Info Service on WTO and Trade Issues (Mar19/06)
Telecommunications networks are changing again. First we had the analogue first generation of mobile technology or 1G, then the digital 2G followed by 3G, which achieved speeds of several megabits per second. With the current 4G, you can reach several gigabits per second.
Now here comes 5G, which will not only be 1,000 times faster than 4G (that’s right: 1,000 times) but also open new fronts in the fight for digital hegemony in the 21st century. Telecommunication companies of the major world powers are geared up for battle, with all the weapons they have at hand.
The 5G network allows for millisecond latency and gigabit speeds for the masses, in addition to opening up ‘a new mine of raw material more precious than gold: data from countless machines chattering incessantly among them, apart from human consumers’. The point of having 5G is not to stream movies better, but to enable new applications that make use of instantaneous, zero-error connectivity, such as remote surgery, precision manufacture by robots and driverless cars.(1)
Meanwhile Huawei, a Chinese private company, has been overtaking the competition in the telecommunication sector. In 2011, Samsung and Apple sold 100 million cellphones each; Huawei sold only 20 million. In 2018, Samsung sold 220 million and the surprise is that Apple and Huawei were now tied at 150 million each.(2) Significantly, in 2018 Huawei became the world’s largest provider of telecoms equipment in general, reportedly having the most advanced 5G equipment available.(3)
Many analysts say that, in this field, Huawei not only is ‘nearing’ the technological frontier (reaching the vanguard platoon of countries), but has already surpassed them. Now the other telecom companies have to catch up with Huawei.
This has been sounding alarms for some time in the United States, which has begun exerting pressure on other countries to opt against using Huawei’s 5G equipment. According to reports, the ‘Five Eyes’ network of intelligence agencies from the United States, Canada, Australia, New Zealand and the United Kingdom have declared Huawei non grata and are lobbying countries, especially Europeans, to adopt the same policy.(4)
The central argument is that the possessor and operator of 5G technology can spy on the countries that adopt it, at both the government and citizen level. In addition, it could hack cybernetic systems, intervene in elections and, if necessary, put the entire system ‘out of service’.
This position has supporters and detractors. Huawei says it is a private company and the Chinese government has nothing to do with it. Critics say that in China nothing is done without the approval of the Communist Party and that the risk is always present.
This battle went beyond the confines of commercial competition when, in December, Canada, at the request of the US, arrested Meng Wanzhou, the chief financial officer of Huawei and daughter of Huawei founder Ren Zhengfei. Meng has been charged by US authorities with violating US sanctions against Iran.
The administration of US President Donald Trump also argues that Huawei – and Chinese companies in general – have been able to advance on the back of ‘bad practices’ and by forcing US companies that invest in China to ‘share’ their technology. Independently of the validity of the allegations about Chinese behaviour, this bashing also points to what French economist Robert Boyer described as the West’s unjustified ‘self-sufficiency pride’: it is not possible for ‘others’ to be better than us.
Duncan Clark, founder of BDA, a Beijing-based technology consultancy, is quoted by the Financial Times as saying: ‘[Huawei] crashed the party of vendors and operators, those golf club relationships. They did that by moving faster and offering good quality stuff cheaper. And in that process, they have been throwing a light on the inefficiencies of the US economy, and posing systemic challenges to US tech businesses.’(5)
And why not? As an article in The New York Times put it: ‘Many critics focus on the weaknesses of the Chinese system — the emphasis on tests and memorisation, the political constraints, the discrimination against rural students. But mainland China now produces more graduates in science and engineering every year than the United States, Japan, South Korea and Taiwan combined. In cities like Shanghai, Chinese schoolchildren outperform peers around the world.’(6)
The United States political elite believed that by bringing China into the ambit of the West-shaped rules of the World Trade Organisation (WTO), at some point its economic and political situation would ‘make it fall’. That has not happened. They look at the world through ideological blinders and they are wrong. There are economic models, different from the neoliberal ones, where the mix between state and market can prevail.
Finally, it is also worth taking into account the words of Huawei founder Ren Zhengfei. In a February 2019 interview with the BBC, he said: ‘The world cannot leave us because we are more advanced. If the lights go out in the West, the East will still shine. And if the North goes dark, there is still the South. America doesn’t represent the world. America only represents a portion of the world.’(7)
The battle over 5G technology is not only a battle between companies. It involves countries and their particular interests in this time of evolving hegemonic power. Let us not forget this.
Humberto Campodonico is Principal Professor at the Economics Faculty of the University of San Marcos (Lima), former President of Petroperu and former Senior Advisor to the Economic Commission for Latin America and the Caribbean. He is a columnist at Peruvian daily La Republica, which published an earlier version of this article on 13 February 2019.
‘5G, strategic edge, not just telecom’, 2 August 2018, https://economictimes.indiatimes.com/blogs/et-editorials/5g-strategic-edge-not-just-telecom/