Features

Britain opens itself up to China

But in the case of its embrace of Huawei’s telecoms gear, is that wise? Emily Hohler reports.

945-Hammond-634

On 24 April, news was leaked that the UK government had decided to allow non-core parts of the UK's 5G network to be built by the Chinese telecoms equipment maker, Huawei. Robert Strayer, US deputy assistant secretary of state for cyber policy, warned allies that if they used "untrusted suppliers" to build new telecom networks, Washington would have to "reassess the ability for us to share information".

Britain's decision is significant because it is a member of the "Five Eyes" intelligence-sharing alliance led by the US, completed by Australia, New Zealand and Canada. Huawei is already blocked from developing 5G networks in the US, Australia and New Zealand, and Canada is considering it too. Japan and Taiwan are similarly unconvinced by Huawei's denials that it is "controlled by the state or that its kit could be used to spy", says the Financial Times.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Justifiable concerns

Britain, however, has "long-argued that such threats can be managed without banning Huawei outright" and this is sensible. Blocking Huawei does "relatively little" to eliminate the risk of cyberattacks because hackers usually gain access to networks via flaws in software coding. Hence Russia's ability to "cause mayhem" despite its lack of a commercial role in Western telecoms networks.

A ban would also carry "geopolitical costs. If an open system for global commerce is to be saved, a framework has to be built for countries to engage economically even if they are rivals." A ban by a few American allies "risks splitting the world into two blocs" (Huawei says it has signed 40 5G contracts, more than half in Europe). Britain has had a system for vetting Huawei's systems and software since 2010. This should continue. And if Huawei falls short of Britain'shigh standards, "it is easy to switch firms".A "u-turn is always possible".

Advertisement
Advertisement - Article continues below

Really, asks Charles Parton in the FT? "When its equipment is embedded? At what financial cost? And at what political cost with the Chinese Communist Party (CCP)?" There's also the fact that experts, including the head of the Australian equivalent of GCHQ, say it's "not safe to distinguish between core and periphery". On top of that, Huawei's technical performance is "lamentable". "Its deficiencies are ripe for hackers to exploit."

Maybe, but other major suppliers, including Cisco Systems and Nokia, have been found to have backdoors or software vulnerabilities too, says Leonid Bershidsky on Bloomberg. The difference is that they are expected to deal with these issues as best they can, at their own pace. That is no longer the case with Huawei, which is "held to impossible standards".

It's about values, says Edward Lucas in The Times. "On most fronts Britain is quite prepared to grovel." Philip Hammond has just flown to Beijing to seek a role for British firms in reviving China's "faltering" Belt and Road initiative. In "any bilateral negotiations, a country of our size will start from a position of weakness. But the danger is not just of a hard-pressed and isolated Britain being bossed around by China's Communist Party. Our stance also costs us support among our closest friends and neighbours, which want to take a tougher line. In short, we abandon our principles and allies in order to put ourselves at the mercy of a dictatorship."

Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Visit/economy/asian-economy/chinas-economy/600846/is-china-heading-for-a-secret-recession
China's economy

Is China heading for a secret recession?

The shutdown sparked by the coronavirus outbreak could put China at risk of a “secret recession”.
25 Feb 2020
Visit/economy/people/600864/rishi-sunak-the-maharaja-of-the-yorkshire-dales
People

Rishi Sunak: the maharaja of the Yorkshire Dales

Rishi Sunak is taking the reins of the world’s fifth-largest economy at a crucial juncture. The unflashy but likeable youngster may be just the man fo…
20 Feb 2020

Most Popular

Visit/investments/stockmarkets/600909/will-coronavirus-kill-off-the-bull-market
Stockmarkets

Will coronavirus kill off the bull market?

It seems clear now the coronavirus will at some point go global. And when it does, will it bring down the stockmarket’s bull market? John Stepek looks…
27 Feb 2020
Visit/investments/stockmarkets/600910/what-to-look-out-for-as-panic-over-coronavirus-spreads
Stockmarkets

What to look out for as panic over coronavirus spreads

Markets have started to get properly worried about the coronavirus outbreak. And it’s not just stocks, says John Stepek. Here’s what you should be kee…
28 Feb 2020
Visit/investments/investment-strategy/600772/just-five-assets-matter-for-investors-portfolio-asset-allocation
Investment strategy

Just five assets matter for investors. Here's what they are

Every investor’s needs are different – but most can be met by the right combination of five investments
11 Feb 2020
Visit/investments/commodities/600729/the-rare-earth-metal-that-wont-be-a-secret-for-long
Sponsored

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020