In his novel The Sun Also Rises, Ernest Hemingway famously wrote that a character's bankruptcy happened in two ways: "Gradually and then suddenly." The same can also be said of the outbreak of conflicts between nation-states and while last week's decision by the US government to place China's Huawei on a US trade blacklist isn't an open conflict between the two countries, this rapid escalation in the fight over Huawei has been a long time in the making.
If the decision of US officials last week to place Huawei on a US trade blacklist list came as a surprise to you, you're not alone. Global markets were caught completely flat-footed by the move and scrambled to sort out the implications. US President Donald Trump announced a 90-day delay in enforcement to give businesses time to adjust, but the third largest electronics maker in the world simply can't be cleanly cut out of the global supply chain in 90 days.
As companies around the world like Google, Qualcomm, and most importantly the UK-based semiconductor firm ARM all cut business ties with Huawei to comply with the new US trade restrictions, a cascading disruption in the global economy now appears inevitable, even threatening the roll-out of long-awaited 5G telecommunications networks around the world.
All of this is taking place in a larger trade and geopolitical context between the world's only remaining superpower, the US, and the nation most well-positioned to present a credible challenge to American hegemony, China. While this week's developments surrounding Huawei aren't entirely about scoring geopolitical points--Huawei has faced credible accusations of espionage, at least of the corporate kind if nothing else--Huawei's trade blacklisting is only the most aggressive and arguably inevitable step in a long series of every increasing escalation of China and America's burgeoning technological Cold War.
The Fall of the Soviet Union Leaves a Path for China's Rise
For the second half of the twentieth century, even if something wasn't about the Cold War, it was about the Cold War. The US and USSR engaged in a global strategic conflict fought out in proxy wars, espionage, and various races to produce the fastest or most powerful new technology. Shortly after the Korean War settled into its decade's long truce, American officials panicked about the perceived "bomber gap" that the USSR supposedly had over the US Air Force.
There never actually was a bomber gap, the United States always had the advantage when it came to the number of nuclear weapon-capable planes, but the fear on the part of American officials was genuine. Most of the modern tools of military surveillance, such as satellites, were built precisely to find out what the Soviet Union was up to.
The anxiety around this great unknown variable, the Soviet Union's military strength relative to the US, was sent into overdrive when the USSR launched the first Sputnik satellite when the Americans didn't even have a space program set up. The first man in space soon followed, as did the first woman. The USSR was the first to launch a satellite to orbit the moon and take pictures of its far side, the first time it had ever been seen by humans. The entire drive to put a man on the moon can be summed up as the American determination to prevent the Soviet Union from putting a nuclear missile base up there.
If this sounds somewhat paranoid and hysterical, you're not wrong. The fear of losing our technological edge has made Americans a little bit addled, honestly, which is probably the real reason why Americans celebrated the fall of the Soviet Union so universally. It wasn't about the defeat of some adversary for the vast majority of people; it was just that the whole thing was over; they could stop freaking out.
There can only be one power for so long, however, and there is no such thing as a permanent hegemony. The size of the vacuum left by the collapse of the Soviet Union appeared unfillable in the years after the end of the Cold War, but despite scholars making careers off that thesis, it was always ahistorical nonsense, and it wasn't long before China began to fill this unfillable space rather quickly--to the concern of American policymakers.
While not nearly on the same level technologically as the United States at the turn of the millennium, China's rise has been quicker than anyone thought possible twenty years ago. This has been powered in part, yes, by mandatory technology transfers from companies looking to do business in China--as well as the typical technological espionage that countries have engaged in since the first city-states--, but China's rise is just as much from its own industriousness and foresight.
China positioned itself wisely around the turn of the millennium, and now they are reaping the technological benefits, making it one of the only nations in a position to challenge the US on its home turf: technology. Meanwhile, the US, having grown quite comfortable as the only superpower on the planet--not usually to its benefit, obviously--is finding itself for the first time in more than two decades having a real challenge to its position--and boy howdy are they not thrilled about that.
Chinese Technology a Flashpoint in a New Cold War
Arguably the most important technological development in the past decade has been the rapid advance of telecommunications infrastructure. In the past ten years, we've gone through 3G networks, 4GLTE networks, and starting this year, the rollout of 5G networks will begin in earnest, promising transfer rates 1,000 times faster than 4G, fewer service interruptions, and the all-but elimination of network latency--dropping to just 1 millisecond down from the current 50 milliseconds standard for 4G.
