The World Doesn’t Want a Digital Cold War

Donald Trump’s failure to enlist international support for his war on the Chinese company Huawei shows the weakening of US hegemony. Coercion won’t be enough for Washington to get its way.

Attendees walk by the Huawei booth during CES 2020 at the Las Vegas Convention Center on January 8, 2020 in Las Vegas, Nevada. David Becker / Getty

The United Kingdom joins a long list of countries that have ignored US orders to avoid using Huawei technology in building its 5G mobile phone network. Last week, British prime minister Boris Johnson announced that, after weighing the costs and benefits, Britain had decided to proceed with using Huawei equipment to supply a portion of its non-core network needs.

The United States is not pleased. Johnson’s embrace of Huawei is seen as a direct assault on the sanctity of the “Five Eyes” intelligence-sharing arrangement between the United States, UK, Canada, Australia, and New Zealand. Huawei, despite its insistence that it operates independently of the Chinese government, is seen as a front for the Chinese Communist Party (CCP) by many US officials. China hawks say allowing Huawei to supply 5G infrastructure could provide China a back door to sensitive data.

Over the past year, the Trump administration has implemented a number of measures that have effectively shut Huawei (along with other Chinese companies) out of the US market. Government agencies such as the Pentagon and NASA are forbidden from purchasing Huawei equipment, and the company has been placed on the Commerce Department’s “entity list,” essentially barring US firms from supplying it, or its affiliates, with products. Huawei’s chief financial officer, Meng Wanzhou (daughter of Huawei founder Ren Zhengfei), was also arrested in Canada on accusations of bank fraud. She remains under house arrest in Vancouver, British Columbia.

At the same time, secretary of state Mike Pompeo and commerce secretary Wilbur Ross went on a world tour, attempting to pressure elected officials to implement similar restrictions — and threatening to stop sharing intelligence information if they did not. The US officials insisted that their message centered on political rather than economic concerns. In Delhi, Ross declared that “anybody who thinks we are doing this for protectionism simply doesn’t know the facts. We hope that our geopolitical partner India does not inadvertently subject itself to untoward security risk.”

Supporting the cause, Steve Bannon produced a fifty-minute film, Claws of the Red Dragon, “inspired by true events ripped from the headlines of the Huawei affairs.” The film depicts a Huawei-like Chinese tech company (complete with spoiled daughter executive) that is acting as a “trojan horse” for the CCP. After a screening of the film, Bannon told the audience: “It’s ten times more important to shut down Huawei in the US than to do a trade deal.”

The pressure campaign hasn’t worked, however. So far, only Australia and Japan have followed US orders. Some countries, such as India, have yet to make a final decision but insist that they won’t be swayed by outside pressure. Others have agreed to grant partial access. Germany, for example, despite fierce debate within the ruling Christian Democratic Union and warnings from within its own intelligence community, has agreed to let Huawei invest in the country.

Many countries have embraced Huawei with open arms. Mexico, Chile, and Cuba have signaled their support. Russia is a firm yes. Thailand, Singapore, the Philippines, Malaysia, Indonesia, and soon Cambodia are all on Team Huawei. Despite the Trump administration’s efforts, forty countries signed contracts with Huawei last year, half of them in Europe.

The blatant disregard for White House wishes and threats, including by major US allies and trade partners, is significant and demonstrates the evolution of global capitalism over the past two decades. Three points stand out.

First, while production (including the production of digital technology) has become deeply integrated on a global scale, many sectors are dominated by a few key multinational firms. One of these is 5G network infrastructure. Huawei, Ericsson, and Nokia are the primary suppliers of 5G network technology for the globe. Developing 5G technology promises a thousandfold increase in data capacity — potentially a game-changing advance. But building out 5G networks is a costly endeavor even for wealthy countries, in many cases requiring a total overhaul of existing network infrastructure. Huawei is substantially cheaper (30 percent by some estimates) than Ericsson and Nokia and has allocated a great deal more money toward research and development than the Swedish and Finnish companies. So even if countries were politically inclined to follow the dictates of the United States, the economic costs of banning Huawei are steep.

The second point concerns the power of China as a global trade partner. Since 2000, China has leapfrogged the United States, becoming the dominant exporter to nearly every country in the world. On the flip side, its domestic market is a major source of purchasing power for countries that rely on exports, both in the Global North and South. At a time when most countries are struggling with low rates of growth and hitting the limits of monetary policy, elected officials are hesitant to jeopardize their relationship with China. Banning Huawei could trigger a retaliation with huge implications for employment and growth.

Finally, there’s the issue of hegemony. Over the past two decades, the United States has leaned more heavily on coercion than consent in superintending global capitalism. In the process, it has lost a great deal of legitimacy. In the Huawei saga, US moves to ban Huawei are interpreted more as an attempt to prevent China from getting ahead in the fields where the United States has long dominated than as a genuine concern over security. Indeed, as Wilbur Ross said himself during his trip to Mexico to convince President Andrés Manuel López Obrador not to engage with Huawei, “We don’t want very active participation of Chinese investment in Mexico, especially not in strategic projects.”

The prime minister of Malaysia, Mahathir bin Mohamad, paints the United States as a bully who threatens other countries that “if you are ahead I will ban you, I will send warships to your country.” Mahathir says, “That is not competition, that is threatening people.”

Moreover, on the issue of security, the United States is increasingly not seen as “the good guy.” The German economy minister, Peter Altmaier, articulated this sentiment last year when he implied a parity between the United States and China in terms of the security threat they posed, reminding the audience during a television talk show that the NSA (National Security Agency) had tapped Angela Merkel’s phone.

The United States is trying to foment a digital cold war to weaken China and shore up its supremacy. It doesn’t seem to be working.