As Europe passes tipping point, will Huawei dominate 5G globally: John Sitilides | Zooming in

Just another WordPress site

As Europe passes tipping point, will Huawei dominate 5G globally: John Sitilides | Zooming in

Huawei has secured more than 65 G contracts in the world many of which are US allies despite American warnings over cybersecurity concerns China probably has its single most effective lobbying operation in Brussels than anywhere else in the world the United States itself does not have 5g technologies do you think that’s going to be a big problem from a planning perspective it puts us at a very dangerous situation going forward the biggest tech giant’s seldom talk about the danger of the CCP’s technological ambitions do they have their own agenda when we hear tech executives talk in ways that are completely divorced from political and social reality it’s very troubling so do you think their motivation is ideological or its profit driven or it’s a combination of both well I think it’s mostly profit driven my discussion was John Scylla tides geopolitical strategists and trilogy advisors takes place at the height of 5g deployment war between China and the United States while way the world’s largest telecom company has now more than 60 commercial 5g contracts outside China and is poised to get many more despite ongoing US effort to lobby its allies not to do business with Huawei many countries have since deepened the relationship with the Chinese telecom giant last month Germany announced that it won’t exclude any supplier from participating in hua ways 5g rollout Thailand and the Philippines have shrugged off the cybersecurity warnings and decided to go with Wow way many more countries including the United Kingdom have not yet made a final decision the US has problem persuading its allies in Europe and in Southeast Asia and Huawei just wrote out its 5g in Southeast Asia so what do you think it’s the path forward well I think we have to look at this situation either regionally or on a market by market basis so in the ASEAN countries very clearly there’s great concern about the rise of China in ways that can be aggressive if not outright hostile and we’ll talk about that when we talk about the South China Sea but they’re also very realistic I mean Huawei is able to provide superior products and services in 5g hardware and software at very competitive pricing so that that’s playing a very major role here and the degree to which these countries that are neighbors of China have to balance out their legitimate security concerns and their relationship with the United States versus the fact that the Chinese economic Colossus is in their neighborhood puts them in a very delicate situation so I think a lot of that Geographic and frankly geopolitical reality is weighing on political decision-makers in many ASEAN countries although obviously in countries such as Japan and even in Taiwan now we see that they are not going to be coming in to the Huawei Network I think in Europe you have a different situation where you have very strong political and economic relationships between the US and a number of your in countries but China probably has its single most effective lobbying operation in Brussels than anywhere else in the world they have deployed thousands of businesspeople and everyday citizens who are operating in Brussels to be able to lobby European Union bureaucracies bureaucrats nationals from different EU countries in an effort to expand Huawei into European markets and also the belt road initiative and so I think that European countries especially their business leaders are making purely business and economic and financial decisions as opposed to the kinds of national security considerations that we would like those governments to begin to take going forward okay so their narrative is I mean for those lobbyists in Europe their narrative is Kwame is not a big national security threat and they’re cheap well one it’s obviously the economic competition I mean the bottom line is thanks to both Huawei’s technological prowess and also frankly its internet its intellectual property threat left over the years over the decades cisco motorola or a number of other companies they are able to