And China is way out ahead of the United States on 5G network deployments. So far ahead, in fact, that US officials are starting to worry that if they don't act soon, it could be decades before the US catches up. So far, with American telecommunications companies showing little real interest in speeding things along, the US can only watch as China's telecom and electronics companies, like ZTE and Huawei, begin offering to license their technologies to help other countries to build up their 5G network infrastructures.
The US government says these offers are trojan horses for Chinese Intelligence to gain unfettered access to networks throughout the world and has gone so far as to state outright that is Huawei is given access to any part of an ally's network infrastructure, the US would reconsider its intelligence sharing arrangements with that country. While it is easy to write this off as simple paranoia on the part of the US and others who are afraid of competition--which they certainly are--it's not as if there is nothing to see here and we should all just move along.
The Chinese government has turned the surveillance state into something of a technological high-art, including the functional development of its own Internet, staffed with official state censors to prevent "subversive" content from disseminating online, using smartphones and AI as a means of tracking dissident or minority communities within China, most notably the several million predominantly-Muslim Uighurs, and the implementation of a social credit system that grants access to public services and transportation based on a score assigned to a citizen measuring their compliance with state morality rules and regulations.
While the US ostensibly separates private industry and business from public administration and policy making, China is still a communist state, so the distinction between private enterprise and public interest is only as rigid as the state allows it to be. While there is no direct evidence that we know of that substantiates US claims, the US isn't the only one who has made such accusations.
As recently as last year, officials of the African Union, no lock-step ally of the United States to say the least, accused China of the exact kind of network infiltration that the US says Huawei will attempt elsewhere. In the case of the African Union headquarters, an investigation by the French newspaper Le Monde found that the headquarters--located in Addis Ababa, Ethiopia and built entirely by a Chinese state-owned construction company and outfitted with equipment entirely supplied by Chinese vendors--found that this equipment contained deliberate flaws that enabled an outside connection to monitor all activity on the network. These flaws were exploited for years by outside actors before they were discovered and new equipment secured.
While not definitively proven to be a case of Chinese spying, and China strenuously denies these and other charges, several such cases over time makes people rightfully suspicious. Africa more broadly has seen an enormous amount of investment from Chinese companies in the past decade, often directed towards infrastructure projects. According to a 2017 McKinsey Report on African development, this investment push including building up most of Africa's updated telecommunications infrastructure.
Aly-Khan Satchu, who works as an investment analyst in Nairobi, Kenya, believes the hack revealed a real vulnerability for African nations. “African countries have no leverage over China,” he said before adding “There’s this theory in Africa that China is Santa Claus. It isn’t. Our leaders need to be disavowed of that notion.”
When a Trade War Meets a Cold War
Now, every one of these would be a legitimate concern, and you could even make an argument that what US officials are doing is a legitimate counter intelligence maneuver. It just so happens that none of these is the real reason for the savaging that Huawei has been put through this week. As Russell Brandom over at The Verge as well as others have pointed out, in a news conference this week, President Trump was asked about the blacklisting of Huawei, and he all but ran a flag up the White House flagpole emblazoned with the words "Huawei is being threatened in order to force China into making trade concessions".
"Huawei is something that’s very dangerous," Pres. Trump said during his news conference. "You look at what they’ve done from a security standpoint, from a military standpoint, it’s very dangerous. [Appropos of absolutely nothing, ] So it’s possible that Huawei even would be included in some kind of a trade deal. If we made a deal, I could imagine Huawei being possibly included in some form, some part of a trade deal (emphasis added)."
The major sticking point in negotiations has been the restrictions the US wants to put on what it sees as Chinese companies and China's government infringing on American patents for pharmaceuticals and other high-value assets. America isn't in a very strong position on this issue, as China is under no obligation to respect American patent or copyright laws that it had no hand in crafting and were written without China's input decades ago. If the Chinese government is complying with its own laws, there isn't much more to say about the matter.
If an American company doesn't like turning over technology to the Chinese government in exchange for access to the Chinese consumer market, those are the terms China's government has laid down; no one is forcing Google or Tesla to go off and try to sell its products and services to the Chinese. For all the talk over the last several months about the dire national security risk that Huawei poses to Western nations, this is not something that is remedied by a trade deal.
Trump's acknowledgment that the status of Huawei is little more than a bargaining chip in a trade dispute over intellectual property claims shows either that Huawei is not the grave threat American officials have been making them out to be, or they are, but it'll be an acceptable trade-off if it means Pfizer can overcharge the Chinese consumer for insulin and viagra the way they've been doing in the United States for three decades. In either case, the moves made by US officials against Huawei will not be easily forgotten, either by the Chinese people or the citizens of other nations who must now question just how much leverage this administration have over their leaders through the widespread use of US-originating technology.