Let’s have an honest conversation about Huawei

Internet Governance Project

A recent event on “International economics and securing next-generation 5G wireless networks” featured Ambassador Robert Strayer, who heads the US State Department’s Communication and Information Policy team. But the focus of the talk was not really on 5G security, international trade or 5G development. Instead, the talk was an extended attack on China and the Chinese-based telecommunications vendor Huawei — another episode in an ongoing U.S. government campaign to shut Huawei and other Chinese firms out of the U.S. market, and to convince every other country in the world to do the same.

One would expect that from a Trump administration State Department official. A few months later, however, Jason Healey, a cybersecurity professor at Columbia University, repeated the same stuff in a blog on the Council on Foreign Relations. In a short piece called “Five Security Arguments against Huawei 5G,” Healey tried to shore up the fraying U.S. campaign against Huawei with another broadside.

It’s now clear to everyone that this is part of an organized, government-led campaign. But the real issues underlying the U.S. challenge to Huawei are not being stated directly. Red flags are being waved and diversionary tactics used in the service of an objective that is not openly stated.

The anti-Huawei campaign is part of a poorly conceived and counterproductive move away from free trade and a global internet and toward tech nationalism in U.S. information and communication policy. Technology trade and development are at risk of being held hostage by military and national security interests in a way that threatens to dismember the global internet.

As much as we would like to attribute this problem to President Trump, it’s clear that it goes much deeper than that. The campaign predates his presidency by nearly a decade and has roots in the U.S. military and intelligence community. That conflict is complicated by a real difference of values between the U.S. and China, symbolized by public attitudes here towards the Hong Kong protests.

Strayer and Healey delivered what is now the standard litany of USG resistance to Huawei. It consists of these major components :

1. Huawei 5G equipment poses severe cybersecurity threats
2. Huawei steals intellectual property
3. Huawei is inseparable from and a tool of the Chinese government

Huawei and cybersecurity

The U.S. argues that the presence of Huawei equipment or software in a 5G network means that the entire system is compromised. Mistrust of China and opposition to its authoritarianism is projected onto Huawei equipment. Professor Healey takes this line of thinking to new heights of fantasy. Perhaps, he muses,

“Huawei has not just a backdoor but a kill switch . Huawei gear around the world would operate as normal, year after year, until a precipitating crisis.”

No need for any facts, spreading fear will do. Lacking any evidence of such threats, he asks us to prove that a threat does not exist. This is exactly the kind of nationalistic paranoia that motivates the Russian “Sovereign RUNet “ efforts. It’s a technological McCarthyism.

For some time now, those making this argument have repeatedly failed to come up with any discoveries of specific backdoors in Huawei kit. The best the Huawei critics can do is to charge that the software is sloppy. A report by the UK’s Huawei Cyber Security Evaluation Centre (HCSEC) Oversight Board concluded that there are:

“ … serious and systematic defects in Huawei’s software engineering and cyber security competence.”

Another key conclusion of the report , however, is never mentioned: The UK’s National Cyber Security Centre “ does not believe that the defects identified are a result of Chinese state interference.” The UK report goes on to make another important but underreported qualification:

“the architectural controls in place in most UK operators limit the ability of attackers to engender communication with any network elements not explicitly exposed to the public which, with other measures in place, makes exploitation of vulnerabilities harder.”

So not only has the threat of Communist-planted backdoors been discredited, but so has the idea that the vulnerabilities in its software could instantly make a nation’s entire telecom infrastructure a tool of Xi Jinping. At worst, Huawei stands accused of bad software engineering. The rhetorical trick here is to turn the unavoidable risks of complex ICT systems into a problem that Huawei and Huawei alone causes. In fact, all 5G systems, being heavily software dependent, pose a new set of risks. Those risks are not reducible to the national origin of the manufacturer or developer. One is tempted to ask what would happen if the Microsoft or Android operating systems were exposed to the same level of scrutiny as Huawei.

Recently, Huawei’s CEO Ren Zhengfei made an interesting move to address these concerns. He told the New York Times’ Thomas Friedman that he is prepared to “license the entire Huawei 5G platform to any American company that wants to manufacture it and install it and operate it, completely independent of Huawei.” That’s a pretty major concession. A refusal to take him up on the deal indicates that it is not mainly cybersecurity that is driving U.S. resistance.

Don’t get me wrong: Chinese cyber espionage is a big problem for the U.S. (and vice-versa). But of the many Chinese cyber espionage problems the U.S. or any other country has experienced in the past 10 years, not one has relied on the target’s use of Huawei products. In inter-state cyber conflict, what matters are cyber vulnerabilities generically, not the use of a specific vendor. The cybersecurity argument, on its own, does not provide a basis for singling out Huawei.

