Fifth Generation Power Struggle

The battle around Huawei and 5G isn’t just about one huge technology company and it isn’t just about the infrastructure for the 4th industrial revolution. It is about geopolitics and the battle between the incumbent sole US superpower versus a rising China under the Chinese Communist one-Party dictatorship. Huawei is an extension of the Chinese state. China’s National Intelligence Law, which came into effect in July 2017, stipulates in Article 7 that: “any organization or citizen shall support, assist, and cooperate with state intelligence work according to law.” Combined with Article 14, this support is not voluntary: “state intelligence work organs, when legally carrying forth intelligence work, may demand that concerned organs, organizations, or citizens provide needed support, assistance, and cooperation.”

Modern conflict between Members of the UN Security Council is not a straightforward affair. Once you have nuclear weapons, most avenues for projecting hard military power become very limited, and proxy wars are unpredictable and messy. Cyber-attacks and industrial espionage, however, have become the preferred choice. Most modern production facilities, industrial technologies and trade secrets are up for grabs in today’s digitally connected and globally entangled world economy. China since years accounts for most of the global known cases of intellectual property theft and industrial espionage. FBI Director Christopher Wray called Chinese espionage the country’s top counter-intelligence priority and that China’s theft of technology is the biggest law enforcement threat to the US – with over 1000 pending cases and an estimated cost of 300-600 billion $ a year. The US and its allies’ main argument is that dependence on Chinese technology for the 5G critical infrastructure will make us vulnerable to espionage, sabotage, and blackmail and could pose an existential threat in a future military conflict with China.

Considering that, this aspiring superpower, which is governed by an authoritarian leader for life and currently holds millions of ethnic Uyghurs in concentration camps, should make every European pay very close attention to our role in the rise of Chinese dominance. The Made in China 2025 plan shows China’s trajectory. The goal, among others, is improvements in self-sufficiency for key production chains and a huge boost for domestic companies over foreign competitors. The plan features the goal of raising domestic content of core components and materials to 40% by 2020 and 70% by 2025. This would improve the position of many Chinese national champions in dominating global markets through economies of scale and thus help ensure unbeatable prices in the world. Add to this the mix of new land- and sea-based infrastructure routes through “Belt and Road” and you see that the birth of the second superpower is happening right before our eyes.

In fact, we Europeans have a front row seat on this development as we are caught in the middle between America, Japan, South Korea, Australia, New Zealand, Canada on the one hand and China and its network of allies on the other. This battle is currently most spectacularly visible in the deployment of 5G networks. The United Kingdom, after severing its ties with the European Union, decided to allow Huawei to build some of the infrastructure for 5G. The European Commission has refrained from any harsh measures such as outright bans, and instead advocated a common Member State Strategy outlined in its toolbox on 5G security. It appears that Member States will be in charge and thus may remain susceptible to Chinese influence and divide and conquer tactics as already seen.

The United Kingdom’s official reasoning for the move is that it has the technical capacity and experience in controlling what China is installing and how safe it is. Even if that was the case, the question remains why all other Members of the five eyes see the prospect of Huawei infrastructure as so critically dangerous for national security, but only Boris Johnson stands against the advice of large parts of its security establishment. Could it be that the new Singapore-on-Thames fears the retaliation and isolation from the vital Chinese market, so quickly after it has given up its ability to negotiate together with the largest trading block in the world?

Germany is currently caught in the same trade-vs-security-conundrum as the United Kingdom. Merkel recently warned “not to slip into a new form of bipolarity, […] Rather we must try, with the results and experiences we have around multilateralism, to include a country like China and at least treat it on the same terms.”. In other words, let’s pretend there is no bipolar division of the world on its way, stay in the middle, rely on he US security and technology and Chinese business at the same time. Given the German economy’s excessive reliance on exports, not angering China is understandable of course. The question then is how much prosperity are we willing to forego for security? According to German Newspaper Handelsblatt: “At the end of 2019, intelligence was passed to [the Federal Foreign Office] by the U.S., according to which Huawei is proven to have been cooperating with China’s security agencies,”. Additionally, only recently three Brussels lobbyists, among them a former ranking German official, have been charged with espionage and their offices and homes have been raided as they evidently spied for Chinese military intelligence.

Relying on European producers of 5G infrastructure might be the best solution, though presumably more expensive and difficult than outsourcing it. By its own admission, Ericsson is leading the ‘end-to-end’ production and technological race around 5G infrastructure with patens and numerous current and future business contracts to proof its competitive stance. The European Commission’s Work program gives a glimpse into what we Europeans plan to do with its emphasis on industrial policy review and European strategic sovereignty. One thing is for sure, the 27 Member States will stand no chance in-between the US and China if they act individually. As the biggest trade block in the world, the EU is capable of standing on its own even in the field of security. But it needs to decide.