Gordon Chang: Do Not Support China's Huawei, Cripple It Instead

Authored by Gordon Chang via The Gatestone Institute,

"A prominent Republican who advises President Donald Trump called America's 5G strategy 'the biggest strategic disaster in U.S. history,'" wrote China-watcher David Goldman recently.

Many people will regard that as an exaggeration, but America's failure to have a 5G strategy will almost certainly prove to have historic consequences.

"5G" is shorthand for the fifth generation of wireless communication.

"In the very near future, dominating the wireless world will be tantamount to dominating the world," wrote Newt Gingrich in Newsweek in February. That is not an exaggeration.

Why not? With speeds 2,000 times faster than existing 4G networks, 5G will permit near-universal connectivity to homes, vehicles, machines, robots, and everything plugged into the Internet of Things (IoT).

Moreover, with just about everything connected to everything else China will filch the world's information. That is not a theoretical concern. For instance, nightly from 2012 to 2017, China surreptitiously downloaded data from the Chinese-built-and-donated headquarters of the African Union in Addis Ababa.

Chinese parties have already been criminally taking American information, intellectual property and data for decades, worth hundreds of billions of dollars a year. This continuing crime is essential to China's implementation of numerous industrial policies, especially the controversial "Made in China 2025" initiative, a decade-long program to achieve dominance in technology sectors, including 5G.

Theft is by no means the full extent of the harm. China, with control of 5G, will be in a position to remotely manipulate the world's devices. In peacetime, Beijing could have the ability to drive cars off cliffs, unlock front doors, and turn off pacemakers. In war, Beijing could paralyze critical infrastructure.

"China's game," Goldman wrote in an e-mail, "is to control the broadband, and then the e-commerce, and then the e-finance, and then all the tech startups servicing the 'ecosystem,' and then the logistics."

As he told me this year, "The world will become a Chinese company store."

There is no mystery to how Beijing thinks it will grab control of the store. The Chinese will use Huawei Technologies.

Huawei, built on stolen U.S. technology, is the world's leading telecom-equipment manufacturer and is fast becoming the world's 5G provider. As Goldman writes, "Huawei has signed equipment agreements with every telecom provider on the Eurasian continent."

Beijing, since Huawei's founding in 1987, has been subsidizing sales of the company's equipment and otherwise promoting its wares. No prizes for guessing why. As Senator Marsha Blackburn told Fox News in July, Huawei is Beijing's "mechanism for spying." For instance, Beijing pilfered data from the African Union through Huawei servers located in the building the Chinese donated.

So, Huawei is a dagger aimed at the heart of America, and as the unnamed adviser quoted by Goldman suggests, the threat is a mortal one.

There are various strategies for meeting China's 5G challenge, but the most direct one is crippling Huawei. The Trump administration has taken steps to do so, but now that effort is on the verge of collapse.

In fact, the Commerce Department looks set to support that dangerous Chinese firm. On Sunday, in an interview with Bloomberg Television in Bangkok, Commerce Secretary Wilbur Ross said his department will "very shortly" grant exemptions from its Entity List designation to allow sales to Huawei.

"We're in good shape, we're making good progress, and there's no natural reason why it couldn't be," Ross told the business channel.

In May, Ross's Commerce Department added the Chinese telecom-equipment provider to its Entity List, so that American businesses needed prior approval to sell or license to Huawei the products and technology covered by U.S. export regulations. Since then, Commerce has granted two 90-day waivers from these prohibitions. The second waiver will expire November 19.

Commerce, it appears, will not issue another across-the-board waiver but will instead grant exemptions to specific companies. Ross said he has received 260 waiver requests.

Granting waivers would be a grave mistake. "The United States," Brandon Weichert of The Weichert Report told me, "is letting China off the hook."

Ross and others argue that the individual exemptions are justified because Huawei can obtain items either from China itself — Huawei has developed its Kirin chipset, said to be comparable to Qualcomm products — or from other countries. He argues that U.S. companies might as well be the ones making the sales. At issue are semiconductors from principally Japan, Taiwan, and South Korea.

Ross is thinking too small. The United States, instead of trying to make sales, should be stopping everyone from selling to Huawei.

America has the power to cut off all sales. Japan and South Korea are formal military allies of the United States, and Taiwan, although no longer a treaty partner, is even more dependent on Washington for its security. Because Huawei poses a critical threat to everyone, it is not clear why Washington should not pull out all the stops to get Japanese, South Korean, and Taiwanese suppliers to cut off the Chinese company.

Taipei says Washington has not asked Taiwan Semiconductor Manufacturing Co., the giant chip supplier, to end sales to Huawei. The issue, therefore, is why has the United States not even made a request.

Up to now, the Trump administration has been trying to persuade, sometimes nudging friends and partners. American officials have, for instance, said they might reduce intelligence sharing with countries maintaining Huawei gear in their 5G networks.

That is too mild. Given the importance of the issue, the Trump administration should be forcing others — Japan, South Korea, Taiwan — to make a choice: sell to Huawei or sell to the world's largest market, America's. Last year, America's merchandise trade deficit with Japan was $67.2 billion. The comparable figures were $17.8 billion for South Korea, and $15.2 billion for Taiwan.

U.S. officials have been telling other countries not to buy Huawei 5G gear, but if they should not be buying Huawei, then Americans should not be supplying that Chinese company either.

Let's put Huawei out of business, not support its efforts to harm us.