As US government officials celebrate what they must see as a victory in their battle against high-performance, low-cost network provider Huawei and other Chinese hardware manufacturers, the country risks falling far behind in the broader global competition for telecommunications technology and customers.
It may be a career that the US is willing to concede, but it should be noted that Huawei’s sphere of influence on other shores continues to expand, even as the company’s ability to operate in the US is totally prohibited.
In fact, Huawei’s CEO and chairman of its investment review board, David Wang, told Bloomberg that “our business in the United States is not that big.” We have global operations. We will still have stable operations. “
Wang is right… up to a point. Huawei gets most of its sales from international markets, according to a 2018 financial report released earlier this year, but it relies heavily on technology from US chipmakers for its gear. Without those supplies, Huawei could find itself in a very difficult place, indeed.
And the US has its reasons for working to hamper Huawei’s efforts to expand the reach of its networking technologies as this excellent Twitter thread from Adam Townsend argues persuasively.
Thread about China, Huawei. Espionage and World War 5 (g) – You are about to become the head of your own Intel Agency. You will be an authority and win any bar fight argument. Let’s get started… pic.twitter.com/cEq3MhhJwF
– Adam Townsend (@adamscrabble) May 16, 2019
Essentially, China has invested its basically unlimited capital into subsidizing next-generation wireless technology and buying up innovative and innovative startups, all while the United States has taken the early stage risk. Meanwhile, he is also using unlimited money to fight the regulators and industry experts who might defend him.
Huawei continues to advance in emerging market countries in Latin America, Eastern Europe, Southeast Asia and Africa, where demand for connectivity is on the rise. Those are regions where the US has many strategic interests, but the US’s ability to influence public opinion or incite governments to act against Chinese network companies could be severely limited by its inability to offer them significant incentives or alternatives.
Even with the passage of the BUILD Act in October 2018, which was intended to revitalize U.S. foreign aid and investment.With a $ 60 billion package, it’s worth noting that China spent close to $ 47,000. million in foreign investment in Europe in 2018 alone. Chinese direct investment totaled Another $ 49.45 billion in Africa and the Middle East and $ 18 billion in South America, according to data from the American Enterprise Institute, compiled by Foreign policy.
Those investments have turned nations that should be staunch political allies into reticent or simply rhetorical backers of the US position. Take, for example, the relationship between the US and Brazil: a historically strong partnership dating back years and seemingly only strengthened given the similarities between the two ultra-conservative leaders in power in both nations.
However, as External relationships Brazil is reportedly unlikely to comply with President Trump’s demands that Brazil assist in steps to block China’s economic expansion.
“Brazilian business groups have already begun to defend the country’s deep trade ties with China, rightly pointing out that any hope of containing China and turning the United States back into Brazil’s most important trading partner is little more than little nostalgia. realistic, “writes Foreign Affairs. correspondent, Oliver Stuenkel. “Working alongside powerful military generals, these trade associations are mobilizing to avoid any delays that bypassing Huawei in the region may cause the rollout of 5G.”
The full article is worth reading, but its spur is that attempts by US government officials to paint the economic forays of Huawei and China as a threat to national security in developing economies are largely on the decline. on deaf ears.
It’s not just about network technologies. As a venture capitalist investing in Latin America and the United States told TechCrunch anonymously: “It is interesting how the relations between the United States and China will affect what is happening in Latin America. The Chinese are already being more aggressive on the banking side. “
China’s big tech companies are also taking an interest in South America, both as suppliers and investors on the mainland.
In an article on Crunchbase, South America and China-focused venture capitalist Nathan Lustig underlined the trend. Lustig wrote:
In both the public and private sectors, China is rapidly increasing its support for Latin America. China’s expertise in fintech, as well as its influence on developing markets around the world, is making China a strategic partner for startups and entrepreneurs in Latin America. So far, most of Chinese investment in Latin America is going to Brazil, although it is likely to spread to the entire region as Chinese investors gain a better understanding of local technology ecosystems, most likely in Mexico.
Beyond the didi chuxing Acquiring the 99 in Brazil in January, Chinese companies began investing heavily in Brazilian fintech startups, specifically Nubank and StoneCo, this year.
Indeed, China has a comprehensive catalog of low-cost technologies and economic packages from state and private investors to support its adoption, underpinning its position as a technology leader in a wide range of applications in emerging markets.
For the US to compete, it will have to look beyond protectionism on its shores, to real commitments for further economic development abroad. With the arrival of lower tax revenues and the possibility of giant deficits accumulating as far as the eye can see, there is not much room to promote an alternative to Huawei internationally. That could leave the country increasingly isolated and create many more problems as it falls behind.