CDT has translated an essay by U.S.-based Jay Chen that was briefly circulating in China before being censored. The essay looks at telecom giant Huawei’s situation amid the trade war between Beijing and Washington, highlighting the fact that, despite assurances offered by founder and CEO Ren Zhengfei, Huawei and the CCP are effectively one and the same, and speculating on possible outcomes of the ongoing trade dispute.
By cutting off Huawei’s limbs, the United States has given Beijing a clear warning: if China does not make concessions in the trade war, the U.S. will implement further measures against Chinese companies. Unlike North Korea, China is too well-connected with the rest of the world. The U.S. economy is the backbone of global operations, which include markets, core high technologies, and the financial system–all controlled by the United States. This is definitely not what Ren Zhengfei meant when he said “United States politicians underestimate our power.” Ren’s words are clearly at odds with the United States’ intention. The U.S. may have overestimated China’s willingness to make concessions, but the Communist Party also may also have overestimated its own capabilities. It may already be futile to try to stop these two trains from running into each other.
Ren Zhengfei’s Tuesday interview is well worth a watch: the entire interview, it turned out, wasn’t the type a tech tycoon like Jack Ma or Ma Huateng would dare to give under the Communist Party rule. For example, Ren noted that his family is still using Apple products, and that his subordinates “always say the boss is not promoting our products. We deter them from chanting slogans in an irresponsible manner, and tell them not to incite nationalistic sentiment.” Nationalistic sentiment is overseen not by tech tycoons, but by the Party’s Central Propaganda Department. Ren dared to talk about nationalism because he is not a tech tycoon. He is part of the Communist Party’s ruling elite.
Ren also said, “We sacrifice individuals and families for a single ideal, in order to stand on the top of the world. For this vision, a conflict with the United States is just a matter of time.” Similarly, this is not what an entrepreneur would say. An entrepreneur has clients in the United States, has upstream manufacturers and cooperative partners. As long as they still want to do business, they will not constantly be preparing for conflict with the United States. So far as to have even thought out a schedule for the conflict.
Ren represents the Party which in turn represents the nation, so his every word and action should be viewed in the context of China’s national policies. There is no such thing as “personal opinion” in the Communist Party. Previously, Ren even stated that Huawei will absolutely not monitor customers’ communications in order to fulfill the Chinese government’s requirements. Unless he bears the imperial sword, he would have been slayed for openly saying something in violation of Chinese law. The Chinese government took the initiative to arrest two Canadians as reprisal after Ren’s daughter was taken into custody. From the perspective of national strategy, this was the only action China could take to show not only the U.S., but also all Western nations: whoever dares to help the United States “do evil” will face consequences like these. But how can an executive from a “private company” have anything to do with “national strategy”? There can only be reason: Huawei is not a private company.
Because Huawei is China. Huawei’s story is China’s story.
The U.S. Department of Commerce granted Huawei a 90-day temporary reprieve from the export ban, a significant factor of which was that telecom companies in remote regions of the U.S. only have Huawei equipment available for use. By granting the reprieve, the United States government gave these companies three months to get prepared. But, why has Huawei gained monopoly power in these markets? That interest groups in Washington DC and New York that benefit from globalization turn a blind eye to Huawei’s monopoly has been an important factor, but equally important has been Huawei’s visionary leadership and hardworking managers and engineers. This is also a reason for China’s rise. The Chinese are not stupid, they have an abundance of cheap labor, connection to the global market, and it is only a matter of time before China becomes a developed country. But Huawei’s rise has depended on other elements of China’s rise: a protected domestic market, and their forcing of foreign companies to transfer tech, helping with China’s own technological development. By prohibiting foreign companies from entering China’s internet and communication technology market, the Chinese government fostered Huawei and ZTE, which allowed Huawei – formerly a low-cost second-tier manufacturer – to gradually develop cutting-edge technology. Of course, improperly acquiring technology while developing its own cutting-edge products has been the secret formula for Huawei’s success. In the U.S., Cisco has accused Huawei of stealing technology since the very beginning.
When China progressively leverages its economic prowess to say “no” to the U.S. on its path to become a regional or even a global power, Washington is certain to become China’s obstacle. Huawei has long prepared to have limbs cut off by the U.S. Ren said they had assumed it might take another two years before an attack was launched, but after the U.S. government stopped using of ZTE products, and after Meng Wanzhou’s arrest, Huawei has stocked up for a bitter winter while advancing research and development. But Huawei’s “self-strengthening” – or Beijing’s preparation for a fall out with the United States – did not begin after the Meng Wanzhou incident or even after Donald Trump’s ascent to power; Huawei and the Communist Party have been preparing to dominate the world since Xi Jinping came to power. The evidence: in about 2013 the Chinese government already began to bar internet and telecom companies such as Qualcomm, Cisco, Intel, and Microsoft from entering the Chinese market. The Communist Party’s strategy – using the Chinese market to foster next-generation tech giants and to dominate the global internet and communications industry – is being implemented step-by-step like this, just as planned. Western nations are still unable to say a firm “no” to Huawei’s 5G equipment, even under tremendous pressure from the United States, testimony to China’s hegemony in this industry. Ren Zhengfei said that they are ahead of the rest of the world by two to three years. This is not an exaggeration.
Without Trump’s trade war, Huawei’s “self-strengthening” and China’s “hegemony” would have become an irreversible situation in the eyes of the world.
Trump has sabotaged the Huawei/Communist Party scheme, but what is the endgame now? The Trump administration’s pressure on Huawei could lead to two different results. One is to make China realize its gap with the United States in terms of technological development; to soften Xi Jinping’s stance and bring him back to the negotiation table, and to pave the way for Trump’s victory and second term, in exchange for several more years of China remaining in the development stage. The ZTE case perhaps made the U.S. assume that Huawei would also fall to its knees, but Ren’s powerful strike-back should let them know that it is impossible to force the Communist Party into making concessions. Hawks have gained ground in Beijing and are fighting hard to resist the United States. They may at least kick the can down the road to comfortably wait for Trump to step down. This reaction may lead to the U.S.’ preparation for the second result: beating Beijing and forcing China to undergo peaceful development amid an economic recession.
But the Communist Party may be overestimating its own capacity. Huawei’s overseas cell phone markets were completely ruined after Google revoked its license, which all of a sudden shows the loophole in the Communist Party’s strategy of “encircling the cities from the rural areas”: gradually taking up markets in the third world, then advancing to the developed world such as Europe and Japan in order to isolate the United States. Huawei will feel more difficulties in its self-strengthening pursuit should the Taiwan Semiconductor Manufacturing Company stop providing products to Hisilicon under pressure from the United States. Huawei already has a lame leg, while the United States still hasn’t fully leveraged its market, technological, and financial advantages. Ren could be just lying when saying “we are ready.” [Chinese]
Translation by Winston S.
See also “Huawei and the Law, in U.S. and China,” via CDT, or a recent article by Matt Schrader in Foreign Policy comparing Huawei’s global PR strategy to the Party’s efforts at exporting its propaganda through English-language media outlets.