Digital Cold War? How Beijing's Striking Back Against US Crackdown on Huawei


Beijing is ready to strike back against Washington's mounting pressure on China's tech industry, scholars say, commenting on Beijing's reported warning to American, South Korean and British companies over the Trump administration's restrictive measures against Huawei.

The Chinese leadership allegedly summoned representatives of US high-tech giants and some other foreign firms operating in the People's Republic, warning them against adhering to Donald Trump's ban on sales of US technologies to China's companies, The New York Times reported last week.

The purported move came on the heels of Beijing's announcement of putting together an "unreliable entities list" of foreign companies on 31 May and was seen as a response to Washington's blacklisting of Chinese telecom giant Huawei on 16 May.

"The New York Times article is spot on. Huawei is flagship vanguard of China's semiconductor industry and its trump card on 5G. There is too much at stake for China to buckle. Hence China is hitting back", says Andrew Leung, an independent China strategist based in Hong Kong.

The strategist highlighted that the countries' "supply chains have become intertwined globally", citing Chinese President Xi Jinping who warned against a decoupling of the US and China at the 2019 St. Petersburg International Economic Forum.

"Components and materials (like rare earths) are diffused and imbedded in one another that total segregation is almost impossible", Leung stressed.

'Bipolar Digital World': China vs the US

According to Professor Keith Richburg, journalist and director of the Journalism and Media Studies Center, at the University of Hong Kong, what is unfolding now resembles nothing but "a new Digital Cold War".

"We have already seen Google is planning to stop its software support for Huawei and Reuters reported recently that Facebook will cease pre-loading its Facebook, Instagram and WhatAspp apps on Huawei devices", Richburg noted. "But in a sense, this new Digital Cold War has been going on for quite some time, since the Chinese government has longed blocked or restricted the top American tech companies, like Google, Twitter and Facebook, from operating freely inside mainland China".

The professor suggested that countries would be forced to make a choice between the American and Chinese digital ecosystems "just like in the old Cold War days" when they had to decide whether to side with the US or the USSR.

"It's not a choice many countries would want to make", he remarked. "But it may become increasingly difficult for countries to stay neutral and avoid taking sides".

China Doesn't Have Many Cards Up Its Sleeve

Despite China's warnings about "dire consequences" for American firms in case they adhere to Trump's technology ban, it appears that Beijing does not have enough leverage to deliver on its threats.

Francesco Sisci, a Beijing-based Italian sinologist, author and columnist, presumed that "the tussle between US and China is going beyond trade" as "the US is threatening to isolate what US deems are China's most dangerous technologies like Huawei".

At the same time, the columnist wonders as to how Beijing could prevent US tech giants from obeying Trump's orders.

"How can US companies really not cooperate with their president? And if they do cooperate what can China do?" Sisci asked. "If Beijing kicks these companies out of China it loses a last leverage in the US and it isolates herself more, just as the Trump administration wants to do".

According to the Italian sinologist, Beijing doesn't have many cards up its sleeve and "any choice it takes it will have a massive cost".

Huawei Ban May Accelerate China's Tech Independence

China is pushing ahead with the production of its own chips amid the US technological crackdown. According to the Made in China 2025 plan Beijing intends to produce 40 per cent of the chips it uses by 2020 and almost 70 per cent by 2025.

Mark Skilton, professor of practice in information systems and management at Warwick Business School, opined that Trump is betting that Beijing "will blink first" while tightening the screws on the Chinese telecom giant. However, what is at stake now for China is "national pride", he remarked.



"While China is heavily locked into American semiconductor and cloud tech, perhaps 5 to 10 years behind in own supply capability, this action to take punitive action against US companies and partner countries is hardly unexpected", he pointed out.

Skilton believes that Trump's assertive trade policies will prompt Beijing to accelerate China's "own technological independence faster rather than slower".

"Unlike Brexit that has no clear outcome measure apart from large fines and slower economies, this self- inflicted economic war will likely drive China's back against the wall, no pun intended, and result in increased economic competitiveness of China that the president after Trump will have to clean up", the professor foresees.

Meanwhile, on 10 June, Reuters reported that major tech companies, in particular Chipmakers Intel Corp and Qualcomm Inc, mobile research firm InterDigital Wireless Inc and South Korean carrier LG Uplus, had prohibited their employees from informal conversations with Huawei staffers on technological issues including the mobile network 5G standards.

Following Washington's ban imposed on Huawei and its numerous entities on 16 May, American and foreign tech companies started severing ties with the Chinese telecom giant. ​Earlier, on 10 May, the Trump administration disrupted the Sino-American trade truce by imposing high tariffs on $200 billion of Chinese goods after the US-China trade talks had ended up with nothing.

Days after Huawei was blacklisted, Google Inc. suspended the telecom company's access to its Android operating system updates, while Qualcomm, Intel, and Microsoft immediately halted cooperation with the Chinese firm. To tackle security and maintenance issues the US Commerce Department granted American producers a 90-day waiver on 20 May to finish their businesses with Huawei Technologies Co. Ltd.

Washington kicked off its anti-Huawei campaign in 2018 citing the company's alleged links to the Chinese government and conducting surveillance on its behalf, something that Huawei vehemently denies. The Trump administration banned the company from participating in government contracts and building 5G network infrastructures with Australia, Japan, New Zealand and some other US allies following suit. Additionally, in December 2018, Huawei Technologies executive Meng Wanzhou was arrested in Canada, at the behest of US law enforcement officials over the alleged breach of anti-Iran sanctions.
Spurce: sputniknews.com

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