provide superior hardware and software services and whether it’s because of state-run banks that are providing the kind of financial support for huawei or other means they’re able to undercut the pricing of competitors such as Nokia and Ericsson so you have ironically two major European companies that are unable to enter into European markets as effectively as Huawei is and then there are the political considerations and again the Chinese have put together a spectacularly effective lobbying operation in Brussels not only on issues such as Huawei but also on belt road port engagement and a number of other issues that are very beneficial for Chinese financial and economic penetration of the European Union so the prospect doesn’t look very good for you well it’s going to be very difficult because we may see the United Kingdom and they’re gonna hold off their decision on Huawei 5g until after the upcoming elections and I think we’ve been able to move the needle in for the proper direction in London but it looks as if most European countries I think there are several dozen now that have already signed commercial contracts with Huawei and so they are abandoning Nokia’s and Erickson’s very very high-tech superior quality and pricing for Huawei and I can’t help but think that there’s also a political dimension to those decisions in other European countries Poland is now gonna go with Huawei is that the only country in Europe that does that but but Poland is also a country that is standout in terms of its not only relationship with the United States but it recognises this it has a very vulnerable security situation given its relationship with Russia and also its desire to have a stronger US partnership u.s. deployments in Poland and to help protect that northeastern part of the NATO flank so I think the u.s. Poland relationship may be somewhat different than that of a number of other Eastern European crunch countries that have come into what’s now the 17 plus one belt world initiative we’re even EU countries are signing up for the Bri loans and projects is Poland the only country in Europe that is not gonna go with Huawei and 5g we’ll look to see what happens with the United Kingdom and I think there was still a handful of countries that have not made a final decision I think we’re looking to work those countries as energetically as we possibly can with a persuasive argument ultimately they’ll make the decisions that they feel are in their own national interest and they feel that they can block off those areas of 5g hardware and software that might provide sort of backdoors for the Chinese Communist Party or the Chinese military to be able to conduct espionage activities but the US government feels that it’s going to be very difficult to do so and I think a lot of this is simply a matter of putting facts on the table and hopefully persuading the remaining European governments that it’s in their best interest to adopt a different 5g platform coming up Wow is privy empires expanding overseas where should the United States do about it in the race to 5g the world has few alternatives the Beijing backed company is one of the only three major companies in the world that can supply a broad range of advanced network equipment at scale the other two are Ericsson and Nokia bak Huawei still dominates the 5g market with state subsidies allowing it to undercut the pricing of other companies moreover the lack of serious US competitor in the 5g space makes it difficult for networks to turn away from Huawei the United States itself does not have 5g technologies do you think that’s gonna be a big problem it is and we had companies that could move us in that direction that have been completely undercut by Huawei and also by their own faulty decision-making over the last 10 15 years so we don’t really have any serious US competitor for this space and from a planning perspective it puts us at a very dangerous situation going forward but we have to look to see how we can support companies such as Nokia and Ericsson to provide for greater intellectual property theft so that our own companies are able to see how they might enter the 5g space and look to see how they compete with a country with a company such as Huawei which really has been able to achieve an astonishing level of 5g prowess in the last several years so we are at a disadvantage there however recognizing the challenge is the first step and we can begin to take steps going forward to address it and to incentivize through research and development through IP protections and the like to incentivize companies to begin to move into this space but today

it’s a challenge for the US mm-hmm so you are talking about just us help Ericsson and Nokia to to develop and deploy 5g instead of the u.s. develop its own 5g technology because probably it’s too late right well in the United States of course we have a free market system so the government is not going to create a company to enter the 5g space they have to be incentivized to do so one of the questions that we’re going to have here and months and years ahead is what are the u.s. major tech leaders doing about not only 5g specifically as it pertains to why way but where are they looking to compete with what is now Beijing’s policy called made in China 2025 right so President Xi Jinping announced that in 2015 I believe that China was going to be undertaking a command economy approach investing tens if not hundreds of billions of dollars to become a world-class leader in robotics in information technology and automation in driverless cars and biopharmaceuticals and agriculture and aerospace and a whole host of breakthrough technologies that really will help the country move forward into the 21st century well we don’t have that kind of a system in the United States here we have a free market system but companies are supposed to see these opportunities and move forward as best as they can competitively within the US and around the world but can the US government can the federal government enact policies that will incentivize these companies to embrace 5g and other technologies more energetically more dynamically and more competitively so that we’re not at a major technological disadvantage visa V China come 2030 so do you think the US government should incentivize tech companies including giving them subsidies to develop those technologies that’s a very difficult question that has to be sorted out politically by the voters here in the United States and also the major parties that seem so polarized on other issues subsidies is a very difficult area because one might argue that it’s not really the role of government to subsidize but you use tax policies you use regulatory policies to provide as free and open a space for technology companies to embrace these technologies and race forward but I think a large part of the burden is also on these US companies they’re us and that they were created here most of the chief executive officers and top c-suite executives live in the United States and they enjoy the benefits of living in the United States but you often hear them speak in ways that make them quote unquote citizens of the world whatever nonsense chuckle concept that is and look to favor multinational policies that are in the company’s bottom line best interest but aren’t in the USA’s best interest and I think we’re going to have to have a very serious dialogue in the United States about the degree to which companies that enjoy the benefits of operating and profiting in the United States have some sense of duty or civic responsibility to help make sure that the United States remains a free and open space for competitive economic and financial activities against a command economy controlled by the Communist Party that is looking to overtake the United States by 2049 as their leaders have publicly stated so I think that’s going to be very interesting public dialogue between government officials political leaders and executives and business leaders in the US technology sector I believe that our international landscape is only going to become more complex and more dangerous in the years to come because we forget that the Chinese Communist Party controls everything in China and it is looking to potentially usurp the United States as the leader of the free and open international economy but also potentially to create a different type of global economy that suits their Chinese Communist Party’s interests not that of the International economy and its participants so when we have American executives or executives in any country talk about this utopian world it’s a fantasy until you have a situation where there’s a different level of governance in Beijing but as long as you have a Lenin Leninist type Chinese Communist Party in power in Beijing that openly proclaims its ambitions to dominate Asia’s commerce to push the United States out of the Pacific region to one day overtake the United States as a global leader then then this is all a farce and I think it betrays a lack of responsibility and frankly a lack of gratitude to the United States for providing the kind of environment economically politically and socially for companies like Google and every other technology company that thrives in