Supply chain cybersecurity should be — and is already becoming — a concern for all vendors and suppliers. But we cannot reduce the problem of supply chain security to the national origin of one company assembling or even designing the equipment. Any attempt to do so is profoundly threatening to the system of free trade in technology and ICT services that the U.S. has worked hard to create, and which benefits the general public tremendously. And yet we see, in the orchestrated attack on Huawei, an attempt to do precisely that.

Asian copycats?

The second part of the litany is that Huawei steals intellectual property. Here we find a familiar mix of exaggeration and hypocrisy. Claims about Huawei are not differentiated from any and every form of Chinese IPR copying that ever took place in history. So “China steals IPR” slides into “Huawei steals IPR” which becomes “Huawei has no original technology and its equipment is only competitive because they copied it from us.”

Huawei’s research and development (R&D) investment in 2018 surpassed that of Microsoft, Apple and Intel. It was ranked 4th among the global tech companies in R&D expenditure. It leads the world in the number of 5G patents. As indicated later, it’s likely that American government critics of Huawei are more concerned about Huawei’s production of IPR than its theft of it. The IPR theft charge is mainly just a smear tactic.

It is true that there are cases, rather old ones, in which Huawei has been accused of infringing patents. In 2003, Cisco sued Huawei for infringing on its patents and copying the source code used in routers and switches. The lawsuit succeeded in getting Huawei to remove the contested code, manuals and command-line interfaces and the case was settled. In 2010 Motorola and Huawei settled a lawsuit around Huawei’s alleged conspiracy with former employees to steal trade secrets.

But let’s put this in context. IP theft claims and counterclaims are endemic to all high-tech companies. Palo Alto Networks’ founders were accused of infringing patents that had been invented by them when they were employees of Juniper Networks. Juniper Networks has been the subject of numerous patent lawsuits in the past ten years. Cisco and Arista finally settled years of patent litigation with a $400 million payment. Just a few months ago Cisco was found liable for infringing a cybersecurity patent. And everyone knows about the titanic patent battles between Apple, Samsung and Qualcomm. It is inevitable that major, innovative high-tech firms bump up against the borders of each other’s patents. The courts work it out, as it did in both Huawei cases. There is no life-threatening problem here, and nothing unique to Huawei.

In Healey’s article, the only evidence of IP theft cited was a link to a Trump Administration Justice Department criminal indictment about Huawei’s alleged theft of T-Mobile’s “Tappy” robot. Healey claims that keeping Huawei out of US markets is thus a matter of “justice.” What a joke. Anyone with knowledge of the “Tappy” situation knows how absurdly trumped up this charge is. Tappy was a device to test handsets. As such it is not a strategically important technology and has no bearing on the core 5G equipment and software markets. Tappy became an issue because it didn’t work right on Huawei (and other) phones. Huawei wanted to find out why. As Columbia University Professor Moshe Adler explained in a devastating refutation, “the problem was not that [Huawei] did not understand how Tappy works [and wanted to steal it], the problem was that Tappy did not work and that T-Mobile was reluctant to acknowledge it…” A civil claim by T-Mobile against Huawei has already been settled with minor damages awarded and some charges dismissed. For Healey and others to use this minor fracas as evidence of why Huawei should be excluded from US markets, and for the US Department of Justice to turn this into a criminal case, shows that this is a politicized effort, part of a broader campaign.

On the whole, the entry of new foreign competitors in high-tech markets has increased the level of competition and innovation. Economist Stephen Roach observed that Japan was portrayed as the greatest economic threat to the United States, and allegations of intellectual property theft were a big part of Americans’ vilification of the country. “Thirty years later,” Roach writes, “Americans have made China the villain, when, just like three decades ago, they should be looking squarely in the mirror.“ It would be more reasonable to see Huawei as a replay of Sony or Samsung than as an illegitimate industrial thief.

Huawei is an agent of the Chinese state

The anti-Huawei litany only makes sense when one realizes that the Chinese state, not a global telecommunication equipment manufacturer based in China, is the target of this attack. This is not really about cybersecurity or intellectual property or unfair trading practices, it is about America’s fear that it is being eclipsed by China.

The often unstated view of Huawei’s critics is that China is an integrated monolith and any Chinese firm can be ordered to do the government’s will without any legal, political or economic checks and balances. Mike Pompeo came right out and said it: “Huawei is an instrument of the Chinese government.” So if network operators buy Huawei equipment, it is claimed, someone in Beijing can flip a switch or issue an order and any network operator who uses Huawei gear will become helpless pawns of Xi Jinping.

