Huawei quandary shows how tech firms are vulnerable to US-China crossfire

US targeting of Huawei reflects the challenges innovative companies face in an increasingly interconnected yet politically sensitive world
The world should push for common regulations and collaborations that encourage inclusive, responsible innovation

Ruqiya Anwar

Published: 3:15pm, 6 Jan 2024

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In the intricate realm of global geopolitics, Huawei Technologies, the world’s leading telecoms equipment manufacturer, finds itself at the centre of an escalating conflict between the US and China as they vie for global technological leadership.

This protracted conflict has dragged Huawei into a complex narrative: is it a technological powerhouse devoted to global norms or, as US intelligence authorities believe, a potential conduit for espionage? Both countries employ these narratives to advance their domestic agendas. Analysts, however, caution that such tactics could disastrously escalate US-China tensions.

Huawei has an extensive presence in China. Beyond it, Huawei has established a global image that shows the distinctive traits and qualities that have helped it remain resilient despite the US-China trade war.

At the core of the debate is Huawei’s identity. US intelligence officials see it as an extension of China’s military, justifying sanctions and its exclusion from international phone networks on national security concerns. But Huawei positions itself as an entrepreneurial, research-driven tech company owned by employees and committed to fulfilling the changing requirements of its customers.

Importantly, determining whether Huawei’s telecoms equipment is capable of spying or poses a threat to national communication networks is a task beyond the scope of the layman. The enclosed nature of telecoms equipment and lack of conclusive evidence backing spying charges add to the complexity of the situation.

Much has been made of Huawei founder Ren Zhengfei’s military past but he was part of the People’s Liberation Army as an engineer at a garment factory. Neither does Huawei’s early failures suggest much direct governmental support.

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The company ventured into mobile phones in the 1990s – after selling cheap telephone switches in rural China in the 1980s – and nearly went bankrupt several times. Forced to seek business abroad, Huawei hit upon selling 3G phone networks and started to earn a reputation for its low-cost, effective products and driven customer service.

Huawei’s company structure is also unusual. Ren says the privately-owned company is entirely owned by employees, via a shareholder scheme for those eligible, and dividends are paid out to both current and retired workers. This suggests a far more democratic corporate structure than is common in Chinese state-linked companies.

If Huawei had failed to catch the attention of the government before, the arrest and jailing of its chief financial officer, Meng Wanzhou, Ren’s daughter, in Canada, certainly did. Amid trade and tech tensions with the US, China stepped in to demand her release. As US sanctions crippled Huawei, Beijing reportedly offered billions of dollars in subsidies as part of a national plan to boost China’s semiconductor industry.

What is unclear, however, is whether Beijing made any demands on Huawei in return for the support. Huawei has repeatedly stated its commitment to cybersecurity.

US concerns about the security and reliability of Huawei’s technology equipment are not unreasonable. But the White House has offered no conclusive proof to back up its claim that Huawei operates as a conduit for China’s Communist Party to infiltrate Western intelligence services. And its campaign against Huawei is set against the backdrop of a larger China-US competition focused on 5G advances.

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For the US, the danger is that if Huawei, with its non-Western and non-democratic origins, dominates the information communication sector, it would jeopardise America’s position as the power shaping global communication systems.

In response to US efforts, states in Europe have made changes. Britain banned Huawei from its 5G network while others, such as France and Germany, are moving to tighten control over their telecoms providers.

How Huawei is perceived in the West has not been helped by Beijing naming it one of China’s AI national champions. The push to decouple supply chains from China is presenting significant challenges for innovative businesses like Huawei. They are pushed to divert research expenditure into duplicating technology and away from advancements that could benefit the global community.

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China’s top intelligence agency has warned that the US tech war might get worse. “It is foreseeable that the United States will continue to pursue anti-globalisation and decoupling-China policies to maintain its hegemony,” said the Ministry of State Security.

Huawei’s entanglement in the US-China dispute reflects the larger issues confronting us in an increasingly interconnected yet politically sensitive world. The implications of governments grappling with the intricate interaction of economic, technological and security factors ripple across businesses and global supply networks.

As the technological race between the US and China intensifies, it is critical to avoid portraying Huawei as an antagonist. Instead, the company should be viewed as a multifaceted entity trapped in a political crossfire beyond its control.

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A comprehensive evaluation of Huawei’s role in global technology requires an acknowledgement of both US concerns and Huawei’s perspective, and a consideration of the complexity and global implications of the dispute. Mitigating risks in a shifting technological context requires international technology and cybersecurity regulations that enable collaboration for standards and best practices.

To ensure that technology benefits everyone, governments and private companies must work together to encourage inclusive innovation. Addressing the Huawei quandary gently requires striking a balance between national security and global innovation. A global effort is required to set regulations, encourage collaboration and steer technology towards development rather than conflict, with a focus on inclusive and responsible global innovation.

Ruqiya Anwar, a PhD scholar of media and communication studies from Pakistan, is a researcher and sociopolitical analyst