claims, neither Japan nor Germany are considered threats to the United States.
At root, the issue here is trust. U.S. moves against Huawei are driven by a fear that the Chinese Communist Party not only rejects the values of a Western liberal economic system but also is at war with those values across the globe. What’s more, U.S. officials worry that the Communist Party has conscripted Huawei in this battle, both as a weapon to dominate cutting-edge technology and as an agent that can conduct espionage on the West.
Despite Huawei’s protestations that American worries about espionage are unwarranted, its executives routinely cross the line between state and private actors. Take Meng Wanzhou, Huawei’s chief financial officer, who was detained in Vancouver in December and has now been charged with bank fraud in connection with Huawei’s alleged sanctions busting in Iran. She reportedly had eight passports, one a Chinese government official passport. Wang Weijing, the Chinese employee arrested in January in Poland on espionage charges, worked for the Chinese consulate in Gdansk before joining Huawei, again blurring the distinction between Chinese officialdom and private sector.
Seen in this light, the American actions against Huawei mix both an independent law enforcement action and a high-stakes worldwide contest with a government whose core ideology is increasingly inimical to U.S. values.
So, what’s next?
Just a few years ago, pundits heralded the victory of globalization and the onset of a borderless world. Now, the Huawei case raises the prospect of a newly bifurcated globe, split into technological spheres of influence. The United States and its closest allies — Canada, Australia, New Zealand, Great Britain and Japan — are coalescing into one. China leads another. In the developed world, Germany and France are sitting on the fence. In the global south, Malaysia and Indonesia are up for grabs.
And Huawei is at the center.