Technically, this claim is ridiculous. It only resonates with people who do not understand how software and equipment vulnerabilities play out. It assumes that major network operators who buy and implement the equipment relinquish total control to their vendors. It assumes that these capabilities and their use could never be discovered. It assumes that vulnerabilities and hidden control logics would work holistically across an entire operator or even the entire country, when in fact network segmentation, the idiosyncrasies of topology and systems integration would confine problems to specific pieces of the network or specific applications.

The claim is ridiculous economically, as well. It assumes that a company whose very survival as an enterprise depends on gaining trust and market share in a globalized market would throw it all away in order to advance the political objectives of the CCP. It assumes that the foreign divisions of Huawei are subject to Chinese law and not the other country’s law. Indeed, the more outlandish theories seem to imply that Huawei only wants to sell us this equipment as part of an ultra-long term conspiracy to gain control of our communications. Billions of dollars invested on research, factories and labor, all to build an elaborate disguise for a Manchurian network.

It’s also an argument that can have dangerous boomerang effects. If national origin is determinative of a threat, then why should China allow Apple to sell phones, why should they allow Microsoft applications, operating systems and equipment, why allow Cisco?

But this isn’t a debate about technology, it’s a debate about geopolitical power. For its main advocates, the attack on Huawei is part of a power struggle for global supremacy between the U.S. and China. These people see the rise of China’s economic clout as an existential threat, and they believe (wrongly, I am convinced) that we can stop it by undermining their leading industries in strategic sectors. They believe (wrongly, again) that the U.S. dominance of the post-Cold War world can be perpetuated not by out-competing our rivals economically and technologically, but by suppressing China and bullying our allies into shunning Chinese products.

Confused tactics

This mix of strategic objectives with economic policy leads to very confused tactics. Competition in technology goods and services is quite different from military and strategic competition. One is positive sum, the other zero sum. Policies that promote economic success cannot be based on a punitive military conflict logic. This is why US policy is so irretrievably botched. Some actors, e.g. Trump himself, are merely confused, opportunistic protectionists; others are focused purveyors of a U.S.- China cold war, and believe that we need to cripple Huawei to diminish China’s power whatever the economic consequences.

One cannot pursue both objectives at the same time. If you want growth, peace, and beneficial trade between the world’s two biggest economies, you take the path wherein China’s growth and development helps the U.S. economy and vice-versa. You want a military power struggle? You take the path which seeks to de-couple, cripple and destroy.

The gap between the two forms of competition became blindingly obvious when Trump imposed sanctions on Huawei. A video from the Wall Street Journal notes that there are more US suppliers than Chinese suppliers represented in a Huawei smartphone. The US companies include software and app provider Google, circuit board maker Rogers, storage chip maker Micron and Corning glass. Even core networking equipment from Huawei relies heavily on US chips.

The Huawei sanctions immediately cost U.S. firms $11 billion in sales. Longer term, the damage will be compounded as supply chains are reorganized and substitute products are developed. Think of the impact on Google if the Android operating system forks into incompatible Eastern and Western versions, and the Eastern version is out of their hands.

The immediate Chinese response to these poorly thought out initiatives provide further evidence of the clash between economic and military competition. A few years ago China alarmists were holding up the Made in China 2025 plan to become self-sufficient in high-tech areas as a threat. But the U.S. sanctions, the impact of which rests on China’s need for US-manufactured chips, only intensified and accelerated Chinese plans for self-sufficiency. If China is guilty of mercantilism, then the attack on Huawei is certain to make it worse, not better.

Let’s tot up the score: American protectionists have cut global growth rates in half; their tech nationalist wing has given us huge short-term losses in the ICT sector; their actions promise to accelerate divisions in the tech ecosystem and deliver decades of continued losses; and the ultimate result is to reinforce tech nationalism in China. What, exactly, is the U.S. bargaining for here? What are we achieving?

Favored national technology companies?

But it gets worse. A recent paper released by the Center for a New American Security (CNAS) attacks China for providing “financial support and political backing” to “favored national technology companies.” And the response they recommend is… for the United States to provide financial support and political backing to favored national technology companies. CNAS calls for the creation of a “Digital Development Fund” (DDF) that would subsidize information connectivity projects in the developing world. CNAS rather openly calls for the DDF to prioritize projects “of strategic importance to the United States.” In the words of CNAS:

These projects should be vetted in collaboration with the intelligence community, the Department of Defense, and the State Department. At the same time, the DDF should make its lines of credit contingent on efforts by recipient companies to advance broader US development priorities such as women’s empowerment and digital inclusion.

More recently, U.S. Attorney General Barr proposed that the U.S. should take a “controlling stake” in Finland’s Nokia or Sweden’s Ericsson to counter Huawei’s dominance in 5G. The tech nationalists in the Republican Party have even torpedoed an attempt by Google and Facebook to build an international fiber cable to Hong Kong because it has a partner that is a private Chinese company.