California and elsewhere in the United States this didn’t just happen it takes political decisions it takes a sense of civic obligation it takes a sense that we’ve created a magnificent system here but it’s fragile and it has to be protected and preserved and upheld and when we hear tech executives talk in ways that are completely divorced from political and social reality it’s very troubling so I think we need to be cognizant of what we’re dealing with here it’s not ideal it’s it’s the real world we have to make decisions based on facts and sometimes we hear some of these pronouncements pronouncements from executives that are completely surreal and divorced from reality so do you think their motivation is ideological or its profit driven or it’s a combination of both well I think it’s mostly profit driven and the problem is that they don’t recognize that there is increasingly an ideological divide between what I would call the free and open international economic system that we’ve enjoyed for many decades especially since the end of the Cold War with the Soviet Union and what is now an increasingly aggressive and muscular Chinese Communist Party controlling Beijing controlling the Chinese economy to the degree that they want to make sure that the primacy of the party is always first and everything else comes under that so yes in Beijing you have officials who want to make sure that as many Chinese citizens are able to enjoy economic prosperity and then you have stability in Chinese society but those are not the end goals for their own sake the end goals are to make make sure that you have the primacy of the Chinese Communist Party first and foremost most American business leaders don’t recognize this either because they don’t know or they don’t want to know they want access to that vast Chinese market and from a business leadership perspective you can’t blame them but we’ve eliminated any talk of values China has risen over the last 20 years since we permitted it to join the World Trade Organization notice how the phrase human rights has disappeared from more and more international fora because if we talk about human rights we have to face the reality of what’s happening in China and that makes the kind of open-ended access that we’d like to achieve in China more difficult to achieve so I think we have to recognize that we are in an increasingly ideological divide and much of this is because President Xi Jinping has made very clear there is an inherent tension between socialism with Chinese characteristics and the Western free-market system and I think it’s going to become increasingly apparent in the years to come this is extremely important I think this is also relevant to the us-china trade talks so the US government demands of China to do structural changes to to to the us-china trade relations like get rid of the forceful transfer of Technology and protect intellectual property rights and get rid of the subsidies and stuff but eventually what they’re essentially what they’re asking is to have the Chinese Communist Party to change the way they run our economy to change the way they run our country basically changed the way they rule so I think that’s almost a mission impossible and I don’t know if the Trump administration really realized this and if they do they have to have a different strategy regarding the us-china trade talks I mean maybe if they can’t do this structural changes anyway what’s left for the us-china trade talks and trade relations decouple right there are the structural issues they really do relate to the relationship between the state and the citizen in China and then in the world those areas that are more immediately ameliorated well same such as buying more American foodstuffs looking to see what can be done about currency manipulation about greater intellectual property protections and the like I think the Trump administration would have preferred a vaster more comprehensive structural reform agreement mm-hmm all indications are that’s where we were headed through the beginning of this year and you may actually have a divided inside of Beijing you know we tend to think of the Chinese Communist Party as monolithic I’m not sure that’s necessarily the case you may have them monolithic in terms of absolute Leninist type control over all aspects of Chinese society right and they’re frank about this government military schools economy that’s what the Chinese Communist Party is there to do to maintain control over all of these for the well-being of the Chinese people

