The company controlled 29% of the 5G infrastructure market, followed by Europe-based Erickson and Nokia whose combined share barely matched Huawei’s.
Over the past two years, consistent U.S. pressure has helped push many European allies to place stricter security restrictions on their 5G telecommunication networks, but it is not time to gloat. China’s strategy is evolving. For the Chinese Communist Party (CCP), supporting Huawei’s 5G infrastructure efforts is part of a larger effort to dominate tomorrow’s technologies and increase its geopolitical influence.
As of Spring 2021, most of Europe has blocked Huawei’s ability to build 5G infrastructure, or at least increased the scrutiny around 5G infrastructure bids. The UK reversed a decision that allowed Huawei to build 5G infrastructure for portions of the nation’s wireless network outside of critical infrastructure. Most of the continent’s larger countries have already, or are likely to, institute stricter security regulations for their wireless networks which will make it harder for Huawei to win 5G infrastructure bids. While likely refraining from publicly criticizing allies in the same manner as the Trump administration, the Biden administration shares the same concerns regarding China’s increasing technological influence. That ought to keep Europe on its current path.
Even so, Huawei has stated that it is not concerned about geopolitical headwinds, with the company’s chairman, Eric Xu, stating: “[The Chinese government] will not stand by and watch Huawei being slaughtered on the chopping block.” Though Huawei’s ownership structure is still opaque, there are no doubts that the company has received substantial support from the Chinese state and the CCP. Support from the China Development Bank and the Export-Import Bank has included loans at below-market interest rates and an unprecedented $100bn line of credit at state-owned banks. In 2018 alone, Huawei received $222m in grants from the Chinese government which not only allowed it to greatly increase revenue, but also to increase R&D spending to $15.3bn a year which is on par with Alphabet and Amazon.
Recent evolutions in China’s 5G strategy have proved Eric Xu correct. 5G was an important component of China’s 2015 Digital Silk Road White Paper, but it was not the entire strategy. Goals included creating China-centric digital infrastructure, facilitating expansion of technology corporations, accessing large pools of data, projecting sharp power, and manipulating political perceptions. Beijing is pursuing these goals without an over-reliance on 5G infrastructure among U.S. allies, partly because 5G itself is not necessarily transformational, although it could ultimately have profound effects on today’s nascent industries, like artificial intelligence and quantum computing.
If Europe has stymied Huawei’s ambitions, there are opportunities aplenty elsewhere. In February, Brazilian Communications Minister Fábio Faria requested vaccines in a meeting with Huawei executives. Just two weeks later, Brazil announced a large 5G auction with Huawei as a major participant. Brazil’s criticism of China has abruptly halted, even though President Jair Bolsanaro had previously criticized China and refused to support its vaccines for use in Brazil. It is not hard to imagine the pressure that China could bring to bear on countries smaller and poorer than Brazil, where a trade-off will be tempting between 5G infrastructure and China’s seemingly plentiful covid-19 vaccines.
In Europe, Huawei has concluded that there is more than one way to skin a rabbit. The company has now shifted the battlefield to artificial intelligence (AI), one of the many technologies that could flourish with 5G’s faster speeds. Take Slovakia. The country ostensibly remains on the fence on the use of Huawei in its 5G infrastructure, but the Slovak Technical University in Kosice recently announced its intent to establish an AI research center in tandem with the Chinese firm. Other schools in Slovakia, including the University of Zilina, are working with Huawei on “safe city” initiatives, described by critics as a means to export authoritarianism because of their emphasis on digital surveillance. 5G was always a means to an end for China, part of that end included dominating the commercial, intelligence, and military applications for AI. Partnerships with European universities on AI and smart cities are a backdoor for China to access European data, and influence the industries of the future without the need for Huawei 5G infrastructure.
Huawei itself has also followed the CCP’s lead with social media influence campaigns using bots and fraudulent accounts. Fake Twitter profiles purporting to be telecommunications experts, academics, and writers recently re-tweeted an article by a trade lawyer attacking draft Belgian 5G legislation detrimental to Huawei. Company officials then swiftly retweeted the content from the fake accounts, allowing the articles to quickly reach a larger audience.
So while China hawks in Europe and the U.S. won the initial battle against Huawei’s involvement in Europe’s 5G networks, technological competition is only just beginning. The West will need an integrated policy — so that when countries like Brazil consider softening telecommunications policy in return for vaccines, Western countries can quickly export excess jabs instead. As Huawei’s AI cooperation with Slovak universities highlights, there is now an urgent need for new legislation in Washington and Brussels to improve transparency of funding for high-tech projects at universities. The U.S. and its allies also need to look to the future.
6G will be even more transformational than 5G and the technological development that 5G catalyzes will have a greater impact than 5G infrastructure itself.