What’s ultimately at stake here is the future of 5G networks around the world — the ultra-fast connection systems that will soon link smartphones, enable driverless automobiles and, potentially, revolutionize warfare. Given the stakes, U.S. measures to date struck us as reasonable.
Now the Trump administration has escalated to a new level, requiring that all U.S. firms seek federal approval before selling to Huawei. Though not an outright ban on sales, it is a major restriction because Huawei’s products rely on inputs purchased from no fewer than 30 U.S. companies, and now those will be subject to government licensing. Huawei says it has stockpiled 12 months’ supply of U.S.-made inputs in anticipation of just such a move. Depending on how it’s implemented, however, the U.S. policy represents a potentially crippling blow to a $100 billion corporation that Beijing considers its national champion.
The communist government’s protective attitude toward Huawei reflects not only the company’s commercial success but also its long-standing connections to the Chinese state. In fact, Huawei’s founder is a former military officer, and the enterprise grew with the support of government contracts and easy government credit. A 2017 Chinese law requires Huawei and all other firms and individuals to cooperate with government intelligence agencies; in January, Poland arrested a Chinese executive of Huawei on espionage charges. When Canada arrested Huawei’s chief financial officer, Meng Wanzhou, in response to a U.S. extradition request for allegedly violating sanctions on Iran, China retaliated by arresting Canadians — not exactly the reaction you’d expect from a government that held Huawei at arm’s length.
Still, neither the United States nor any of its allies has produced a “smoking gun” proving that Chinese intelligence uses Huawei technology to penetrate other countries’ networks. Under the circumstances, it is legitimate for the United States to seek greater transparency from Huawei, both about its ownership and its strategic objectives in the global market. To the extent that the Trump administration’s latest step is an attempt to bolster its negotiating position on those issues, it may be justified. If it represents a deliberate attempt to bring down Huawei and provoke a broader economic rupture with China, it may not. In that sense, the administration owes the public more transparency about its intentions, as well.