America worries that Huawei, China's telecoms giant,
spies on behalf of its government and threatens
Western interests. Such concerns are not just about
America's security, but also its insecurity.
By The Economist
February 22, 2020 "Information
Clearing House" -
Rarely does a country go to war with a private
company. But America has done just that. But is this
really about Huawei or is it something bigger than
that? And what is the threat?
What is this war really about and why is Huawei in
the middle of it?
Founded in China in 1987 Huawei is now the world’s
largest maker of telecoms equipment with revenues
exceeding $103bn. When you think about Huawei you
might think about the handset. That makes sense,
since it sold 200m of them in 2018 alone. But close
to half of its revenue comes from selling network
equipment. In fact, since 2014 it’s outgrown all its
competitors reaching over 3bn people.
This is how networks function - Your phone sends a
signal to a nearby tower using radio waves, voice
and data are passed over an internal network run by
your phone company, which connects your handset to
other phone users and the wider internet. In other
words, these antennas connect us all. But now,
there’s a new kind of network. Although 5G is
massively overhyped, it is coming and Huawei is a
leading force in this innovation. But though this
computerised, smart future opens up new
possibilities it comes with a health warning.
Because if entire networks are vulnerable this opens
the door to countries spying on one another.
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In a rare interview with The Economist Ren Zhengfei,
Huawei’s founder and CEO, talked about the political
storm surrounding his company. As the argument rages
over the security of Huawei’s products the effects
can be seen in some unexpected places. Joe Franell
runs Eastern Oregon Telecom, a small network serving
the people of this rural area. The problem is that
the network here relies on Huawei technology.
It’s a similar story around the world Mobile-phone
users in developing countries have benefited from
Huawei’s attractive deals. But how is Huawei
undercutting its competitors?
Whether or how Huawei is connected to and subsidised
by the Chinese government is unclear. But what is
clear is this - China is the kind of country where
if the party says jump all you can say is, well how
high? Loyalty to the state is actually enshrined in
China’s intelligence law Article 7, a 2017 addition,
states that “Any organisation or citizen shall
support, assist and co-operate with the state
intelligence work.” Critics say this law means that
when you buy Huawei equipment you may be exposing
yourself to surveillance by the Chinese intelligence
services. And this makes governments very
uncomfortable.
The fear is that Huawei will leave backdoor
vulnerabilities in its networks that would provide
China with an opportunity to spy on its competitors
and enemies. To counter this mistrust, Huawei has
shared its code and allowed the likes of Britain’s
National Cyber Security Centre to scan it for
backdoors. So, if there’s no solid security threat
why is America making an enemy out of Huawei?
It seems as though the concern over Huawei is not
only about America’s security but also its
insecurity. And it’s causing collateral damage at
home as well as abroad. In May 2019 the Trump
administration issued an executive order which not
only forbade American companies from supplying
Huawei with components, but restricted domestic
networks from using its equipment. It’s a move that
feels like an own goal to Americans like Joe Franell.
And there’s another uncomfortable truth that America
can’t ignore. Smartphone technology relies on a
truly global supply chain. Take an average
smartphone. Some contain components from more than
200 international suppliers. Screens might be made
by Samsung in South Korea. The camera lens
engineered in Germany. The chip could be designed by
a California-based company and manufactured in
Taiwan. The battery could come from Japan and the
audio chip from China. But increasingly, hostility
and lack of trust threaten to fracture these supply
chains.
America's concerns about Huawei are understandable.
But the risks can be managed by limiting the use of
Huawei equipment to less sensitive parts of 5G
networks. That way it is possible to benefit from
the low cost of Huawei’s equipment while minimising
security concerns.
Billions of people around the world have benefited
from increased connectivity made possible by global
standards and global supply chains. But if political
mistrust divides the telecoms industry into rival
camps everybody stands to lose
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