Photo: AP
Photo: AP

Opinion | The storyline behind Chinese paper spies in the house of tech

Unless there is conclusive proof, the US-led attack on Chinese telecom giant Huawei Technologies smacks of commercial nationalism

Over the past few days, the global media has been fascinated by the goings on in the “secretive" Chinese telecom giant, Huawei Technologies. Countries like the US, Japan, Australia and New Zealand have already banned Huawei’s switches and routers. These bans are driven by national security concerns that these network infrastructure products could be hijacked or manipulated by foreign governments and spies. Of course, fuelling these fears is Huawei’s perceived closeness to the Chinese government, as well as its opaque shareholding.

Even in India, a recent media report said a leading telecom industry body, The Telecom Equipment and Services Export Promotion Council, will ask the government to issue a ban on import of 5G telecom equipment made by Huawei and other similar Chinese companies.

This has prompted a sharp reaction by the Cellular Operators Association of India, which finds these concerns lack any merit. In a letter, the COAI argues that “it is virtually impossible for any one entity to control the system. There are inbuilt security systems designed to make the system robust and secure." Arguing against a hasty decision, COAI stressed that “such decisions cannot and should not be taken on mere concerns".

All this comes at a time when Huawei is investing massively in 5G, which is poised to become the next-generation technology. In Q3 2018, Huawei had a 28% market share of the global telecom equipment market, up 4 percentage points since 2015, according to research agency Dell’Oro.

The telecom network market share report assumes significance because Huawei is now facing setbacks in several of its key telecom markets. Countries such as the US, Australia, New Zealand and the UK are trying to block their telecom operators from sourcing 5G network from Huawei. The arrest of Meng Wanzhou, Huawei Technology’s chief financial officer, earlier this month has also cast a shadow on US-China relations, though the issue is inextricably linked to broader tensions over trade and intellectual property theft. It is clearly a war for technological leadership between American and Chinese tech companies, vying as they are for a bigger share of the growing global telecom market.

However, it may become harder for Western multinational firms to ignore technological developments in China. Research and development spending by Chinese firms rose by 12.5% in 2017, with much of it directed at next-generation technologies such as 5G wireless networks. China’s total spending on R&D rose a robust 12.3% last year to a record 1.76 trillion yuan ($254 billion), according to a Chinese government report.

No doubt data security, theft and espionage are grave issues. Such concerns have prompted countries to impose greater restrictions on technology transfers, in particular on Chinese companies operating in the US. However, experts on technology are unanimous that innovation is all about collaboration and is a two-way street.

There are many ways to firewall companies and countries from bots and bugs during technology transfers. Simply banning Huawei is not the answer.

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