Despite increasingly vocal anti-China rhetoric by American politicians of late, the United States government as reported by Reuters is set to sign off on new rules which allow American technology companies to work with China's Huawei in coordinating on standards for global 5G internet networks.
The move comes despite an all-out war against the Shenzhen firm by the United States government for nearly two years which has seen Washington attempt to bludgeon the company with a number of tactics, including domestic blacklistings and sale restrictions, coercing foreign governments against using it and tactics which have included legal charges at home and the pursuit of Meng Wanzhou in Canada.
The timing of this move given the circumstances is extremely odd. However, the conceding that Huawei will have a role in the setting of global 5G standards is an indication that the White House is now aware of the realities that are at play. The United States has effectively lost the 5G war against Huawei.
Failing to get it blacklisted throughout the world, Washington is now resigned to the fact that the company will now dominate the standards of the next generate internet, and therefore, it is now forced to ultimately work with it in doing so, than against it. The outcome marks a major strategic defeat for the United States on this issue.
First of all, despite everything we are hearing from the U.S. right now, policy and rhetoric are different. As I have set out previously, many American politics are showcasing anti-China stances in the pursuit of electoral races and this does not always translate into practical policy outcomes.
Trump sees opportunity in bashing China right now over the COVID-19 pandemic, however, what he says and suggests does not tell us everything he will do in practice and thus it is important to read deep between the lines during this given period.
This brings us to Huawei. The Trump administration's campaign against the Chinese firm has been a failure on multiple levels. Starting in 2018, it sought to isolate Huawei globally by placing pressure on allied countries to shun the firm from their 5G networks branding it a security risk.
One of the cited reasons for this was a fear from Washington that China could grow to dominate the global standards of the next generation of internet technology. Whilst countries more loyal to U.S. strategic goals, such as Australia, followed suit with this, by and large, the rest of the world did not, even close allies such as the United Kingdom.
As a result, despite repeated aggressive actions from Washington, by the start of 2020 Huawei stood as the world's largest provider of 5G patents and commercial contracts, well on course for over 100 deals with roughly half of those being based in Europe.
The company moved fast to diversify its supply chains and reduce its reliance on American parts, with the White House also blacklisting it on the Commerce Department entity list in 2018. This did not hinder its success in 5G, and after Britain rebuffed pressure from Washington and Germany followed suit, it becomes obvious that Washington's campaign had floundered on the premise it was demanding countries cut themselves off from a technology the U.S. itself didn't have.
In this case, the newest move is a very quiet and pragmatic concession that Huawei has won the 5G race and the United States has failed to stop it from becoming a major player in the next generation of internet networks. Therefore, Washington is, like it or not, forced to recognize that if it wishes to have a stake in setting standards, it must work with the company rather than riding on the false hope it can shut it out.
The U.S. had also proposed nonsense alternatives that they buy one of Huawei's competitors such as Nokia or that they invest in the technology of their own, a move which is of course time-consuming. In the end, none of these options were feasible and thus the writing was on the wall: Their strategy had failed.
Therefore, despite unrelenting American pressure, Huawei has sustained its position as the world's leading provider of 5G technology and even in the midst of the most vehemently anti-China rhetoric ever seen in the United States, Washington is forced to accept that begrudgingly. Policy and rhetoric are not always the same, and the White House has very much come around to the fact it has lost this round.
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