but from from an economic perspective there are those who believe that a more open Chinese economy one that genuinely advanced the original vision of say Deng Xiaoping for reform and for opening up would be better for the Chinese people for Chinese society and ultimately of course as good communists for the well-being of the Chinese Communist Party so they were looking to advance that more liberalized relationship and it provide for a stronger foundation for future Chinese economic growth and then you have I mean for lack of a better word the hardliners who feel that too much reform too much opening up starts to crack that edifice and will eventually weaken the ability of the Chinese Communist Party to maintain primacy inside of China they seem to have come back with a vengeance in April or May of this year and to have held off any further progress that’s what we had the stymie talks through the summer and I think the Trump administration realizes that right now they have the upper hand and so they’re going to proceed from all at least public domain sources with a a phased or a multi-phase trade arrangement that begins with a phase one agreement sometime hopefully in the next few weeks to at least get some of those immediately accessible issues addressed but obviously as you note not really addressing structural reforms because Beijing has decided they’re not going to proceed with structural reforms no one is able to force Beijing to make structural reform from the outside we’ll take what we can get and then we’ll try to see when we can start the talks on other parts of this trade arrangement in the months to come or if there’s a second Trump administration then Xi Jinping paying probably has no choice but to engage in a second phase trade negotiation if there’s a second Trump administration coming up even in the second Trump term will a structural change from China’s side be possible even underdone shopping China has never really transformed into a market economy it’s because it’s just that the market economy needs a a political system to back it up and China fundamentally cannot make that transformation in my opinion so I think I I agree with you the Trump administration is trying to get what they can for now but if the structural changes is something that the Chinese Communist Party just can’t do I mean they look at what they are doing now they are reversing the privatization of companies now the parties is going to all private companies and taking the good part out of them and make them you know state-owned and stuff like that so they’re not going to like further open up they are reversing the process so I heavily doubt the Chinese Communist Party will do the structural changes if that’s true the Trump administration would should really think what’s next if those can be done do you think the US and China economy should decouple all right a couple of things here I think the Trump administration recognizes that it needs to get the best that it can in terms of changing the direction of us-china trade arrangements that have been so damaging to the US economy for the last 20 years again it’s not an ideal series of victories but it’s a partial set of victories and I think they’ll look to take them where they can on the structural reforms those may take place inside of China not because of anything that’s agreed to with the US administration whether it’s President Trump or President Elizabeth Warren whoever might follow on in 2021 or 2025 but because there are inherent contradictions now there were major tensions inside the Chinese economy that Chinese political leaders have no choice but to begin to address so that’s going to be an internal issue there’s also no guarantee that Xi Jinping will remain president of China or more realistically general secretary of the Chinese Communist Party he’s been given unprecedented power right the greatest power since Mao tse-tung in 40 years in China to steer the country forward in a certain direction right so now we even have Xi Jinping thought embedded in the Chinese Constitution so almost a cult-like status for the general secretary but if he fails to protect China’s economy or he’s seen by other Chinese Communist Party leaders as not sustaining the primacy of the Chinese Communist Party effectively there’s no guarantee he’s going to survive so we have no idea what awaits us in China what we can do is control what the United States does and persuade our allies to address these

challenges and move forward in ways that give us as much of a competitive advantage going forward as possible while seeing what is playing out in Beijing in ways that again we’re not able to control the Chinese leadership those more open-minded Communist leadership in China is seeking structural changes to their economy but I think that’s different from with the Trump administration is seeking in the us-china trade relations you know there are structural imbalances in the Chinese economy for example they over invest in infrastructure and that has been driving the Chinese GDP for years so I agree with you the Chinese leadership is is seeking structural changes to their economy but that doesn’t necessarily address the trade problems with the US well keep in mind that the Trump administration’s goal here is to open up the Chinese economy in the Chinese market so that American companies and potentially economies from other parts of the world can fairly compete with China other words to remove all of the unfair advantages that China’s say as a quote unquote developing country inside the WTO when it does the second largest economy in the world I mean at what point do you no longer a developing country with all of the advantages that the WTO confers sort of an absurd situation and yet they’ve been able to sustain this inside the WTO but the goal is not to promote structural reforms that the Chinese Communist party feels threatened their rule over China that’s not the Trump administration’s goals I mean that’s a regime change strategy that no country is looking right now to promote in China we’re dealing with China’s governing leadership as it is not as we would wish it to be so given the reality that the Communist Party will likely remain in power for the foreseeable future you get what you can out of that reality so this is phase one and I would say take the maximum that you can now pocket it Trump has to try to win reelection and then if he does he’s able to come back to Beijing and say now you have four more years with me let’s go back to the table or I’m going to come after your economy again with tariffs with pressures and whatnot I think to a certain degree the Chinese leadership has gambled that Trump is not going to survive the 2020 elections and they’ll be dealing with a US president that’s easier to negotiate with if they have to negotiate at all so the bottom line is President Trump is not seeking a regime change in China not only is he not talking about it but he is really not seeking a regime change in China Thanks I think that’s correct yes he’s not seeking regime change in China you