This is exactly the wrong response. Barr’s initiative attempts to make European companies “agents of the state.” The CNAS initiative would taint American information technology products and services with exactly the same suspicions that we are now aiming at Huawei. It cynically smears human rights lipstick over the pig of military objectives. It reinforces China’s tendency to promote national champions. And it is based on the hallucinatory viewpoint that the developing world is interested in inviting our intelligence community and State Department into their infrastructure. Worst of all, it explicitly wants to lure Americans and their partners into a long-term technology cold war in which ICT vendors and states are invited to pick sides among state actors, creating a fragmented system.

The focus of our policy should be on opening or expanding access to China’s market for Western companies, not on restricting and excluding Chinese firms from Western markets. Yet our current approach is doing just the opposite.

Trading with an authoritarian state

Trade in ICT goods and services does not have to mean that we support the other country’s political system. Indeed, while convergence between Chinese authoritarianism and American liberal democracy will not happen, the communication and interdependence fostered by trade certainly makes relations between the two societies more peaceful and beneficial. The confrontation and decoupling promoted by the American China hawks will only make China more insecure and more authoritarian.

American sentiment towards China is at an all-time low. In this regard, China’s Communist Party is its own worst enemy. The PRC’s reaction to the NBA executive’s tweet supporting Hong Kong protests couldn’t have done a better job of helping the U.S. tech nationalists’ cause. FCC Chairman Ajit Pai, an apologist for the Trump administration’s anti-Huawei campaign, used the NBA incident to enlist the American people’s support. Pai tweeted:

If this is how China is willing to use its leverage over basketball, e-sports, and flag emojis, imagine what could happen if we let Chinese companies’ equipment into America’s #5G networks.

What a jaw-dropping non sequitur. Contrary to Pai’s tweet, how the Chinese state stifles dissent and abridges human rights inside its own sovereign territory is not relevant to how we assess the risks of American buyers of a private Chinese company’s goods. China systematically censors its domestic information economy, and gate-keeps the flow of entertainment and news content into its domestic media and has done so for decades. This is wrong, but we’re not going to change it with trade barriers or a tech-nationalist Cold War. Buying the products of a Chinese company for domestic use, on the other hand, does not give the Chinese the same sort of leverage they have over access to their domestic market. Claiming that purchases of Huawei equipment by U.S. operators will somehow make the country subject to their political control is like claiming that buying Lenovo laptops or Haier refrigerators will make us subject to their control. It’s an absurd and phony claim.

But the most important point is this: Far from signaling an aggressive threat to the U.S., China’s reaction to the NBA tweet is a sign of weakness. China has a serious problem on its hands. The CCP have lost the allegiance of Hong Kong, and as that happens they also lose any chance of incorporating Taiwan into their sovereignty. What China faces in Hong Kong is not violent “rioters,” or “terrorism,” or separatism, but a people fed up with the authoritarian model. They reject China’s refusal to respect their freedoms and the legal autonomy granted to them under the Basic Law. There is a total breakdown of trust in the mainland central government and in its local puppet government. The so-called “motherland” is exposed as stepping into the shoes of the British and behaving as a colonial power. What an accomplishment for the PRC: they have made the Cantonese nostalgic for British rule!

Let’s also keep in mind that the human rights concerns expressed by China hawks such as Mike Pompeo are opportunistic and hypocritical. The Trump administration’s defense of Saudi Arabia and its refusal to do anything about Mohammed bin Salman’s murder of an American journalist shows that they only play the human rights card when it serves a geopolitical objective.

When China’s economy spawns a multinational company that makes good telecommunications equipment at a competitive price, it is playing by the rules of the game and helping the global economy, especially when that company is a major buyer of advanced U.S. technologies. Huawei is the wrong target for anyone concerned about human rights inside and outside China.

Conclusion

At its heart, the anti-Huawei campaign is a fraud. It is being sold to us as part of the trade war or as a strike for cybersecurity, but it is really part of a military-strategic cold war strategy that most Americans would reject if it were presented to them honestly. Technology and trade are being used as pawns. Mike Pompeo, Marco Rubio, Mike Rogers and others pushing this campaign are not trying to achieve fair trade, a more secure cyberspace and a prosperous America; they are after confrontation and a backwards-looking attempt to achieve the kind of global military and communications supremacy we had in the 1990s. In their mindset dominance cannot be shared, so they see China as an obstacle to their plans. They have singled out Huawei for more than a decade, not because it is an instrument of the Chinese Communist Party, but because it is a successful global enterprise and its dependence on a globalized economy makes it vulnerable to attack. If China did the same thing to Apple or Microsoft we would be furious. If we keep going down the tech nationalist path, we may well get to that point.

Originally published at https://www.internetgovernance.org on October 16, 2019.