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TematicheCina e Indo-PacificoThe Huawei Networks: To ban or not to ban?

The Huawei Networks: To ban or not to ban?

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The story of the arrest of Huawei company official Meng Wanzhou, Chief Financial Officer, in December 2018 at the request of the US and her release in September 2021, reflects the larger concerns of many nations as they grapple with a decision to accept or reject technology being provided by this leading Chinese company. In some countries, Huawei faces product and 5G wireless-network bans, security scrutiny and related pushback. Many countries allege that the company’s products may contain security holes that China’s government could use for spying. Furthermore, some countries allege that Huawei steals intellectual property from foreign technology companies. Despite such obstacles, many countries have proceeded with Huawei as a potential or confirmed choice for 5G wireless network projects and associated infrastructure.

A Council for Foreign Relations (CFR) Report (29 March 2021) on China’s Belt and Road Initiative (BRI) shows that, in addition to the United States, eight other countries, close allies of the US, have issued outright bans of the company. Still, others have chosen to use Huawei’s competitors without taking a public stance. In BelgiumCroatiaFinlandGreeceNorwayPortugalSingapore and Spain, telecommunication companies have all contracted with Nokia or Ericsson to build their networks. In May this year, Canada announced that it was banning both Huawei and ZTE, a Chinese telecommunication company based in Senzhen, from working on its 5G networks. However, it has not always been a win-win for the US in the war against Huawei. The company is involved in 5G networks in NATO members, HungaryIceland, the Netherlands, and Turkey. Likewise, some of the US’ closest partners in the Middle East, including Saudi Arabia and the United Arab Emirates, are also using Huawei.

Official approaches to using Huawei equipment in 5G networks – COUNCILon FOREIGN RELATIONS

In September 2019, Huawei’s founder Ren Zhengfei dismissed US accusations that the company was helping China to spy on Western governments. Huawei said it was willing to sign “no-spy” agreements with governments, including the UK, amid US pressure on European countries to shun Huawei over espionage concerns.  The US Department of Justice (DOJ) charged Huawei with bank fraud and stealing trade secrets. In a 13-count indictment, the DOJ charged Huawei, its chief financial officer, the afore-mentioned Meng Wanzhou, and two affiliated firms with crimes including conspiracy, money laundering, bank and wire fraud, flouting US sanctions on Iran and obstruction of justice. The US had alleged that Meng misled the HSBC bank over the true nature of Huawei’s relationship with a company called Skycom, putting the bank at risk of violating US sanctions against Iran. 

Globally, multiple factors have heightened media coverage and discussion about Huawei. Questions about its business practices intensified amidst the US-China trade war. Also, numerous countries and companies worldwide are considering 5G wireless network rollouts. The US DOJ case against Huawei provides the legal basis for a ban by many countries. US government officials say Huawei is dangerous in part because it uses its growing share of the telecom equipment market to spy for the Chinese government.

As far back as 2012, a US House Intelligence Committee report had tagged Huawei and ZTE as potential security threats. Concerns about Huawei drove the 2018 decision by then-President Donald Trump to block a hostile takeover bid from Broadcom, based at the time in Singapore, for the US chipmaker Communal. The deal could have curtailed American investments in chip and wireless technologies and handed global leadership to Huawei, which allegedly circumvented sanctions imposed on North Korea and Iran, by providing them with telecom equipment that can be used for extensive spying on populations, essentially dual use technologies. 

Several countries have warned against using Chinese hardware because of security concerns, which stem from the Chinese government’s use of Huawei’s products to spy on people around the world. In the Pacific region, Australia blocked Huawei and ZTE from providing equipment for its 5G network. At the same time, Australian media reports suggest that government officials had advised India to ban Huawei from supplying parts for a rollout of a high-speed telecommunications network. India has not formally banned the company but has phased out the use of Huawei equipment in future projects. Other countries have also taken a similar cautious approach in their attitude towards Huawei. For instance, France had announced telecommunications operators would not be able to renew licenses for Huawei equipment when they expired, effectively phasing out the company’s presence. Vietnam has not barred Huawei, but its service providers have avoided using its equipment in both their 4G and 5G networks.

Sweden’s ban was amongst the most direct in Europe. As the South China Morning Post recently noted, “Sweden’s ban…of Huawei Technologies and ZTE Corp from its 5G networks…did not surprise observers. It is the blunt reference to China as a threat to national security that did.” Other countries, like Italy, have avoided a confrontation with China by adding bureaucratic and financial hurdles that would incentivize firms not to work with Huawei, rather than instituting an outright ban. Italy’s government vetoed a deal between the Chinese company and telecommunications provider Fastweb that would have used Huawei as the sole supplier of its 5G network. 

Huawei continues to operate around the world. Significantly, soon after Meng Wanzhou’s return from Canada it was reported that she would have a new position as rotating chairwoman of the company. Meng is the daughter of Huawei founder Ren Zhengfei and will act as the head of Huawei’s board of Directors for six months, when it is her turn. The rotating chairmen are Eric Xu and Ken Hu. This indicates that the Chinese state continues to see Meng and the company as a useful asset in its efforts to globally dominate the 5G market. The commercial and strategic battle for the world’s 5 G networks is thus far from over. 

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