Virus crisis will open doors to Huawei 5G in Europe
Since the outbreak in China of of the virus that causes the
Covid-19 respiratory disease, experts around the world have been looking into
how the pandemic will end up impacting the country, and how it will reshape its
influence on the global scene.
In particular, many have argued that the Belt and Road
Initiative (BRI) will be negatively impacted because of the urgency of focusing
energies and allocating resources into the domestic domain to move toward the
recovery of the Chinese economy, and society at large.
It is certainly reasonable to think that this crisis
requires extreme measures that cannot be combined with conspicuous investments
in other countries, which also face the same challenges. However, it has
probably been underestimated how a specific segment of the BRI could instead
open up some opportunities that the decision-makers in Beijing do not want to
miss.
The Digital Silk Road (DSR) – which is constituted of a
broad set of projects in artificial intelligence, Internet of Things, 5G,
fiber-optic cables and new technologies to construct a new digital economy –
could gradually be expanded even during turbulent times, if fifth- generation
networks are promoted and accelerated, as the Communist Party of China (CPC)
wishes, equally at home and abroad.
In this framework, inevitably, private companies such as the
national champion Huawei continue to play an active role to drive technological
breakthroughs in spite of the adverse circumstances originated by the pandemic.
This role reflects the aspirations of the Middle Kingdom within the
technological minefield, which in turn depends on the success of its
tech-driver companies to materialize.
The Shenzhen-based company, leveraging its leadership in
China, where it recently won 56% of the total China Mobile’s 5G contracts,
could boost its resilience in front of the 1.4% growth in revenues registered
during the first quarter of the year in virtue of the virus emergency, and
could also proceed with the plan to access advanced economies in Europe
further.
In January the UK, with some restrictions, agreed to allow
Huawei to be included in the development of fifth-generation periphery networks
to support the digital transformation of the country’s industrial apparatus.
This clearly is a top priority to reinforce the weight of the country in the
international arena after Brexit.
The decision has been attacked by critics, but will be not
revisited in spite of the contextual changes. The company’s relationship with
London, in particular, appears still to be promising considering the
appointment of Micheal Rake to the board of directors of Huawei UK.
Rake, who previously was chairman of the British network
operator BT and adviser to then-prime minister David Cameron, is an important
figure promoting the reliability of the Chinese company in the West. But the
United Kingdom is only one component of a mosaic that Huawei wants to complete
in its commitment to 5G in Europe, where countries have taken divergent
positions on the adoption of Chinese technologies.
Even though Huawei claims to have contributed €2.5 billion
(US$2.7 billion) to Europe’s gross domestic product in 2018, showing the
relevance it has in the market, concerns related to national security persist
in relation to the company’s links with the government of China, and the high
level of dependence on the Asian giant’s technologies in many BRI countries
that expose them to risky situations.
Specifically, in January last year, the European Union
announced strict guidelines for 5G communication infrastructures in order to
contain high-risk vendors, and even if Huawei was not expressly mentioned in
the document, the reference seemed obvious in the light of US statements
against allowing the company into the 5G networks of its allies, and President
Donald Trump’s administration intensified pushback against the company founded
by Ren Zhengfei.
Nevertheless, the final decision was left to the member
states of the EU.
France hasn’t started to roll out its 5G network, but Huawei
is carrying on with its plans with an investment of €200,000 to build a new
wireless communication manufacturing facility in the country, specialized in 4G
and 5G equipment. But while smaller operators such as Bouygues Telecom and
Altice rely on Huawei, big French players such as Orange prefer to partner with
Nokia and Ericsson.
In contrast, Telefonica and Vodafone in Spain took steps to
cooperate with Huawei in the 5G area, further demonstrating the growing Chinese
influence in that country. Germany, instead, aims to adopt an approach that
could be supported by its various political entities. A paper issued by the
Christian Democratic Union to evaluate trustworthy suppliers and excluding
interferences from foreign actors is, in fact, a signal that a decision is
pending.
However, the dramatic juncture we are witnesses of
highlights how the disruption faced by Huawei is temporary, because digital
infrastructures and technologies will be much more critical to all of us in the
near term, as tomorrow’s world will be powered by a great need of data flows
and fast networks.
Governments will be required to act accordingly to bring
connectivity to their markets through strategic partnerships. Many state actors
could initially resist the idea of cooperating with Chinese telecom-equipment
makers to build 5G networks, but the different ecosystem that will emerge after
the pandemic will make hesitation a luxury that cannot be afforded if people,
businesses and cities do not want to be left behind in a fast-changing
environment.
In Europe, the gains stemming from 5G-enabled realities will
soon overcome the barriers posed by political boundaries and doubts around the
relation between Huawei and the CPC. To achieve technological sovereignty and
to maintain their global competitiveness, European countries will have to take
a more definite position on Huawei, unless they are able to find and develop
feasible alternative solutions – which are hard to study in acceptable short
terms.
In this context, while the time variable becomes much more
important in virtue of the negative impact generated by the virus emergency,
Huawei could be essential, even at the cost of putting under stress a country’s
ties with Washington. Automatically, the features of the post-pandemic markets
will make Chinese tech companies stronger, and will open new gateways to Huawei
5G in Europe.
If so, the Digital Silk Road will benefit from a heightened
reputation of the Chinese players in the West, consequently leading China to
gain terrain in its competition with the US.
At the moment, the tension between Beijing and Washington is
evident, with the latter spreading accusations that China lacked transparency
around the virus’ origins, and continuing its move on the tech domain, with the
US Department of Commerce proposing rules to restrict exports of semiconductors
and other technologies to China earlier.
But even taking into account the initiative launched by the
United States in 2018 related to the Digital Connectivity and Cybersecurity
Partnership (DCCP) in the Indo-Pacific region, the American actions in Europe
will remain insufficient to make the Chinese technological offer unattractive
in front of the broken shards that the Covid-19 pandemic will leave behind.
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